According to PwC U.S.’s Trendsetter Barometer study, U.S. private companies are embracing innovation to help them fulfill their growth agendas. Their innovation initiatives include creating novel products and services never before seen by the marketplace, with 39% of private companies saying that these will be important growth engines for them in the next year. They are not approaching these innovations as one-off efforts – 20% of the surveyed companies say that novel products/services will be even more important to their growth objectives over the next two to three years. Another 37% of businesses are focusing on products and services that would be newly offered by their companies but not be new in the marketplace as a whole.
PwC said introducing new products and services isn’t without its challenges. Almost one-third (29%) of private companies say that difficulty tailoring products and services across geographic markets could impede their ability to pursue top growth objectives. The concern is greater among U.S. private businesses that sell abroad (40% of these companies cite concern, compared with 21% of domestic-only companies). Accordingly, more of them are focused on developing new products and services (68% versus 45% domestic-only companies) and say R&D investment is critical/important to fueling growth (73% versus 43%).
Other main avenues of growth cited by private companies include increased market share (83%), new geographic markets (62%), new joint ventures and strategic alliances (39%), and mergers and acquisitions (29%).
PwC notes, interestingly, international companies that are contemplating these last two avenues of growth are more focused on pursuing them in the U.S. than abroad – 34% U.S. versus 25% abroad for new joint ventures and strategic alliances, and 26% U.S. versus 16% abroad for M&A.
“Private-company executives recognize that achieving their business goals requires putting innovation at the heart of their efforts,” says Ken Esch, a partner with PwC’s Private Company Services practice. “We especially see this with private companies that sell abroad. Developing products and services for a highly diverse customer base across geographies and then finding innovative ways to reach those customers is critical to success in foreign markets. Having the right partners there can also be instrumental to success. That said, we’ve recently seen a number of private companies reconsider their initial partners and alliances abroad as they become more familiar with key foreign markets, signaling their increased sophistication.”
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