When Considering Potential New Products, Services or Ventures, Fast Growth CEOs Stay Close to Their Core Business.

NEW YORK--(BUSINESS WIRE)--June 25, 1998--

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But Less Than Half Use Formal Evaluation Process, Says Coopers & Lybrand

Coopers & Lybrand's "Trendsetter Barometer" interviewed CEOs of 430 product and service companies identified in the media as the fastest growing U.S. businesses over the last five years. The surveyed companies range in size from approximately $1 million to $50 million in revenues/sales. Half of these CEOs say their companies are recognized as high tech firms.

When it comes to developing new products, services or ventures, the message from CEOs of America's fastest growing companies is clear and consistent. More than 8 in 10 say: "Don't stray from your core business." And it works: CEOs who prohibit consideration of non-core opportunities have grown faster and considerably larger than their peers. But despite the success their focuscan bring, less than half of all "Trendsetter" chief executives have gone so far as to put in place a formal or systematic process for evaluating new opportunities, according to Coopers & Lybrand's latest "Trendsetter Barometer," released today.

Vast Majority See Focus as Key

Over 8 in 10 CEOs of America's "Trendsetter" companies (83 percent) have a strong sense of focus when considering opportunities for new products, services or ventures: 38 percent automatically exclude anything outside their core business and an additional 45 percent say it is very important for new opportunities to be core-related. Just 10 percent say this is only somewhat important, and another 7 percent say it is not particularly important.

"The most-focused of these CEOs--those who will simply not entertain any new opportunities outside their core business--are highly successful," says Erik Rule, a Toronto-based partner for Coopers & Lybrand, the international professional services firm. "They are heading companies that are 31 percent larger in revenues than their peers. Collectively, these highly focused CEOs have grown their enterprises 23 percent faster over the past five years, and they expect to grow 28 percent faster over the next 12 months."

Evaluation Process Can Make a Difference

While CEOs of America's fastest growing companies overwhelmingly endorse focus as a management principle, fewer than half (only 46 percent) have installed a formal or systematic approach for evaluating their own new product, service or venture opportunities. Nearly half (49 percent) of high tech firms have such a process, compared to 43 percent of non-tech firms.

"Our findings indicate that companies with a formal evaluation process in place are dramatically outperforming their counterparts that lack a structured approach to exploring new opportunities," says Rule. "Those with a systematic evaluation process have grown larger and are more productive. They have an average of 46 percent more employees and their sales-per-employee are 60 percent higher. Additionally, the haves report a 32 percent revenue growth rate over the past five years, 40 percent faster than the have nots , and anticipate a 29 percent growth rate over the next 12 months, outpacing their have not peers by 26 percent."

CEOs Cite Critical Success Factors

When asked about the steps critical to the success or failure of new products, services and ventures, 57 percent of "Trendsetter" CEOs respond that insightful opportunity assessment and selection is most critical, with strong, ongoing management a close second (56 percent). Other critical success factors include resource allocation (mentioned by 46 percent), with idea generation, sufficient funding and new business planning each cited by 39 to 40 percent.

When exploring a prospective opportunity, two-thirds or more of "Trendsetter" CEOs with a formal evaluation process cite the following criteria as key considerations:

- Relationship of the new opportunity to
  competitive strengths and weaknesses............ 89%

- Synergies with current distribution
  and supply channels............................. 72%

- A written "business case," including
  going-in assumptions, timing and financials
  for each new opportunity........................ 66%

"The first two considerations are early hurdles, while the business case comes later in the decision-chain," says Rule. "The business case documents the key assumptions and specifies questions the company must address before investing further."

Also mentioned by a majority of "Trendsetter" CEOs are detailed pricing studies (cited by 64 percent), consumer or end-user research that screens and assesses new concepts or opportunities (59 percent), due diligence from the company's acquisition group or consultants (57 percent), and analysis of communications from consumers, end-users or resellers (53 percent).

CEOs Find Direct Financial Incentives Useful in Reducing Time-to-Market

Once a new product, service, or venture has been approved, "Trendsetter" companies move quickly to market. Half (50 percent) offer direct financial incentives to their employees to accelerate the launch. Many more high tech growth firms use incentives than do non-tech companies: 58 percent compared to 42 percent.

Most growth company CEOs using incentives (86 percent) view them as effective. But comparatively few (22 percent) see them as extremely effective, while most (64 percent) call them "somewhat" effective. Only 9 percent rated financial incentives as not effective, and the remaining 5 percent were not certain.

"Overall, this means that only two in five of all 'Trendsetter' growth companies--about 43 percent--are effectively using direct financial incentives to accelerate the successful launch of new products, services or business ventures," says Rule.

Coopers & Lybrand's "Trendsetter Barometer" is developed and compiled with assistance from the opinion and economic research firm of Business Science International.

One of the world's leading professional services firms, Coopers & Lybrand L.L.P. provides services for enterprises in a wide range of industries. The firm offers its clients the expertise of more than 19,000 professionals and staff located in 100 U.S. cities and more than 82,000 people in 138 countries worldwide.

If you would like to access previously released "Trendsetter Barometer" studies, visit our archives on our website: http://www.us.coopers.com/eas/trendset

 KEY CONSIDERATIONS USED BY "TRENDSETTER" COMPANIES IN EVALUATING
    THEIR OWN NEW PRODUCT, SERVICE, OR VENTURE OPPORTUNITIES


                                          TYPICALLY          MOST
                                           INCLUDE         VALUABLE

Re-evaluation of competitive strengths &
weaknesses.................................. 89%           10%

Analysis of new opportunities
presented for distribution & supply
channels..................................   72%           10%


A written "business case" including going-in
assumptions, timing & financials
for each new product, new service, or new
venture...................................   66%           16%

Detailed pricing studies.................... 64%            5%


Consumer or end-user research
that screens and assesses new
concepts or opportunities................... 59%           12%


"Due diligence" from own acquisition group or
consultants..................................57%           15%


Analysis of communications from
consumers, end-users or resellers........... 53%            6%

Consumer or end-user test results for
new product, service or venture compared
to competitive offerings.................... 50%            9%

Assessment of intellectual property
of strategic alliance
partners.................................... 43%            6%

"Highest and best use" evaluation of
corporate intellectual property............  42%            3%

Not reported..............................   --             8%

                                                          100%

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 CONTACT: Pete Collins
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