CBI president Sir Clive Thompson has used his New Year message to warn British companies that they will have to be more innovative than perhaps at any other time in their history in order to survive in a changing economic environment.

Drawing a parallel with ships sailing on calm waters, he said that now is the time to look at what may be bubbling below the surface.

"Firms that expect to benefit from the economic upturn could get caught on the rocks if they fail to rise to the e-commerce challenge," Thompson noted. "This will be a period of structural changes, and firms must adapt to survive in the new UK.com."

He added: "Companies will have to be more creative. They will have to bring in new products and services to achieve growth and retain margins. Innovation will become the industry watchword of the 21st century."

Thompson speaks from the heart. As chief executive of Rentokil Initial, he has presided over mixed fortunes lately. Interim figures reported for the period ending 30 June 1999 showed UK turnover down by 2.3%, though profits climbed by about 5%.

Elliott Chase