Wednesday, August 15, 2007

How to Predict a Company's Future

From Science Daily:

"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.

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.

Unfortunately, the paper has yet to be released so I can't pick it apart. My question is whether the online banking industry is a good proxy for all industries. It does seem that it's a good choice when looking at entrenched industries. Startups, of course, are focused completely on innovation, so the study is not very relevant in regards to them.

If you predicted the future of a startup based on what the CEO says publicly, then every company in the Valley would be the next Google. Except mine, we're the next Oracle. Because I'm short and greedy and to quote Mark Zuckerberg, "I'm the CEO, be-yotch!"