Business Pulse

Innovation is the biggest opportunity

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With little prospect of organic growth in mature markets, companies are searching for new places for expansion.

They are looking to expand, in part, geographically, i.e., in rapid-growth economies, but also in terms of seeking out new niches in established markets.

The biggest opportunity is seen within innovation, whether in terms of new products or services, or within operations. This is especially crucial for finding unexploited gaps in existing markets, but it is also becoming an increasingly fundamental component of how many companies succeed within major rapid-growth markets.

Spending on research and development is growing four times as rapidly within countries such as China and India, as compared with mature markets such as the UK and US.

The IMF expects major rapid-growth markets to grow by 5%-6% in 2013-14, or about four points faster than mature countries. Companies now accept that the bulk of their growth will come from such markets and are readjusting their businesses accordingly.

Businesses are increasingly excited by the emergence of new marketing channels, such as social media, ranked as the fourth-greatest opportunity. This was especially true of companies operating in rapid-growth markets.

Cloud computing and data insights also offer tremendous marketing potential. But inevitably, there are risks too: emerging technologies are still narrowly considered a top 10 risk, although this is down from fifth overall in 2011. But the disruptive capabilities of ongoing technological development remain a worry for many emerging technologies are still considered a top 10 risk.

The disruptive capabilities of ongoing technological development remain a worry for many.

What it all means for businesses

Organizations need to prioritize technology and innovation in order to improve their overall customer reach, as new markets and technologies emerge in the aftermath of the global financial crisis. Opportunities exist for those able to understand the imperatives in this area and integrate their processes and operations accordingly.

To mitigate the risks and enable opportunities companies could:


Performance

  • Identify potential rapid-growth markets to expand operations.
  • Define a channel-selection strategy aligned with the business strategy and focused on customer needs and market demand.
  • Design coherent organization-wide strategy for innovation and well established processes for managing products and services.

Risk

  • Set up an effective channel management to ensure use of the right channels that apply to the business strategy.
  • Develop a consistent framework to assess the value created by investment in IT operations.
  • Undertake targeted IT investments aimed at inefficiencies in current business practices.
  • Gather a deep understanding of critical cost categories, such as cross-border taxes and tariffs, and supply chain performance to identify the true costs and benefits of sourcing to rapid-growth markets.

IT and information security risks

  • Evaluate the potential benefits and risks of integrating throughout the value chain and how IT can enable additional value generation across it.
  • Align their IT investment strategy with the company's strategic goals.
  • Enhance communication and transparency around technology and information security requirements and efforts.
  • Perform a risk assessment on the various distribution channels per geography and enhance technology and information security measures where necessary.
  • Develop a policy for using social media by their employees when that relates to their organization; monitor what social media report about their organization and take appropriate actions.
 

Download the report for more information and self-assessment questions.

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