When CEOs don't win awards, they make more acquisitions

Vantage point: Insights from cutting-edge research

Each year major business media outlets rank CEOs based on their performance. But for every happy award-winning CEO, there are many more CEOs who did not win. How do these rankings affect CEOs who don’t get the top spot? A study conducted by academics Wei Shi, Yan Anthea Zhang and Robert E Hoskisson, whose article has been published in Harvard Business Review, investigated this question. Looking at CEO awards granted by journals, they identified over 200 superstar CEOs of S&P 1500 firms in the US from 1996 to 2010. They then identified their competitors among S&P 1500 firms. They authors hypothesised that competitor CEOs’ firms would undertake more and/or larger acquisitions in the four years after a peer had won a CEO award, compared to the four years prior.

“We found that competitor CEOs’ firms conducted 22 per cent more acquisitions in the post-award period than in the pre-award period. This suggests that if a competitor CEO firm made five acquisitions in the pre-award period, such a firm would undertake six acquisitions in the post-award period. Moreover, we found that if a firm spent $100 million on acquisitions in the pre-award period, it would increase its acquisition spend to $256 million in the post-award period,” they wrote.

Major shift to hybrid infrastructure services underway, says Gartner

The growth of cloud and industrialised services and the decline of traditional data centre outsourcing (DCO) indicate a massive shift toward hybrid infrastructure services, according to Gartner, Inc. In a report containing a series of predictions about IT infrastructure services, Gartner analysts said that by 2020, cloud, hosting and traditional infrastructure services will come in more or less at par in terms of spending. “As the demand for agility and flexibility grows, organisations will shift toward more industrialised, less tailored options,” said D D Mishra, research director at Gartner. “Organisations that adopt hybrid infrastructure will optimise costs and increase efficiency. However, it increases the complexity of selecting the right toolset to deliver end-to-end services in a multi-sourced environment.”

The traditional DCO market is shrinking, according to Gartner’s forecast data. Worldwide traditional DCO spending is expected to decline from $55.1 billion in 2016 to $45.2 billion in 2020. Cloud compute services, on the other hand, are expected to grow from $23.3 billion in 2016 to reach $68.4 billion in 2020. Spending on colocation and hosting is also expected to increase, from $53.9 billion in 2016 to $74.5 billion in 2020.

Bankers feel AI key to creating human-like customer experience

In the next stage of artificial intelligence (AI) adoption, banks will use AI to help understand the intentions and emotions of customers and enable better interactions, according to a new report from Accenture. The report, Accenture Banking Technology Vision 2017, draws on the analysis of an advisory board of more than two dozen individuals, interviews with technology luminaries and industry experts, and results of a survey of more than 600 bankers. According to the report, 78 per cent bankers believe AI will enable simpler user interfaces that will help banks create a more human-like customer experience. In addition, 79 per cent believe AI will revolutionise the way banks gather information and interact with customers, and 76 per cent believe that within three years, banks will deploy AI as their primary method for interacting with customers.

“Consumers’ diverse needs and priorities are forcing financial services firms to redefine how they interact with them to determine the best products and services to meet individuals’ needs,” said Alan McIntyre, a senior managing director at Accenture and head of the company’s Banking practice.