For private companies, the driver for innovation and technology transformation is often meeting – and exceeding – customer demands.
Customer centricity. Disruptive technology. Innovation.
Regardless of your role or the size of your company, you’ve undoubtedly heard these terms as they relate to the future of your business and business in general. Companies around the world are increasingly realizing how investing in technological advances today is essential for growth tomorrow. For ambitious private companies, the driver for technology transformation is often the race to meet — and exceed — customer demand.
Customer demand driving innovation
In our ongoing conversations with C-suite executives from private companies throughout the Americas, we explore what’s driving these leaders to make certain decisions with a goal of helping their companies grow. We are overwhelmingly hearing that customer demand is their greatest driver of innovation — where in past years, we’ve seen issues such as regulation, profitability and competition play a more prominent role. In fact, in the most recent EY Growth Barometer Survey, we learned that 31% of private companies in the Americas rate customer demand as their greatest driver of innovation — up 12% over the prior year and much higher than in other parts of the world.
What does this mean? It means private companies are anchoring their drive for innovation in their customer strategy. They recognize that meeting the needs of their customers — who are accustomed to on-demand, customized service — can fuel their growth and success. To not only meet — but also anticipate — customers’ expectations, they plan to make innovation part of their culture and embrace the opportunities that brings.
Kamakshi Sivaramakrishnan, founder and CEO of Drawbridge, a cross-device advertising platform, shared her perspective with EY leaders. “We don’t ever want to give our customers a reason to go elsewhere. So for us, growing our market share is directly related to how much we can differentiate ourselves, our products, our performance and our level of service from our competition, which means constantly pushing the frontiers of innovation,” she explained. “Customers are typically the best guide of innovation for most companies.”
Eye on Artificial Intelligence (AI)
The reality of business today is one of unrelentingly disruptive change. The organizations that thrive will make digital transformation and innovation part of a holistic business perspective. Rather than treating digital or innovation as discrete strategies, the most successful private companies are making them part of an integrated business and customer strategy.
One area of innovation being evaluated by nearly all companies is artificial intelligence (AI). In our conversations, private business executives are evaluating the advantages and benefits of adopting some form of AI. According to our survey, 93% of private companies in the Americas plan to adopt some form of AI in the next five years. Remarkably, that’s up 15% from the prior year.
So what is the value of AI to a mid-size to large private business? I was recently talking with an owner of a mid-size business who was implementing document intelligence — a form of AI —to streamline the processing of leases, reduce costs and improve efficiency. This allowed him to reassign members of his team to other roles, again putting the focus back on customers.
Innovation is not only about the technology you incorporate into your operations, supply chain and infrastructure to be more responsive to changing customer demands, marketplace disruption and competition. It is also about leveraging data to gain insight and perspective into your customers’ buyer journey and purchasing decisions.
Data analytics continues to grow in importance. While getting direct input from customers is essential to staying competitive and relevant, knowing what to measure and how to uncover insights that enable you to serve your customers can be an even bigger differentiator for companies.
For example, private company owners are finding that moving to a digital audit — one that is grounded in data analytics ― can deliver insights that help them put more focus on the customer. An audit that is based on full data sets gives greater visibility into a company’s business processes — from sales, to inventory, to billing ― and allows teams to quickly find anomalies and identify risks. Flagging issues related to quality or changes in the sales pipeline early in the process allows management to proactively address any impact on growth.
A key takeaway is the central role that the customer takes in driving the innovation strategy for private companies. US private business leaders are investing in technology to improve the customer experience; they see innovation being driven by customer demand and they prioritize customer data to increase innovation.
“We know from our extensive work with high-growth entrepreneurs,” says Randall Tavierne, EY Global Private Client Services Leader, “that customer focus is a key driver of growth. Listening to customers, improving the customer experience and being ruthlessly focused on the customer are critical to success. This is a key opportunity for innovation at ambitious private companies.”