Attack is the best defence – or what Flemish growth companies have learned from FC Barcelona and top footballers like Messi
Flemish growth companies are doing better than their counterparts in Western Europe and worldwide. They are more proactive, flexible and alert, and respond more quickly. They think the worst of the crisis is past, and are looking very hopefully to the future. Those are the findings of the annual iGMO Growth Survey by the Growth Management Impulse Centre for Medium-Sized Companies by Vlerick Leuven Gent Management School jointly with Ernst & Young and KBC, covering around 80 Flemish owner-managed growth companies – all members of iGMO. What is new this year is that this survey was combined with a worldwide study (cf. “[Striving for growth]” survey, Ernst & Young), enabling the Flemish findings to be seen in a broader perspective for the first time.
Hans Crijns, Professor of Entrepreneurship at Vlerick, explains: “In their priorities in dealing with the crisis, we find major differences in vision between executives at mature multinationals and entrepreneurs (‘global entrepreneurs’). While executives focus mainly on 'protecting what they have' (that is, defending), entrepreneurs are looking actively for 'new market opportunities' (that is, attacking). Just as good footballers can use both feet, and top teams are strong in both defence and attack, good businesses need to use both strategies too. And our Flemish growth companies have mastered these methods much better than their counterparts, both in Western Europe and the rest of the world, by being sharper and more alert.” To give an example: when businesses were asked how fast they could respond to changing demands, no less than 50% of Flemish growers said they could do so immediately, compared with just 37% in Europe and 36% worldwide. Their range of tactics is also much wider: they can be both defensive (for which read 'saving costs') on many fronts (investing more selectively) and attacking (for which read 'opportunistic') (acquisitions, product innovation, market development).
Main findings of iGMO growth survey
How have Flemish growth companies tackled the crisis, and how are they looking to the future?
- Flemish growth companies think the worst of the crisis is past: 74% are satisfied to very satisfied with how their business is performing, and are even more satisfied than in 2007 (71%)! The figure was just 49% in the slump in 2009.
- 73% say sales have increased and 78% profits are up in the last two years. So Flemish growth companies did well even at the height of the crisis!
- Looking to the future, 88% of growth companies are positive and hopeful about the next two years. Their confidence in the future is back to what it was before the crisis (2007: 89%). The trough here was in 2009 (58%).
- How have they responded to the crisis?
- Through cost-saving innovations (a nice combination of attack and defence)
- Through launching new products (more than other businesses)
- Through paying more attention to marketing and sales
- Growth strategy: Flemish growers are not quick to dare to move into new markets. They would rather launch new products and move existing products in existing markets. That may sound like being afraid of dipping their toes in the water, but one positive explanation is that they want to expand existing markets further.
- What is remarkable is that no less than 33% have made an acquisition in the past year which means they are really attacking flat out! · What is or is not a brake on future growth? -
- BRAKES: recruiting and developing talent. “The war for talent is back”. Even more than businesses that are being more defensive, these growth companies are using opportunities the crisis offers, so they need talented staff. The fact that they are working on a smaller scale than the multinationals may work against them, because to them one member of staff is more important and has more impact than one member of staff at a large multinational. On the other hand, their dynamic, stimulating business culture plays more in their favour than ever before.
- NOT BRAKES: finance. Flemish growers have good access to capital and are experiencing little restrictions on finance (just 7%). The fact that the majority are financed mainly by family shareholders gives more confidence or less upheaval in turbulent times like a financial and economic crisis.
- The main cost pressures are labour and raw materials. Prices are being eroded worldwide; but Flemish businesses have reduced their prices much less: on the contrary, even, they intend to put their prices up.
- All businesses have found that competition has increased strongly in the last two years, worldwide, in Western Europe and Flanders; and Flemish growth companies believe competition will keep on increasing in future.
About the Impulse Centre:
List of all iGMO members