2013 global industrial executive survey: leadership ...€¦ · leadership strategies for...

Stanton ChaSe InsIghts

©2013 Stanton ChaSe InternatIonal sC InsIghts

2013 GLOBAL INDUSTRIAL EXECUTIVE SURVEY:Leadership Strategies for Accelerating Growth



So we decided to do our own research and found out that the answer to all of these questions is YES! We engaged with nearly 500 executives to discover the collective wisdom of industrial sector leadership from around the world.

This White Paper provides some insights from you and for you. The senior business leaders who participated have helped us take a look “behind the wall” of the boardroom. The report contains information about your investment strategies, your way of recruiting new talents and executives and your priorities and directions in building and growing your businesses in today’s hyper-competitive global business environment.

Our sincere thanks and appreciation to everyone who participated in the survey. If you would like to follow up on anything in this report, please visit www.stantonchase.com and/or contact your local Stanton Chase office.

MESSAGE TO INDUSTRIAL LEADERS fROM STANTON ChASE

Stanton Chase consultants work with industrial firms around the world, and we have heard many leaders give their perceptions about industry trends and pressures. We thought it would be useful to try and investigate some of the challenging questions and issues you are talking about.

• Is the pace of business getting faster?• Is it harder than ever to keep pace with the competition?• Are decisions becoming more complex?• Are customers more demanding?• Are executive teams struggling to be capable and equipped for today’s challenges?• Do executives feel the heat in challenging times?

Mickey Matthews Vice Chairman Baltimore/Washington, USA

Bernard Layton Partner Chicago, USA

Dieter Hagmann Partner Zurich, Switzerland

Jan Duniec Partner Warsaw, Poland

Welcome to the Stanton Chase International 1st Annual Global Industrial Executive Survey.



EXECUTIVE SUMMARY 1

1. fINDINGS 5

A. Positive outLook 5

B. toP tHree CHALLenges to growtH 5

C. growtH AnD investMent 6

D. teCHnoLogy 7

e. resHoring 7

F. LeADersHiP AnD tALent 8

2. ANALYSIS 10

A. Core CoMPetenCies suPPort orgAniC growtH 11

B. tHe inDustriAL resHoring oPtion 13

C. gLoBAL LeADersHiP sHortAge 15

3. RECOMMENDATIONS 17

PotentiAL strAtegies For tHe inDustriAL seCtor 17

4. METhODOLOGY 19

ABOUT STANTON ChASE INTERNATIONAL 21

2013 GLOBAL INDUSTRIAL STRATEGY SURVEY:Leadership Strategies for Accelerating Growth

CONTENTS


©2013 Stanton ChaSe InternatIonal sC InsIghts1

EXECUTIVE SUMMARY

In June and July of 2013, Stanton

Chase International undertook an

online survey of executives in the

global industrial sector to understand

trends and issues affecting these

businesses. 451 industrial executives

from around the world participated

and contributed their insights. This

report outlines the findings of the

survey and provides a brief analysis of

emerging issues.

Despite intense global competition, the international industrial sector has a positive outlook and appears to be undergoing a form of resurgence, though leadership challenges are presenting a roadblock. The evidence for this is in four trends.

1. FoCus on orgAniC growtH There is a shift away from growth by acquisition, and a shift towards organic growth driven by investments in core business and related core competencies. Firms are invest-ing in new markets, new products and technology financed by bank and debt financing.

2. strAtegiC investMents in teCHnoLogy Investments in technology are driven by goals in core competency development, customer experience, and quality/efficiency. These include investments in Customer Relationship Management (CRM), research and development, supply chain management and manufacturing robotics and automation.

3. resHoring While offshoring of manufacturing is still going on, a reshoring trend has started. Firms in developed markets see reshoring opportunities especially for sophisticated and technology-intensive products.

4. signiFiCAnt LeADersHiP AnD MAnAgeMent CHALLenges Firms acknowledge a continuing shortage of leadership talent citing deficits in vision and strategic thinking, entrepreneurship and creative thinking, and general management skills. Industrial firms are particularly challenged by the shortage in engineering talent, especially with business skills. There appear to be underlying issues in the education, preparation and development of leaders, and a heightened interest in honesty and integrity.



EXECUTIVE SUMMARY

key FinDings

Positive outLook• 74%ofrespondentsassessedthecurrenteconomicclimate as the same or better than last year

• 64%areoptimisticorveryoptimisticthat2014willbebetterthan2013

toP 3 CHALLenges iMPeDing CorPorAte growtH1.GlobalCompetition

2.ShortageofLeadershipTalent

3.NewProductDevelopment

toP 3 AreAs For CAPitAL DePLoyMent1. NewProductDevelopment

2.NewMarkets

3. Technology

toP 3 AreAs For teCHnoLogy investMents1. CRM

2. ResearchandDevelopment

3. SupplyChainManagement

toP 3 MotivAtors For resHoring1. Quality

2.Cost

3.CustomerResponsiveness

toP 3 LeADersHiP DeFiCits 1.LackofLeadership/Vision/StrategicThinking

2.LackofEntrepreneurshipandCreativeThinking

3. LackofManagementSkills

toP 3 tALent DeFiCits 1.GeneralManagement

2.Engineering(specificallythosepossessingsalesandbusinessacumencapabilities)

3.SalesandMarketing



EXECUTIVE SUMMARY

AnALysis

Core CoMPetenCies suPPort orgAniC growtH

• 57%ofrespondentsratednewproductdevelopmenthighfornewinvestment

• Companiesarefollowinganorganicgrowthinvestmentstrategyversus an acquisition strategy

• Companiesarefocusingoncorecompetenciesaskeytosupporting this organic growth

• Customerexperienceand“bigdata”areemergingprioritieswhichalsodrive organic growth

• Thetoptechnologyinvestmentsarepartofboththecorecompetencyfocusand renewed customer focus

• Technologyinvestmentsinmanufacturingandsupplychainmanagementcanalso be seen as part of a conscious effort to increase their ability to be effective, efficient and quality-focused

tHe inDustriAL resHoring oPtion

• 35%ofrespondentsseeatrendtowardreshoring.Thisresultcouldbeinterpretedas very significant as it implies a real trend and action on the return of manufacturing to home countries

• Theprimaryreasonsgivenforareshoringdecisionarequalityandcost

• Reshoringmayalsobepartofthesamecustomer-focusedstrategythatplacedCRMas the top technology investment. Customer-influenced factors of quality, logistical cost and agile supply chains may be critical drivers for reshoring strategies and decisions

• Theremayalsobespecificeconomicadvantagestoreshoringhighly-engineered technical products

gLoBAL LeADersHiP sHortAge

• Over70%ofrespondentsidentifiedthegloballeadershipshortageasaprimaryroad block to corporate growth

• Honestyandintegrityhaveemergedashighlysoughtqualities

• Engineers,particularlythosewithbusinessskills,continuetobethe highest in-demand function

• Thereisconsensusthatcontinuouslearningandprojectteaminvolvementwillbe used to support leadership development, but these seem like status quo approaches



EXECUTIVE SUMMARY

reCoMMenDAtions

to Be suCCessFuL CoMPAnies sHouLD:

• ImplementexecutivementoringprogramsfocusedonGeneralManagement and Engineering talent

• Implementcorporate-wideleadershiptrainingwithanemphasisonstrategic thinking, execution, delivery, honesty and integrity

• Considerembracingentrepreneurialstrategiesand/orlooktohirefromsmaller companies that have proven track records in this area

Looking At tHe survey As A wHoLe, inDustriAL FirMs neeD to ConsiDer A rAnge oF FACtors Moving ForwArD. suCCessFuL FirMs wiLL:

• “Followthemoney”stayingclosetotheircustomersandexceedingtheir expectations. Deep customer relationships etched in over time will create mutual value and profit

• Hireanddevelopstrong,entrepreneurialandhighintegrityleadership. Develop and mentor their talent

• EvaluateandinvestincorecompetenciessuchasCRMandSupplyChain Management, the most efficient and effective methods of making and delivering products, and building sustainable customer relationships

Noneofthiswillhappenwithoutleadership.Themostsuccessfulcompanieswillexecutebest of breed leadership programs globally that are agile, nimble and responsive and will incent,exciteandmotivatetheirexecutiveswithadefinedcareertrajectorythatisfluidand compelling.



1. fINDINGS

A. POSITIVE OUTLOOk

respondents showed a generally positive outlook for the global industrial sector.

• Forthecurrentyear,74%thoughttheirbusinesswasperformingeitherbetter (36%)orthesame(38%)aslastyear

• Forthefuture,64%wereeitheroptimistic(58%)orveryoptimistic(6%)about economicandbusinessgrowthoverthenext12months

B. TOP ThREE ChALLENGES TO GROWTh

the top three challenges for achieving corporate growth were identified by respondents to be:

1.GlobalCompetition

2.ShortageofLeadershipTalent

3.NewProductDevelopmentPipeline

3.29

3.95

3.96

3.97

4.06

4.27

4.49

2.5 3.0 3.5 4.0 4.5

Primary Challenges Impeding Your Corporate Growth

Global Competition

Shortage of Leadership Talent

New Product Development

Pipeline

Technology Investment and/or

Implementation

Government Regulatory Issues

Investment Capital

Manufacturing Constraints

Primary Challenges impeding your Corporate growth

global Competition• 51%rankedithigh

• 21%gaveitthehighestranking

shortage of Leadership talent• 47%rankedithigh


new Product Development Pipeline• 45%rankedithigh


Average respondent’s numerical ranking



1. fINDINGS

3.51

3.75

3.84

3.85

3.94

4.44

4.67

3.0 3.5 4.0 4.5 5.0

Acquisitions

Talent (training and acquiring)

New Plants or Infrastructure

Sustaining Existing Products

Technology

New Markets

New Product Development

Capital Deployment

C. GROWTh AND INVESTMENT

fINANCING

on the question of how they would finance growth and investments in their business, respondents indicated a clear preference for bank and debt financing.

WhERE TO INVEST: DEPLOYMENT Of CAPITAL

the top three destinations for new capital were identified by respondents as:

REGIONAL GROWTh

the Asia/Pacific region was identified as presenting the highest growth opportunity.

• 47%ofrespondentssaidtheir financing approach would be an evolution from past practice

• 53%saidtherewasnochange in approach

How will industry finance growth?43%BankandDebtFinancing25%RemainPrivate/CurrentEquity23% PrivateEquity16%StrategicSaleofthebusiness

12% PublicOffering7% EmployeeStockOwnership17% NotApplicable

• Asia/Pacific: 70%rankedithigh• North America: 52%rankedithigh• South America: 49%rankedithigh

• Middle East: 49%rankedithigh• Europe: 48%rankedithigh• Africa: 30%rankedithigh

Capital Deployment 1. new Product Development

57%rankedithigh

2. new Markets 51%rankedithigh

3. technology 40%rankedithigh

This is organic growth, rather than growth through mergers and acquisitions.




1. fINDINGS

7

2.51

3.06

3.15

3.63

4.18

4.47

2.0 2.5 3.0 3.5 4.0 4.5 5.0

Leading Motivators For Reshoring Decision

Customer Responsiveness

Quality

Cost

Security

Location

Political Environment

D. TEChNOLOGY

IMPACT Of TEChNOLOGYTechnology investment and implementation was ranked as the fourth challenge to growth.

top four areas for technology investment1.CRM2.ResearchandDevelopment3.SupplyChainManagement4.Manufacturing(robotics,automation)

E. REShORINGMore than a third of respondents see a trend towards reshoring (moving some manufacturing back to home-country locations).

Customer relationship Management• 65%rankeditashighimpact• 54%rankedithighforinvestmentresearch and Development• 61%rankeditashighimpact• 28%gaveitthehighestrankingsupply Chain• 57%rankeditashighimpact• 53%rankedithighforinvestment

Manufacturing (robotics, automation)• 50%rankeditashighimpact• 52%rankedithighforinvestmentinternal Communications• 37%rankeditashighimpact• 21%rankedithighforinvestmentsocial Media: • 29%rankeditashighimpact• 21%rankedithighforinvestment

top three motivators for a reshoring decision

1.Quality 2.Cost3.CustomerResponsivenessSecurity,locationandpoliticsranked4th,5thand6threspectively.

is there a reshoring trend?• Yes:34%• No:50%


Leading Motivators For reshoring Decision



2.89

2.97

3.20

4.01

4.62

4.93

5.38

2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5

Human Resources

IT

Finance

Manufacturing & Operations

Sales & Marketing

Engineering

General Management

Global Talent Shortage: Functional Ranking

1. fINDINGS

8

f. LEADERShIP AND TALENT

Respondents indicate that yes, they are affected by a global talent shortage. The shortage of leadership talent was ranked as the second challenge to growth.

is a global talent shortage affecting your organization?• Yes:60%• No:40%

top three global human capital challenges1. LackofLeadership/Vision/StrategicThinking2. LackofEntrepreneurshipandCreativeThinking3. LackofManagementSkills

Challenges in your global Human Capital

0.24

0.39

0.46

0.55

0.66

0.71

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

Challenges In Your Global Human Capital Lack of

Leadership / Vision / Strategic

Thinking

Lack of Entrepreneurship

and Creative Thinking

Lack of Management

Skills

People Development

Overall Talent

Shortage

Diversity

global talent shortage: Functional ranking

two regions have a slightly smaller talent shortage1. NorthAmerica2. Europe

But the difference is marginal. All other regions are clustered together with a similar level of challenge.

respondents see three functions as facing the greatest talent shortage1. GeneralManagement2. Engineering3. SalesandMarketing





1. fINDINGS

9

valued Attributes of today’s and tomorrow’s Leaders

14.1%

18.4%

25.7%

30.8%

33.5%

37.1%

45.4%

47.1%

47.8%

10.0% 20.0% 30.0% 40.0% 50.0%

Valued Attributes of Today's and Tomorrow's Leaders

Vision/Strategic Thinking

Execution & Delivery

Honesty & Integrity

People Management

Innovative Ideas & Ability

Industry Knowledge

Change Management

Functional Capabilities

Multicultural Sensitivities

top three traits/attributes most highly sought in leadership recruiting1.Vision/StrategicThinking2.ExecutionandDelivery3.HonestyandIntegrity

f. LEADERShIP AND TALENT cont’d

strategies your Company implements to ensure upward Professional Mobility

2.37

2.75

2.86

3.5

3.53

2.0 2.5 3.0 3.5 4.0

Engage with a Mentor

Take Risks

Accept International Assignments

Project Team Involvement

Continuous Learning

Strategies Your Company Implements To Ensure Upward Professional Mobility top two strategies for developing future leaders1.ProjectTeaminvolvement2.ContinuousLearning

there is a trend AwAy from moving expatriates around the world and hiring local senior executives• Yes:59%• No:25%

the key characteristic sought in hiring local executives is local knowledge and contacts. the top three other desired characteristics for hiring local executives are:• Proventrackrecord• Abilitytoworkandcommunicatewithheadquarters• Industryknowledge





2. ANALYSIS

10

Despite intense global competition, the international industrial sector has a positive outlook and appears to be undergoing a form of resurgence, though leadership challenges are presenting a roadblock. The evidence for this is in four trends.

1. FoCus on orgAniC growtH There is a shift away from growth by acquisition, and a shift towards organic growth driven by investments in core business and related core competencies. Firms are investing in new markets, new products and technology financed by bank and debt financing.

2. strAtegiC investMents in teCHnoLogy Investments in technology are driven by goals in core competency development, customer experience, and quality/efficiency. These include investments in CRM, research and development, supply chain management and manufacturing robotics and automation.

3. resHoring While offshoring of manufacturing is still going on, a reshoring trend has started. Firms in developed markets see reshoring opportunities especially for sophisticated and technology-intensive products.

4. signiFiCAnt LeADersHiP AnD MAnAgeMent CHALLenges Firms acknowledge a continuing shortage of leadership talent citing deficits in vision and strategic thinking, entrepreneurship and creative thinking, and general management skills. Industrial firms are particularly challenged by the shortage in engineering talent, especially with business skills. There appear to be underlying issues in the education, preparation and development of leaders, and a heightened interest in honesty and integrity.



2. ANALYSIS

A. CORE COMPETENCIES SUPPORT ORGANIC GROWTh top challenges identified by executives as impeding corporate growth1.GlobalCompetition(51%)2.ShortageofLeadershipTalent(47%)3.EnsuringaRobustNewProductDevelopmentPipeline(45%)

The survey suggests that global companies are trying to address these challenges by focusing on organic growth and related core competencies.

Driven By orgAniC growtHCompanies are following an organic growth investment strategy versus an acquisition strategy.Newproductdevelopment,newmarketsandtechnologywereidentifiedasthetop three areas for capital deployment as executives invest for growth. Acquisition was ranked as the lowest priority investment. Customer relationship management was identified as the top priority for technology investment, which further supports organic growth.

this suggests that going forward, to be successful companies need to:• Beembeddedwiththeircustomers• Understandtheirmarketsbetterthantheircompetitors• Createproductsandofferingsthatarevalueadded

teCHnoLogy investMents As A Core CoMPetenCyThere appears to be a growing commitment to support organic growth through the development of the related core competencies.

the top four technology investments are part of the core competency focus:1. CRM2.ResearchandDevelopment3.SupplyChainManagement4.Manufacturing

These technology priorities highlight the commitment to organic growth through the R&D pipeline to build continuous new product offerings. All of these will contribute to improved competitiveness in this global market, and will stimulate, accelerate and streamline that growth.



A. CORE COMPETENCIES SUPPORT ORGANIC GROWTh cont’d

CustoMer exPerienCe AnD “Big DAtA” Are eMerging PrioritiesCustomer experience also appears to be a priority connected to organic growth. The survey suggests that executives and corporations are focusing and investing to improve their customer’s experience. They recognize the high cost of acquiring additional customers versus keeping their current customer base. CRM investments help organizations make good use of massive amounts of data referred to as “Big Data” that can help in enhanced corporate decision making, customer segmentation, new product development and customer retention. Acquiring and maintaining a satisfied customer base is a critical tool to enhance organic growth and to stay competitive.

QuALity, eFFeCtiveness AnD eFFiCienCyThe relatively high priority of technology investments in manufacturing and supply chain management can be seen as part of a conscious effort to increase their ability to be effective, efficient and quality-focused in today’s increasingly global business environment. These findings highlight the importance organizations see in active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. The focus on manufacturing and robotics may be about leveraging cost-reduction and quality control programs, as well as implementing new product development innovations.

AsiA/PACiFiC region seen As Most AttrACtive For growtHCompanies appear to be investing around the world, but the region viewed as the top growthopportunityisAsiaPacificwithatleasta25%higherrankingthananyotherregion.Howeverthisdoesnotmeanthattheotherregionshavebecomeunattractive.TheMiddleEast,NorthAmerica,SouthAmericaandEuropewerebasicallyallrankedsimilarly. Africa appears to be suffering from the talent shortage concerns combined with unstable government and political environments which creates a higher level of risk.

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2. ANALYSIS



2. ANALYSIS

B. ThE INDUSTRIAL REShORING OPTIONThe reshoring of manufacturing, or the moving of some production back to home country locations, generally the USA or Europe, is a very topical issue and is certainly the subjectofmanyfeasibilitystudiesinitiatedbyCEOsofindustrialcompanies.Thissurveyincluded questions on this strategic topic to improve understanding of this trend.

35% see A resHoring trenDHalfoftheexecutiverespondentsstatethattheyhavenoplansorseenotrendforreshoringmanufacturing.However,itisworthnotingthat35%oftherespondentsdoseea trend toward reshoring. This result could be interpreted as very significant as it implies a real trend and action on the return of manufacturing to home countries.

QuALity AnD Cost Are tHe PriMAry DriversThe primary reasons given for a reshoring decision are quality and cost which are closely alignedtocustomerexperience.Securityandlocationwerenotidentifiedasmajorfactors. Most surprisingly, the local political environment is not seen as a problem and wasrankedasleastsignificantforreshoringdecisions.HoweveritshouldberememberedthatGovernmentRegulatoryIssuesshowedupasthefifth-rankedchallengetocorporategrowth, but not apparently a key driver for reshoring.

ConneCteD to CustoMer-FoCus AnD orgAniC growtHReshoring may be part of the same customer-focused strategy that placed CRM as the top technology investment. Customer-influenced factors of quality, logistical cost and agile supply chains may be critical drivers for reshoring strategies and decisions. This in turn may reflect the focus on organic growth.

resHoring wortH investigAtingThere are several reasons why companies may want to explore this reshoring trend. Reshoring may be an effective way to “follow the money” and be closer to customers. there may also be specific advantages to reshoring highly-engineered technical products particularly for firms in the usA and europe:

• USdollardepreciationhasimproveddomesticwagecompetitiveness while Chinese wage costs are increasing• Reshoringcouldbenefitfromlowerenergycostsduetoarevolutioninnewoil and gas drilling technologies in the USA and Western Europe• Reshoringmightmakeiteasiertomanageandoffermorereliabletransportation and supply chain logistics• Theremaybegreaterbusinesspredictability(i.e.lessrisk)attributedtomorestable political and legal environments



B. ThE INDUSTRIAL REShORING OPTION cont’d

not AFFeCting eMerging MArketsInterestingly, survey findings suggest that reshoring is not having a negative impact on the manufacturing sectors of emerging markets like China or India. In effect this is a form of reshoring within the emerging market. The output of these plants is analogous to the plants being re-energized back in the USA and Europe. They now serve a strong local customer base and sustain their own “close to the customer” strategy.

resHoring is A key strAtegiC issue For inDustriAL seCtorReshoring is a topical and strategic issue for many companies, especially for those in the industrial sector. Such decisions are often core to companies’ future competitiveness, profitability, product quality, customer responsiveness and flexibility. The findings of this survey suggest a real and significant trend for reshoring investigation, decision and action.

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2. ANALYSIS



C. gLoBAL LeADersHiP sHortAge

The world has become increasingly “flat” (Thomas Friedman), with rapid evolution of regional/global processes, a strong requirement for innovation as well as the internet virtualizingbusinessatafastpace.Withinthisenvironment,over70%ofrespondentsidentified the global leadership shortage as a primary road block to corporate growth and goal achievement in this increasingly complex and dynamic business environment.

seeking visionAry AnD strAtegiC tHinkersSurvey respondents indicated a need for strong general management leaders that are visionary and strategic thinkers with an entrepreneurial mind set and the ability to executeanddeliver.60%ofallrespondentsseedeficitsintheirglobalhumancapitalinthese key areas.

Honesty AnD integrity HigHLy sougHtHonestyandintegrityiscominginatasurprisinglyhighranking(thirdofnine)ofdesiredqualifications needed when it comes to selecting future leaders. The trend seems to reflect the strong efforts in corporate environments to “control” this area through an increasingnumberofgovernanceandcontrolprograms.Naturalhonestyandintegrity“by culture and education” have become more important, which adds challenge and complexity to the people selection, assessment and management development process.

engineering is tHe Most in-DeMAnD ProFessionTheshortageofengineersworld-wideiswellknown.Goingdeeperthissurveyrevealeda critical deficit of engineering talent possessing a commercial mind-set and acumen. A historical lack of mobility and international experience seem to aggravate the trend towards this supply/demand imbalance.

Though many top managers in the industrial world today no longer have an engineering background, it would be beneficial for universities and companies to promote broader career development for engineers. Engineers with a dual degree in engineering and economics seem to be performing better when compared with their single degree colleagues.

15

2. ANALYSIS



C. gLoBAL LeADersHiP sHortAge cont’d

AFriCA AnD tHe MiDDLe eAst LArgest LeADersHiP DeFiCitGeographically,AfricaandtheMiddleEastaretheregionswiththelargestgapsinthistype of human competence. When this is combined with government regulatory risk and instability, it contributes to the slow, measured and calculated approach to investment in those regions.

LeADersHiP DeveLoPMent soLutions TheGlobalLeadershipShortageisamajorpotentialroadblockforcorporategrowthanddevelopment in the industrial sector. The question is how to grow and develop future leaders to improve their upward mobility. While there is consensus that continuous learningandprojectteaminvolvementarekeystoleadershipdevelopment,theseseemlike status quo approaches.

The low ranking of mentoring as a strategy for leadership development (fifth of five) was surprising. As there is also a trend away from ex-pat assignments, mentoring would seem to be a low risk – high reward leadership development tool.

FinD entrePreneuriAL tALent in sMALLer CoMPAniesAlthough it runs counter to what global search consultants currently see in large global multinationals, smaller private companies often recruit talent from global multinational corporations because they value the training, best practices and lessons learned from workingwithinlargecorporations.Itmaybejustasbeneficialviceversa-largepublicorganizations should value and recruit the nimble, agile, entrepreneurial skills executives acquire in smaller private companies.

HumanResourceexecutiveswillelevatethemselvesasvalue-addedbusinesspartnersifthey can proactively deploy these strategies and programs.

2. ANALYSIS



3. RECOMMENDATIONS

POTENTIAL STRATEGIES fOR ThE INDUSTRIAL SECTOR Senior executives and boards of directors appear to be spending more time on strategy, and less on mergers and acquisitions. This is implied by the high ranking of organic growth within capital deployment priorities, and the low ranking of mergers and acquisitions. This trend is also consistent with a number of other recent third party surveys which show evidence of larger corporate organizations divesting non-core assets and possibly providing an acquisitional growth opportunity for small to mid-size firms.

overall, the survey suggests a handful of key directions for the industrial sector which are working together:• Anoptimisticbusinessoutlook• Focusonorganicgrowth,ratherthanacquisitions• Focusingoncorecompetenciestosupportorganicgrowth• Customer-focusedorcustomer-drivenstrategiesandinvestmentssuchasCRM• Trendstowardsreshoringandfewerexpatexecutiveassignments

the question is how to achieve success in developing a winning strategy when the findings of this survey also suggest deficits in the leadership of the very areas being targeted for growth. For example: • Organicgrowthhasahighpriority,butadeficithasbeenidentified in general management leadership which has visionary, strategic and entrepreneurial capabilities• Newproductdevelopmentisthetoppriorityforcapitalinvestment,butthereis a deficit in engineering talent with business or commercial acumen

This suggests that leadership and technical talent acquisition and leadership development should be a high priority for senior executives to ensure future corporate relevancy, sustainability and growth. The recommendations for industrial leadership development are relatively obvious.

17



3. RECOMMENDATIONS

to be successful companies should: • ImplementexecutivementoringprogramsfocusedonGeneralManagement and Engineering talent• Implementcorporate-wideleadershiptrainingwithanemphasisonstrategic thinking, execution, delivery, honesty and integrity• Considerembracingentrepreneurialstrategiesand/orlooktohirefromsmaller companies that have proven track records in this area

Looking at the survey as a whole, industrial firms need to consider a range of factors moving forward. successful firms will:• “Followthemoney”stayingclosetotheircustomersandexceedingtheirexpectations. Deep customer relationships etched in over time will create mutual value and profit• Hireanddevelopstrong,entrepreneurialandhighintegrityleadership.Develop and mentor their talent• EvaluateandinvestincorecompetenciessuchasCRMandSupplyChain Management, the most efficient and effective methods of making and delivering products, and building sustainable customer relationships

Noneofthiswillhappenwithoutleadership.Themostsuccessfulcompanieswillexecutebest of breed leadership programs globally that are agile, nimble and responsive and will incent,exciteandmotivatetheirexecutiveswithadefinedcareertrajectorythatisfluidand compelling.

18



4. METhODOLOGY

The data, analysis and insights found

in this white paper are the result of

both personal interviews and a survey

instrument. 451 executives completed

the survey.

roLe50%ExecutiveP&LManagement

seCtorRepresentation Across Industry

survey respondents

Executive P&L Management (CEO, COO,

Division President)

50.2%

Board Directors 11.6%

Finance, 5.8%

Human Resources

10.4%

Sales & Marketing

11.6%

Operations 5.1%

Engineering 3.1%

Technology 2.2%

Aerospace & Defense,

8.3%

Automotive, 13.6%

Chemicals, 9.5%

Electric or Electronic

Equipment and Power Generation

13.3%

Engineering, Construction and Building Materials

23.7%

Industrial Equipment and

Components 21.3%

Mining, 4.1%

Oil & Gas, 7.7%

Pulp, Paper & Packaging,

7.1%

Diversified, 11.5%

19



4. METhODOLOGY

survey respondents

ownersHiP40%PubliclyTraded

Under $100M, 30.3%

$101M - $500M, 24.1%

$501M - $1B, 11.4%

$1B - $5B, 16.9%

$5B+, 17.2%

Publicly Traded, 38.1%

Privately Owned, 52.0%

Private Equity or Venture Backed,

9.9%

size oF FirM33%GreaterThan$1Billion

20



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Stanton Chase is ranked within the

top 10 global retained executive

search firms. With proven expertise

in key sectors of the global economy,

Stanton Chase has 9 international

Specialist Practice Groups that operate

as international teams.

Stanton Chase is owned by its partners

who take individual responsibility

for delivering outstanding quality for

each assignment. Stanton Chase

is a member of the Association of

Executive Search Consultants. for all

information about us, please visit

www.stantonchase.com.

www.stantonchase.com

21

Bernard Layton • Managing Director • [email protected] • 847.722.4180 • www.stantonchase.com

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Consultant in the appropriate office and/or industry Practice group,

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