Companies Focus on Incremental Innovations to Fuel Competitiveness, Ernst & Young Reports

Over the last three years, 87 percent of companies have grown their product portfolio through incremental innovations, according to an Ernst & Young report — Competing for Growth Approximately 75 percent of new products developed are intended for consumers in the established markets of the developed world. Respondents, however, envision the new global shifting its focus away from these established markets towards the emerging markets. Seventy percent of respondents indicated that their companies are becoming more global due to the recession.

The diversification of product portfolios is fueled by the necessity to enter into these emerging markets in Asia, Africa, the Middle East and the Americas. The report shows that companies are increasing R&D budgets to support product development intended for these emerging markets due to increased consumer demand. China (44 percent of respondents) and India (47 percent) remain the two most sought after markets by international companies due to their rapidly increasing standards of living and their enormous populations. Other countries of interest include Brazil, Russia, Poland, Mexico and Argentina. U.S. companies in-large prefer China over India. In contrast, European and the advanced economies of Asia-Pacific prefer India.

Respondents (72 percent) also reported dramatic increase in the speed of developing goods and services over the last three years. Respondents point to market volatility as the driving force behind rapid product development. The authors contend that places pressure on the supply chain to accommodate the rapid changes in consumer preferences. These rapid incremental innovations allow countries to enter new emerging markets and tap into the increased consumer demand. Read the report...