US private companies are embracing innovation to help them fulfill their growth agendas, according to PwC US’s Trendsetter Barometer survey. Their innovation initiatives include creating novel products and services never before seen by the marketplace, with 39 percent 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 percent 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 percent 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.
Workforce Investment Is Critical to Innovation, But Talent Costs Pose a Challenge
Consistent with their focus on innovation, roughly one-third of private companies say that investments in information technology (IT) and research and development (R&D) will be critical in helping them achieve their growth objectives (cited by 36 percent and 32 percent of companies, respectively). The important role that talent plays in making the most of IT and R&D investments is not lost on the survey respondents. Indeed, the majority (54 percent) of them cite talent as another investment area that is critical to their growth agendas. The private companies in that majority flag IT professionals (32 percent), engineers (30 percent), and R&D staff (17 percent) as workforce demographics they plan to invest in over the next year.
So that their innovations can be put to profitable use, private companies are also placing a strong emphasis on their marketing and sales function — nearly two-thirds (59 percent) of them say that this will be a critical area of investment for their businesses over the next year. Accordingly, of the majority that cite talent as a critical investment area, nearly two-thirds (62 percent) plan to invest in marketing and sales representatives over the next year, and 44 percent plan to invest in business development professionals.
However, talent costs are a concern, with 71 percent of private companies saying that wage pressure and healthcare expenses, among other talent-related costs, could impede their growth over the next 12 months (34 percent cite these as a "major" potential impediment). International private companies, in particular, see talent-related expenses as a possible impediment (76 percent versus 66 percent of their domestic-only peers) as wages continue to rise in formerly low-cost labor markets such as China.
New and Emerging Technologies Help Private Companies Do More with Less
Among private companies that ranked IT investment as critical to fueling their growth (36 percent), the majority of them plan to invest in the following areas over the next year: data analytics (75 percent), cloud computing (61 percent), social media (57 percent) and mobile devices (53 percent).
A greater percentage of international companies (41 percent) say IT is a critical area of investment overall, compared with their domestic-only peers (33 percent). Cloud computing, in particular, is an area where these international companies plan to invest (66 percent), since it enables them to move nimbly across borders instead of being tied to infrastructure back home or needing to build costly new infrastructure abroad. Fast-growth companies, meanwhile, are noticeably more focused on investing in social media, with 65 percent of them reporting that this investment area is critical to supporting their growth objectives, versus 52 percent of their private-company peers. Data analytics, however, is the top area of focus for the overall group of companies that are prioritizing IT investment, with 62 percent of those companies saying that their planned data-analytics investments will have a significant impact on their business.
Source: PwC Trendsetter Barometer / Abridged