CEO'S Words Can Foretell a Company's Future Innovation, Study Says

Inward focus leads to slower innovation

The University of Minnesota has found the key to predicting future innovations at companies. "The answer lies in the words of the CEO," said Rajesh Chandy, professor of marketing at the university's Carlson School of Management. "By simply counting the number of future oriented sentences in annual reports we can predict future innovation by the firm."

CEOs who focus their attention on future events, as well as external activities, lead their firms to earlier adoption and invention of new technologies and greater and faster development of innovations, according to a paper, "Managing the Future: CEO Attention and Innovation Outcomes," by Chandy and co-authors Manjit Yadav of Texas A&M University and Jaideep Prabhu of Imperial College, London University. In contrast, more attention to internal operations leads to slower detection, adoption and implementation of new technologies.

"The daily pressures from inside the corporation tend to take up the bulk of the CEO's time, overwhelming their attention spans," explains Chandy. "But because the CEO sets the tone and culture, not thinking forward and outside of the firm has major negative consequences for innovation." "A CEO who focuses on the big picture, not the nitty-gritty, will influence the process of innovation and future outcomes of the firm more than one who has an internal day to day focus."

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