"Continental Europe sees the strongest growth sentiment for a decade both domestically and export-led," says Andy Baldwin, EY Area Managing Partner for Europe, Middle East, India and Africa (EMEIA), "and we see this confidence reflected in foreign direct investment into the region. Moreover, Europe has moved beyond Brexit. It is now a localized UK issue, weighing on business confidence, but not impacting continental Europe."
In 2017, foreign direct investment (FDI) projects in the UK declined by 6 percentage points over 2016, now overshadowed by Brexit, and leaving Germany in pole position. A surging France (up 31 percentage points) is now a much fiercer competitor. “In Europe, the historic growth of inward investment to the longstanding league champion, the UK, has stalled,” says Baldwin.
The cohort of companies expecting to grow at the highest rates (from 15% to over 50% in the current year) share some characteristics that mark them out from the broad survey base of all respondents.
While women lead 4% of companies we surveyed overall, they lead 17% of companies with the highest growth ambitions.
For companies targeting growth rates over 15% nearly one in four (23%) operate in the technology sector, while one in six (15%) is US-based, just over one in ten (11%) are based in India and just under one in ten (9%) are UK-based.
More than one in four (27%) of this elite group of high-growth entrepreneurs – including some past winners of the EY Entrepreneur Of The Year™ program – are focused on entry into new overseas markets as their number one growth priority, compared to 23% of the broader cohort.
Unlike the broader cohort, these high-growth entrepreneurs see digitization as the disruptive force having the biggest impact on their business. Thirty-two percent rank it first compared to just 13% of other C-suite leaders, who instead rank demographic shifts as the top megatrend disrupting business (at 34%). Nevertheless, for all respondents taken together, the majority (57%) see digitization and industry convergence as megatrends having the biggest disruptive impacts on their business this year.
These high-growth entrepreneurs are also more directly driven by the customer, with over a third (34%) citing customer demand as the key driver of innovation, ahead of competition (21%) and improving profitability (20%). In contrast, only 15% of the broader cohort cite customer demand as the key driver of their innovation efforts, behind improving profitability (28%) and responding to regulation (25%).
Over half (53%) of high-growth entrepreneurs are planning to hire more full-time staff this year, reflecting their more ambitious growth plans and a general focus on talent to realize those ambitions. This compares with 38% of other C-suite who are planning to hire more full-time staff.
More than one in five (22%) of high-growth entrepreneurs have adopted AI already, compared to 5% of other companies, and they are also more likely than their peers to increase agility by building alliances with external partners (23% compared to 21%).
As business leaders heading up companies growing at exceptional rates, they are already spending more time on future strategy than their peers. Nearly half of the high-growth entrepreneurs (48%) believe they should be spending at least half their time on the future, compared to just 16% of other C-suite.
Home or away?
The dominant growth strategy for company leaders globally is entry into a new overseas market, with nearly one in four (23%) citing it as a priority. Except for companies born into uniquely large and self-reliant countries such as the US, China and India, most middle-market leaders see the need to expand their geographic footprint beyond home borders if they are to become market leaders in their space.