Privately held businesses still believe product innovation boosts profitability

1 April 2009

New research from the annual Grant Thornton International Business Report (IBR) reveals that product innovation is seen as the most successful initiative for boosting profitability by the world's privately held businesses (PHBs). When 7,200 PHBs were asked to identify the initiative that helped profitability most, 20% cited innovation followed by cost cutting (18%) and pricing strategy (13%).

Product innovation was rated highest in Italy (39%), almost double the global average of 20%, followed by mainland China and the Netherlands, both at 32%. Product innovation was rated lowest in Sweden and Thailand (9%). Cutting costs was regarded as the most successful profitability initiative in Taiwan (28%), Spain (26%) and Finland (24%). A further 15% of PHBs globally cited productivity reviews and outsourcing as their key initiatives - both closely related to cost reduction.

 

Frank Ponsioen, partner at Grant Thornton Netherlands explains, "During a downturn innovation budgets are often the first to be cut. However, based on these figures, businesses may want to consider less radical cuts to innovation budgets to safeguard their future competitiveness. Innovation in the current climate is about making processes more efficient. A lot of companies are trying to work smarter as they plan ahead."
Grant Thornton offers the following advice to businesses wishing to innovate their way out of the recession:

• look for new opportunities created by the effects of the economic crisis
• ring fence resources for innovation
• tailor existing products and services to current marketing conditions
• be open to ideas
• carefully manage your risks
• collaborate with customers and suppliers to develop new ideas
• examine innovative processes and business models, as well as products, to improve efficiency.

 

Further information about the most successful profitability initiatives undertaken by PHBs is available in "Business planning: navigating the global downturn", a report based on the findings of this year's IBR survey and available at www.internationalbusinessreport.com.  

The Grant Thornton International Business Report is an annual survey of the views of senior executives in privately held businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 7,200 PHBs in 36 economies providing territory, regional and global trend data on the economic and commercial issues affecting a sector often described as the 'engine' of the world's economy. Data for eight key industry sectors will be available for the first time in 2009. The research is conducted by Experian Business Strategies Ltd. Grant Thornton International donates US$5 to UNICEF for every completed IBR questionnaire, a donation of over US$39,000 in 2008.

To find out more about the Grant Thornton International Business Report, please visit www.internationalbusinessreport.com.