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.

Related Articles


"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 January 31, 2015 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 January 31, 2015).

Share This


More From ScienceDaily



More Mind & Brain News

Saturday, January 31, 2015

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

NFL Concussions Down; Still on Parents' Minds

NFL Concussions Down; Still on Parents' Minds

AP (Jan. 30, 2015) The NFL announced this week that the number of game concussions dropped by a quarter over last season. Still, the dangers of the sport still weigh on players, and parents&apos; minds. (Jan. 30) Video provided by AP
Powered by NewsLook.com
Study Shows Newborn Chicks Count From Left to Right Just Like Humans

Study Shows Newborn Chicks Count From Left to Right Just Like Humans

Buzz60 (Jan. 30, 2015) Researchers for the first time identified human&apos;s innate preference for associating low and high numbers with the left and right respectively in another species. Jen Markham (@jenmarkham) explains. Video provided by Buzz60
Powered by NewsLook.com
Best Mood Elevating, Feel Good Shakes & Smoothies

Best Mood Elevating, Feel Good Shakes & Smoothies

Buzz60 (Jan. 30, 2015) You can elevate your mood by having a meal in a glass. Fitness and nutrition expert John Basedow (@JohnBasedow) offers the best &apos;feel good&apos; smoothies and shakes chock full of depression-relieving ingredients...including apples, berries, lemons, cucumbers, papaya, kiwi, spinach, kale, whey protein, matcha, ginger, turmeric and cinnamon. Video provided by Buzz60
Powered by NewsLook.com
Poll Says Firstborn Is Responsible, Youngest Is Funnier

Poll Says Firstborn Is Responsible, Youngest Is Funnier

Newsy (Jan. 30, 2015) According to a poll out of the U.K., eldest siblings feel more responsible and successful than their younger siblings. Video provided by Newsy
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:

Strange & Offbeat Stories


Health & Medicine

Mind & Brain

Living & Well

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