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Too much ink has been spilled forecasting the end of growth and, with it, hopes for better prosperity.
At EY we recently surveyed 2,340 chief executives and senior leaders of middle-market companies — those with revenues of $1m-$3bn and selected high-growth companies less than five years old in 30 countries.
We asked them about their growth ambitions, challenges and strategies, and sought to better understand their attitudes to global risks and uncertainties. The results show that despite geopolitical uncertainty, sluggish global growth and rising trade barriers, nearly one-third expect to increase revenues this year by 6 per cent-10 per cent, far outpacing the latest World Bank global growth forecast of 2.7 per cent.
In fact, 90 per cent of the business leaders in our survey see uncertainty as an opportunity for growth.
Nearly one in four high-growth entrepreneurs in the survey (an elite group of nearly 300 entrepreneurs drawn from EY’s Entrepreneur of the Year alumni who were included in the wider survey) have plans to increase their revenue by more than 26 per cent over the next 12 months. These high-growth entrepreneurs are also early adopters of robotic process automation (RPA), with 20 per cent already using it for some business processes. Nearly 40 per cent plan to adopt it in the next two to five years.
A dystopian vision that such automation will lead to large-scale lay-offs is not shared by these business leaders. Far from seeing RPA as a route to slashing labour costs, nearly two-thirds (61 per cent) of the same group of entrepreneurs plan increases in full-time staff. It seems that these high-growth middle-market leaders are selectively adopting RPA to bring efficiencies to routine operations — as an adjunct to human talent, rather than as a replacement for it.
The high-growth entrepreneurs also had different priorities from their peers when it came to technology investment in general. While the majority of middle-market leaders said they thought investment in technology would help increase efficiencies and profit margins, the entrepreneurs revealed they had longer-term goals and placed more value on customer experience when setting technology investment priorities.
A long-term perspective was also reflected in how entrepreneurs say they manage their own time. While all middle-market leaders recognise that they should increase the time they spend on future strategy from a current one day a week to two, nearly a third of the cohort of high-growth entrepreneurs say that a full 80 per cent of their time should be focused on the future, not running current operations.
Access to skilled talent is cited as a top priority for middle-market business leaders. They also see cutting red tape and states’ negotiating better trade agreements as critical to ensuring future business growth.
The survey found that corporate leaders are harnessing the power and creativity of their people to drive innovation within their business, rather than pursuing it through acquiring start-ups or investing in R&D.
“If you have the right talent,” says Kamakshi Sivaramakrishnan, founder and chief executive of Silicon Valley-based Drawbridge, a digital marketing company, “you’ll probably have the right product. For us talent is fundamental and foundational.”
Underscoring these sentiments, over 93 per cent of all the business leaders surveyed see investment in innovation that can free employees’ time to be used more for creativity, or developing strategy, as a way of attracting the talent they need.
The author is global growth markets leader at EY