Featured Research

from universities, journals, and other organizations

Words Of A CEO Can Foretell A Company's Future Innovation

Date:
August 15, 2007
Source:
University of Minnesota
Summary:
Many stockholders wish they could look into a crystal ball to forecast a firm's performance. Researchers have found that they need something far less mystical to predict future innovations of firms. "The answer lies in the words of the CEO," said one of the scientists. "By simply counting the number of future-oriented sentences in annual reports we can predict future innovation by the firm."

Many stockholders wish they could look into a crystal ball to forecast a firm's performance. Researchers at the University of Minnesota have found that they need something far less mystical to predict future innovations of firms.

"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."

In the paper "Managing the Future: CEO Attention and Innovation Outcomes," forthcoming in the Journal of Marketing, Chandy and co-authors Manjit Yadav of Texas A&M University and Jaideep Prabhu of Imperial College, London University, show that 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. In contrast, more attention to internal operations leads to slower detection, adoption and implementation of new technologies.

Words, not just actions, of the CEO set the tone to inspire, propel and motivate innovation by employees in a firm. To investigate their theory, Chandy and his co-authors studied empirical data collected from the online banking industry over eight years to determine innovation outcomes such as speed of detection, speed of development and the breadth of deployment of technology. By counting the number of future oriented words and phrases in letters to shareholders over this time span, they were able to predict the level of innovation by the firm up to five years later.

"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."

The researchers advise CEOs to direct their attention outside their firm rather than toward internal problems, which are better left for others to solve. "The temptation to focus on fires within the firm may cause you to take your eyes off of your job," said Chandy. "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."


Story Source:

The above story is based on materials provided by University of Minnesota. Note: Materials may be edited for content and length.


Cite This Page:

University of Minnesota. "Words Of A CEO Can Foretell A Company's Future Innovation." ScienceDaily. ScienceDaily, 15 August 2007. <www.sciencedaily.com/releases/2007/08/070814150611.htm>.
University of Minnesota. (2007, August 15). Words Of A CEO Can Foretell A Company's Future Innovation. ScienceDaily. Retrieved July 23, 2014 from www.sciencedaily.com/releases/2007/08/070814150611.htm
University of Minnesota. "Words Of A CEO Can Foretell A Company's Future Innovation." ScienceDaily. www.sciencedaily.com/releases/2007/08/070814150611.htm (accessed July 23, 2014).

Share This




More Mind & Brain News

Wednesday, July 23, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Why Do People Believe We Only Use 10 Percent Of Our Brains?

Why Do People Believe We Only Use 10 Percent Of Our Brains?

Newsy (July 22, 2014) The new sci-fi thriller "Lucy" is making people question whether we really use all our brainpower. But, as scientists have insisted for years, we do. Video provided by Newsy
Powered by NewsLook.com
Do Obese Women Have 'Food Learning Impairment'?

Do Obese Women Have 'Food Learning Impairment'?

Newsy (July 18, 2014) Yale researchers tested 135 men and women, and it was only obese women who were deemed to have "impaired associative learning." Video provided by Newsy
Powered by NewsLook.com
Does Mixing Alcohol and Energy Drinks Boost Urge To Drink?

Does Mixing Alcohol and Energy Drinks Boost Urge To Drink?

Newsy (July 18, 2014) A new study suggests that mixing alcohol with energy drinks makes you want to keep the party going. Video provided by Newsy
Powered by NewsLook.com
Pot Cooking Class Teaches Responsible Eating

Pot Cooking Class Teaches Responsible Eating

AP (July 18, 2014) Following the nationwide trend of eased restrictions on marijuana use, pot edibles are growing in popularity. One Boston-area cooking class is teaching people how to eat pot responsibly. (July 18) Video provided by AP
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins