Figures from IBM's 2006 global CEO study show that almost 60 percent of Australia and New Zealand's top CEOs believe competitive and market pressures will drive radical change within their companies over the next two years.

The study, which examines where CEOs focus innovative effort, is based on responses from 750 CEOs of major global organizations across 20 industries, with 60 respondents from Australia and New Zealand.

In improving growth over the next two years, most CEOs (41 percent) will focus on innovating products and services, followed by improving operations (32 percent) while a surprisingly high number (27 percent) cited changing their business model to extract growth.

IBM's global business services Australia managing partner, Ian Ball, said collaboration, which refers to a non-contractual agreement between a company and a supplier, customer or competitor, is more widely used by the region's CEOs than elsewhere to reduce risk and increase efficiency and flexibility.

"CEOs in Australia and New Zealand use collaboration as a strategy to respond to the constraints of a small and highly competitive market as it offers speed and strategic flexibility and can reduce the risk and capital investment required for innovation," he said.