CEOs of private companies expect to see continued channel convergence in the coming years, according to the results of PwC's 18th annual Global CEO Survey. More than half (54 percent) of private company CEOs said they think it's likely that organizations will increasingly compete in new sectors, while nearly one-third (31 percent) said they had entered a new industry during the past three years.
Among privately owned businesses, family-run firms are having the most success achieving this diversification, with 38 percent saying they've entered a new industry in the past few years, compared with only one-quarter of private equity and owner-managed firms.
It's a different business model for many who have focused on being the best in their industries for so long. But due to competition from more sources – including online sellers such as Amazon that are trying to sell everything to everyone – it's a risk they may have to take.
“Disrupt or be disrupted? This is the choice private company leaders recognize they must make to thrive in this riskier but potentially more rewarding world," said Henrik Steinbrecher, PwC's network middle manager leader. "Sticking to business as usual, in what continues to be a challenging global economy, will put private companies at a distinct disadvantage. Those CEOs who choose to change are feeling confident about the future."
That said, there is still a role for specialization in niche markets. In fact, focusing on a niche can help boost struggling business, according to an article from the National Federation of Independent Business. For example, Digitron Electronics adapted by pairing up with manufacturers to create a stock of refurbished items, which granted the company access to technical resources, low pricing for parts and a steady flow of work. A segment of the business is dedicated to projector repairs to fill a need in the industry, and now the company markets itself to schools, hospitals and movie studios.
Both tracks – specialization or expansion – can have positive impacts on a business, but distributors must make the decision about which path they want to follow. As one respondent to an MDM survey noted last fall: "You can't be everything to everyone all the time."