For most publicly held companies, growth isn’t an option but rather is central to their mission. Indeed, the very reason they sought equity investment in the first place was to fund growth strategies designed to boost shareholder value.
It’s the job of a company’s board to establish growth-oriented priorities, and in the current demanding business environment, two stand out.
In a recent survey of 200 public-company directors by BDO, 61% said their single most important focus over the next year will be on either investing in new or enhanced product or service development, or seeking strategic M&A or partnership transactions. For most boards, other concerns are relatively minor in comparison.
“Directors understand that continued growth is essential for sustaining the business, though it often comes with related costs,” BDO wrote in its survey report. “Similarly, innovation requires investing tradeoffs and almost always comes with risk.”
Today, of course, a vast array of corporate activities is increasingly tied to reliance on advancing technologies, and BDO’s survey pointedly included technology investment as a central feature of R&D innovation.
At the same time, though, a plurality (32%) of survey respondents selected “advancing the use of emerging technology implementation within our business” as their most important priority, not specifically aimed at growth. Next were more traditional finance concerns: managing capital allocation (25%) and optimizing margins (15%).
Relatively few directors placed their highest non-growth priority on addressing the needs of stakeholders. Only 8% said their top focus was increasing stakeholder engagement, while enriching the customer experience (6%) and optimizing culture and workforce management (3%) were even more marginal concerns.
Directors may be looking for their management teams to do a better job engaging shareholders and other key stakeholders, as just 33% of those surveyed rated company executives as highly effective in that area.
Almost three-fourths (74%) of the survey respondents said the company they oversee will increase its investment in emerging technologies over the next year. A similar proportion (73%) plan to do so with R&D investment, and more than half (53%) are looking to boost their focus on M&A.
Only 35% of directors strongly agreed with the statement, “Our company is ahead of our competition in technological implementation.”
Perhaps just as worrying were their views about their company’s executive leadership. Less than half (48%) of those polled strongly agreed with, “Our board receives timely and transparent technology and cybersecurity information from our management team.” And just 38% were enthusiastically on board with, “Our management team has the appropriate skillsets and experience to implement emerging technologies.”
