An Accenture research study of the industrial products sector identifies four attributes that stock-value growth leaders in this industry have.
The study reviewed the financial, operational and value systems of 100 public companies that consistently deliver "above-average return to shareholders (a stock price index of 2.75 versus a 1.5 peer average) and achieve growth and returns in excess of capital costs above the industry median." The stock price index reflects total return to shareholders for the period of March 2000 to March 2005 and specifically focused on the industrial-electric segment and producers with more than $2 billion in annual revenues.
Of these leaders, four "pillars" were repeated within their corporate cultures, according to the Accenture researchers.
- Global Flexibility: Sales and marketing, product development, manufacturing and distribution, parts and service -- basically, all components of the supply chain work in an integrated way that allow companies to be responsive to global market opportunities.
- Innovation and Pricing Power: The companies have "an exceptionally good understanding of their customers' needs" and therefore can command premium pricing. This insight comes from rigorous marketing analytics that bring an in-depth understanding of customers that in turn dictates product portfolio.
- Productivity Plus: A lean culture permeates the companies, the result of which is high productivity.
- People Performance: The high-growth companies emphasize recruitment and retention of employees with needed skills and attitude. This plays out with strictly managed measurement and reward systems. Also, continuous learning is a philosophical priority for them.
According to Accenture, these findings are particularly significant as the industrial products sector begins to experience a modest rebound in the form of improved GDP, increased manufacturing activity and improved U.S. demand for products. Accenture expects "2006 and 2007 will continue to present significant growth opportunities."
"With access to global markets quickly expanding and competition increasing, these findings are particularly timely," says Paul Loftus, managing director for Accenture's North American Industrial Equipment Practice. "For companies striving to move to a higher level of performance and increase their global footprint, they provide a roadmap for how to engineer solutions that take advantage of new economic opportunities."