The FINANCIAL — CEOs from global manufacturing companies are feeling the pressure on their ability to compete and win in what is a very competitive market KPMG’s Global CEO Outlook reports.
Seventy-five percent of the manufacturing CEOs responding to the KPMG Global CEO Outlook are worried about new entrants disrupting their business model and 70 percent are concerned about their competitors’ ability to take business away from them.
“What’s really worrying manufacturing CEOs is the possibility that they may be losing the innovation race,” says Doug Gates, KPMG’s Global Head of Industrial Manufacturing*. “They are concerned that their competitors may be innovating faster, more efficiently or more effectively than they are. There are certainly plenty of examples of manufacturing organizations that failed to recognize a new opportunity until it was too late.”
The KPMG Global CEO Outlook also found that 73 percent of manufacturing CEOs are worried that their organization is not doing enough to keep current with new technologies and 65 percent are concerned that their products and services may not be relevant 3 years from now.
This said, manufacturing CEOs put ‘fostering innovation’ at the top of the list of strategic priorities for the next 3 years, followed closely by ‘developing new growth strategies’. And, almost half of all manufacturing respondents said they planned to devote ‘significant’ capital towards new product development over the next 3 years.
Doug Gates, KPMG’s Global Head of Industrial Manufacturing comments:
“The fact that innovation is moving up the agenda and gaining increased investment is a strong signal that manufacturers are starting to act on their fears. But it will take more than increased capital and enthusiastic leadership to create innovative manufacturers. It will also require CEOs and their management teams to think more holistically about innovation.”
Tom Mayor, Principal, Advisory, KPMG, Head of US Strategy for Industrial Manufacturing adds
“When we work with manufacturing CEOs, we often break down ‘innovation’ into three main areas: product innovation, manufacturing innovation and business model innovation. Most CEOs intrinsically understand the need for product and manufacturing innovation. Where they are sometimes lagging is business model innovation. If they wait for their competition to bring a new business model to their attention, they’ve likely missed the boat.”