“By simply counting the number of future-oriented sentences in annual reports we can predict future innovation by the firm,” said marketing Professor Rajesh Chandy of the University of Minnesota’s Carlson School of Management.

CEOs who focus their attention on future events and external activities lead their firms to early adoption and invention of new technologies and greater and faster development of innovations, said Chandy, whose study appears in the next issue of the Journal of Marketing.

In contrast, firms whose CEOs focus on internal operations are slower to detect, adopt and implement new technologies, Chandy’s study found. Words, not just actions, of the CEO set the tone to inspire, propel and motivate employee innovation, he said.

He and co-authors Manjit Yadav of Texas A&M University and Jaideep Prabhu of London University’s Imperial College reached their conclusion after studying the online banking industry over eight years.

By counting the number of future-oriented words and phrases in letters to shareholders over this period, they were able to predict the level of innovation by the firm up to five years later, the researchers said.