The 2016 American Express CFO Future-Proofing Survey, Game Plan for Growth: CFOs’ imperative to fuel innovation, has uncovered a great propensity by chief financial officers (CFOs) to prepare strategic Game Plans. Conversely, they are finding it tough to access sufficient capital to invest in innovation projects. This has the potential to stymie growth in the future.
According to the survey results, 77% of mid-sized companies have a Game Plan. Of these businesses, growth is the main priority, with 69% saying this is the business’s focus, 57% concentrating on technological advancements, 50% looking at operational efficiencies and 44% preparing to hire new staff or improve the skills of existing employees.
The good news for businesses that have a long-term Game Plan is that they are more likely to be targeting double-digit growth. Of the 77% of businesses with a long-term game plan, 30% expect double-digit growth, versus 18% with a short-term Game Plan. Businesses that don’t have a Game Plan are on the back foot when it comes to growth: 51% expect no growth at all.
What does having a Game Plan mean?
One business that understands the power of a growth strategy is Beaumont Tiles. CFO Andrew Cromie explains that having a long-term Game Plan gives direction.
“It means it’s clear what’s expected of people and everyone knows where we’re going. There’s no use jumping in a car today and going to Brisbane without a map – you might end up in Perth. It also gives the executive team clear focus,” he says.
It’s a strategy that’s working for Beaumont Tiles. The business has achieved 15%growth over the last two years despite flat economic conditions and it expects to double the size of operations over the next two years.
One reason the business is achieving such stellar results is its commitment to innovation. Says Cromie: “Innovation is critical to any business – you have to keep up with the latest trends. It doesn’t matter where you are in the business, Bob’s door is always open to anyone with a great idea.”
An example of innovation in Beaumont Tiles is the ‘scan and play’ units in its stores. This allows customers to choose a product and see how it would look in a bathroom or bedroom, for example.
Innovation was also a focus of the Game Plan for Growth research. According to the results, 80% of CFOs of mid-sized companies agree that innovation is a priority. But 40% say their organisation has failed to bring a new product or service to market in the past three years. Moreover, 52% say they are not evolving as quickly as they need to.
What’s equally as concerning is a lack of funding for innovation. The survey results indicate 70% of mid-sized businesses intend to spend less than $100,000 on innovation in the next 12 months – for a business with an annual turnover of $50 million, this is the equivalent of 0.2% of this amount. It’s a very small commitment and not enough to really drive an innovation focus in a business. The main reason CFOs’ cited for their inability to invest in innovation was their lack of access to growth capital.
Of the businesses that were innovating, their CFOs indicated it was essential to critically assess the potential for innovative strategies to generate growth for the business. The criteria they used to do this were: costs versus current approaches and alternatives, potential short- and long-term benefits and time and opportunity cost.
Among key highlights reported by those mid-sized businesses surveyed:
- 77% have a Game Plan
- 50% of those without a Game Plan expect no growth
- 80% say innovation is a priority
- 52% of CFOs of mid-sized companies say they are not innovating as quickly as they need to
- 70% expect to spend less than $100,000 this year on innovation