Manufacturing CEOs from around the world rank innovation as the top challenge they face this year in a Conference Board survey released March 20.
Innovation topped human capital as the greatest challenge they must address in the Conference Board's CEO Challenge 2012 survey. The survey included responses between September and December 2011 from 776 leaders in the manufacturing, finance and service sectors.
The top ranking for innovation signals intense global competition and overcapacity in several commoditized sectors, underscoring the importance of process and product innovation to remain competitive, according to the report.
Manufacturing CEOs ranked human capital as the second-most pressing challenge in 2012. The two categories are strongly linked as manufacturers continue to seek skilled individuals who can drive innovation, the report stated.
"The strategies selected by these CEOs to meet the innovation challenge focus on talent-oriented actions," the report concluded.
Some of the ways CEOs said they plan to address the innovation challenge include the implementation of new technologies, creating an innovation culture by rewarding entrepreneurship and risk-taking and engaging in strategic alliances with business partners.
Top challenges cited by CEOs varied by region, with U.S. executives citing government regulation as the most critical challenge they face followed by global political and economic risk, innovation, and human capital.
CEOs view regulatory uncertainty as a hindrance to long-term planning, according to the report.
Not surprisingly, European CEOs say global political and economic risk is their primary challenge as the region continues to grapple with a debt crisis.
In Asia, CEOs cite innovation as their most critical challenge with human capital needs close behind.
"In Asia, it's become clear to leaders that internal talent development -- creating the effective leadership to drive business results -- is a critical key to success," said Rebecca Ray, senior vice president, Human Capital at The Conference Board, and a co-author of the report. "This is particularly true in China and India where CEOs rated human capital as their primary challenge, as well as in service and manufacturing industries worldwide, where human capital concerns are playing a critical role in a firms' path toward continued growth."
Asia was the only region in the survey to rank sustainability as a top-five challenge for 2012.
Another trend cited in the report is a growing awareness that collaboration, in some cases outside a company's corporate walls, can spur innovation.
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