Results suggest companies aren’t meeting growth targets due to a lack of focus; chasing too many opportunities at once, squandering energy and resources
London, July 28, 2015 – Growth is a priority at nearly every company today. But most executives don’t have a clear view of how their companies will meet growth targets.
That’s according to a new survey by PwC’s Strategy& of more than 500 executives from around the world whose companies have annual revenues between $100 million and more than $10 billion.
“The fundamental problem is targeting big growth — although everyone knows they need it for long-term success, most executives do not believe they will deliver against their aspirations,” said Alan Gemes, senior leader at Strategy&, PwC’s strategy consulting practice.
“Companies often chase growth wherever it presents itself, rather than designing it around what they do best,” added Gemes.
Confidence in achieving growth — and in company leadership to make it happen — is low
Because of the heavy emphasis on growth — 94% of executives say growth is a company priority, and a full 30% say it’s more important than anything else — companies often set very ambitious targets for long-term success. However, only 38% of executives are highly confident their companies will realize their growth targets.
Executives paint picture of how difficult growth is — and feels
Although 74% of executives agree more growth opportunities exist now compared to 10 years ago, 70% say it’s more difficult now to generate profitable growth, and 66% say knowing which growth avenue to pursue is harder than it was a decade ago.
“Globalisation, deregulation, and digitisation bring new players to the scene and increase market transparency, making the environment more competitive than ever. While these trends bring along many new growth opportunities for companies, they also make it easier to be disrupted by new entrants who can bring exactly the capabilities required to succeed,” says Gemes.
The growth imperative often spreads companies and executives thin — unproductively and unnecessarily
“In the search for growth, a company often launches several initiatives. This leads to resources being spread too thin, leaving potentially viable growth paths under-resourced, and preventing the company from building the type of advantage that leads to long-term growth. The result is that companies may experience a temporary revenue boost, but the gains are rarely sustainable,” says Gemes.
Based on the survey results, this lack of focus is palpable within companies and leads to frustration. More than a third (34%) of executives admit to being frustrated because they have to pursue many growth opportunities in parallel, none of them significant enough to make a difference.
The way to grow sustainably is to focus on what differentiates the company – its key capabilities
Says Gemes: “Our research confirms that consistent growth stems from building a growth engine — a handful of capabilities that provide real differentiation in the market. IKEA, for example, combines price-conscious and stylish product design, with highly efficient operations and customer-focused retail products. Growth becomes the result of leveraging that advantage again and again, rather than seeking out a growth opportunity first and then struggling to find a way to succeed with it.”
Strategy& conducted a Web-based survey that contained 19 questions on the topic of growth. There were 503 respondents from 11 countries. Respondents included company founders, presidents, CEOs, and other C-Suite executives, senior vice presidents, vice presidents, and managers. Annual revenues at responding companies ranged from $100 million to over $10 billion. Strategy& fielded the survey in spring 2015.
Strategy& is a global team of practical strategists committed to helping you seize essential advantage. We do that by working alongside you to solve your toughest problems and helping you capture your greatest opportunities. We bring 100 years of strategy consulting experience and the unrivaled industry and functional capabilities of the PwC network to the task. We are part of the PwC network of firms in 157 countries with more than 223,000 people committed to delivering quality in assurance, tax, and advisory services.
Telephone: +44 20 7393 3251