In an age of innovation and technology, companies must take action and be open to entering into mergers or alliances with long-standing competitors.
Many companies are forced to optimize their product portfolios and acquire new expertise and technologies. In many cases, takeovers or coopetition will be the fastest way to secure these changes, although the latter will be something German companies will have to manage culturally.
If German companies have plans to catch up, they will have to assign more of their total investment capital and increase the amount they focus on growth opportunities. Currently, 42% of German executives say they plan on devoting 25% to 49% of their investment capital on digital and technology versus 55% of global executives. Twenty-three percent say they will focus between 25% and 49% on new growth opportunities, versus 35% of global executives.
Despite reinvention, talent challenges remain
Even as German companies look ahead to reinvention, they face a number of challenges on the talent front, which could threaten to slow their progress. Almost three-quarters (72%) of German executives admit that their companies struggle to hire and retain staff — a much higher percentage than their global peers (61%). Of those, one-third say their biggest issue is finding and keeping talent with specific technical skills related to their core business. Interestingly, for 28%, the second-biggest talent gap is at the board and management level. Among global executives, only 15% cited this as a talent issue.
German companies are ready and capable of reinventing themselves for the future
Despite geopolitical and regulatory uncertainty, Brexit, trade and tariff issues, German companies are ready to reinvent themselves for the future.
To do so, digital investments need to be a more prominent feature of their transformation agenda. M&A, joint ventures and in-house corporate venture funds will be some of the options German executives will consider to accelerate growth and remain competitive in an increasingly fast-changing environment.
Key highlights from our global report
Summary
The EY Global Capital Confidence Barometer (pdf) gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their Capital Agendas.