Accenture Outlook Journal February 2011

Outlook

The journal of high-performance business 2001, under 1

How to harness
> the power of
accenture social media

High performance. Delivered.

PLUS
Cloud on the horizon: Is
outsourcing obsolete?

Jumping the S-curve: How to S
- sustain long-term performance

Does your company have the
talent to grow?

Outlook

(too pubis by Accent,
201 Accenture
A gs reserve

Esitoran-Cniet
David Cutack

Managing tor
Leta 8 Burton

Senior Editor
gui Kesler

Senior Contbting Ear
Pau tunes

Contrbuting ers
satin Kerr
rig Mindrum

Industry tor
Wendy Cooper

Contrbuting Writers
Lance Eley
Dovid ight

Assistant tor
Caron Shea

Design & Production
Inari In

accentue com Qutiok

‘Tha utente pros
Hope post-consumer et

Chain
Will D. Green

Che Eee Officer
Pie Hatem

Chief Marketing 8
Communications Offer
Roxanne Taylor

For mae infomation sut
Accenture plese vist

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During my 28 years at Accenture, have always been
passionate about helping our clients use innovation
{0 drive gromth and achieve high performance. Soi
ds both a privilege and pleasure tobe CEO at time
‘when o many exciting new things are happening
around the world. believe that novation trans

our journal of high-performance busines. This is
Something {Took forward o, because Outlook helps
Shape Accentures Innovation agenda by showcasing
our best thought leadership and chronicling how
the world's top companies are leveraging new
technologies

Drawing on our latest research and client experience
{his Issue of Outlook isa source of fresh des for
leaders to consider as they seek 1 differentiate them-
Selves in a highly competitive marketplace. The cover
story focuses on a particularly critical Innovation in
<ustomer relationship management-ihe use of social
media and digital marketing to become more relevant

Another article explores new ways to attract and

for every company-while à third piece locks at how
the clou has fundamentally redefined outsourcing
relationship, Innovation isnot limited to the private
Sector, of cours; readers will aso learn how it can
Aramatially transform the delivery of government

At also defines who we are and what we do at Accenture.
Today's word sone of new opportunities, driven by
new Ideas. ook forward to sharing them with you
in future ass

Ru
v

sone of the most important facts economie fein
mul polar world: The complexity ad volatility that
fare permanent features of global markets mean that no

‘organization can succeed on its own. Collaboration in
er words, ls esenial o high performance. sal

theme hat runs thoughout this sue

Take the electronics business Few industries are more
‘competitive o change more quickly. As our industry
professionals demonstrate in one arti, the best
‘lectronics and high-tech companies stay ahead of the
competition by skilfully leveraging alliances with
partners across this industry to drive growth, access
Specialist talent and encourage innovation the are
stars on page 70

Collaboration Is very much an internal phenomenon
aswel, playing a more and more important role within,
‘Companies atthe operational level For example,
harnessng the power o social media~for superior
smarting sae, customer servie, innovation and HR,
Among other business functions demand high-level
cooperation, starting with an unprecedented gr of
collaboration between the chef marketing ocr and
the chief ecology afer. A par of rice beginning
on page 22 explores how social media i funtamenaly
‘eansforming the way busines done

‘Meanwhile, outsourcing is becoming a more collab
orative endeavor a well Despite predictions o ls
imminent demise, outsourcing ha, In fact become

mat important with the advent ofthe cloud model
for delivering busines services. An arte starting
‘on page 42 looks at how outsourcing I playing a Rey
new role aka value-added services aggregator and
Integrator nthe new cloud environment

Collaboration i often the handmatden of innovation.
In a mul polar word, Western managers can karn
from their colleagues In emerging economies who
“develop new and innovative solutions through a process
fone article describes as “workaround innovation”
(page 62.

Collaboration has also become esental to succes in
the publi sector Another article explores a series of
Innovative cllaboratons-from ineragency programs
‘to public-private partneshis-through which over
ments at al levels ar providing bete services at
Tower cost (page 78.

‘As the authors of the article on the electrons industry
note, “Collaborations of al Kinds are pig leading
companies adapt their loba operating modesto the
uncertaimes of the upturn. Alliance partners have
brought them closer o consumers… and] have also
contributed key capabilities that they would otherwise
have to build themselves, fom scratch” Is. valuable
lesson fr organizations everywhere

David Cudaback
Eatr-in-Che, Outlook

On the Edge

What the C-suite should know about analytics

ass or answering such questions
bout the physical world,

Much the same way that an em-
pirialy based scientific method
‘came the basi of or understand
{ng ofthe world around us, anales
sil eventual bring empties
Into business dscourse and dethrone
many of today’s business practices.

‘Mundane decisions
Recent, received memo saying
thal employees at my location.

Kishore S, Swaminathan ‘would be required to beep their

et Sent offices lean, subject to inspection

press very other Fay. wanted an

explanation, so asked Iiher was
any data to show that clean offices

‘case study after case study has ad to higher productivity.
contirmed the value proposition

for analytics across a wide range My question, of course was side
of busines functions, including stpped and was ald that clean

pricing demand prediction, targeted offices woul make a beter inees-
marketing supply hala ptimze- on on ceras Undeterred, lasted
tion, CRM and HR. In my view, tire was any data to sow that
analytics ls something much more clients walking through our aces
‘than a technology with an RO; is buy more of our services or express
‘transformational phenomenon Hirte impresion” any tler
‘hat wil fundamentally change bow way. Not unexpectedly Iwas asked
snes discourse will be conducted by the powers that bef this realy
and decisions made. An analogy Was bate tat I wanted to ight
‘may help In understanding why.

1 chose thisexampletstrate how

‘you drop à eather anda rock average, mundane decisions ae made
atthe same time fom the same in arganizations dal ase 0 well
eight which wil ht the ground intentioned, plausible yet armehalr

first? A one point In history. this dheorles-those tate Arte,
was a question for philosophers to lack any empirical evidence, While

resolve: Aristotle opned thatthe gi special Functions such
rock, because vas heavier would aspricing or customer segmentation
{all fster and hit the ground frst. may be based on sophisticated
‘Aisles armchair wisdom was et models and empiri data my con
‘questioned until the 16h century, tenon that te long-term impact
‘when Gallo, through cleverly” of analytes willbe in instilling
designed experiments, proved him a culture data-driven decision

‘wrong and established an empirical making all vhs fan emprise.

On put more bunt, business
proposals and decisions-big or
Small-wil have to provide satis-
Factory answers to this question:
Do we think this truc or do we
know?” (This particular formule
tions attributed to Gary Loveman,
(CEO of Hare's Entertainment)

A sophisticated and analytically
oriented enterprise ofthe Future
wil behave and operate ifeenty
From today’s enterprise along five
aor dimensions.

igh analytical literacy
Data is double-edged sword. When
propery used e can Fad to sound
And well-informed dechions When
Improperly used, the same data can
lead not only to poor decisions but
10 poor decisions made with igh
‘confidence that, ln tum, could ead
to actions tat could be erroneous
and expensive, Les consider some
Specie examples

When ane has accesso real-time
da, s tempting to make reine
decisions For instance ifyou area
rear and you have rate acess
Lo sales data from cash ester rom
your stores and real-time acess
to go venti your wae,
ou could be tempted to run sales
promotions an the y and manage
our supply chain in adem to
"pert your cae promotions.

However his I unlikly to work
because three types of events-your
decisions the ensuing customer

behavior and suply chain events
operate in diferent timetrames, so
making eciios any fase tha the
STowest-moving event could be use“
less at best and dangerous at worst

On te Eage

‘An analytically literate
organization will have
a firm grasp of its risk
tolerance and guidelines
and models for action
under uncertainty.

ys that they ve you very fre
‘rained visit io your business
process, and you coal be tempted
lo oerpmize he processes, Highly
‘opted processes justine
Inventory Being an example-are
very Fale because circumstances
beyond you control could ars, and
there site om freon

A thin proce what’ known as
“overseeing” or making decisions
vibe noe is needed, So, fr example
our data oul ell you hat project,
As behind schedule, which, In torn,
may lea yout berate the project
manager or tell your stakebolders
that the projec will be delayed
Yet nee ofthese actions may be
necessary ifthe project has contin
gene bu in, i he status update
as diferent frequency than your
sampling frequency of paps the
employes wh are aware ofthe pro
delay vil patin more work Hee
do get the poet back on schedule

Volatility

Businesses thrive on stability and
repeatability. table and repestable
processes justify large scale capita
expenses: hey Jus large-scale
employee traning: and they reduce
ame overhead because processes
“nd decisions donot change and
hence tei atonal does at have
10 be explained repeat.

By contrast, am analytically based
enterpeise ofthe future wi have ©
be designed around volt rather
han rpeatabliy

When you have fine-grained vis-
ity no your processes, customers,
supplies and competitors, ou have
{he ability to make very negra
decisions fc, your decison rules
an capture subes such as stock
‘more eer on Sunday night no
‘ons where the ome football team i

on à winning tea” Such decisions
ar highly context send and ean
change as rp asthe fortunes of
{he football ta,

Volailay-or raid changing
decisions that are contexts and
time-sensitive ea bi chal
lenge for enterprises. Decsions
remo longer easly esplainabe
‘pital investments cannot be
based on mass repeatability bat
must cater to eee volatility.

Integrated awareness
Today enterprises have more
Information than hey can ac upon
casete information sod in
0 many ways: ecologically (ats
In diferent systems that cant be
brought together organizational
(data in diferent governance ws
{hat cannot be brought together or
by ownership side versus ouside
the enterprise). The enterprise of
‘the future wil be or wl be forced
10 be) conscious" in the sense that
‘til know that mus integrate
everything lt has access o.

rated awareness” lts consider
pharmaceuticals, an industry that
has traditionally ied on clinical
trials data asa means of etab-
lishing the efficacy and the ide
effects ofa drug,

A pharmaceuticals company today
an legally and morally aim e.
‘munity from any adverse effet of
drug that was ot revealed during
‘linia ral eher words any
Information that dd at expli
calle as part ofa linia al
protocol But ina world of Bogs and
Social network, where people sare
{is information unpomped and in
pub, twill become otha respon-
"bly and an obligation of pha
maceuicals companies o monitor
rail sour and Integrate the publ

Information with thir own cline!
dat. (For more onthe business
impact of social medi, se page 2)

“I should have knows ether for
regulatry or competitive reasons)
‘nll be the new normal replacing
the“ id not know” oT could nt
ave known” approach to awareness
and information Integration.

The end of analysis-paralysis
An theatre, busines wl ily
‘eran by managers and leaders who
ae o-nonsense empliists they
ont move a finger nt afterall the
‘eleva data has ben gathered and
analyzed. A recipe for organico!
“analysis arly? This noc an
"recon fer Bu though may
seer coterie an mpirical
enterprise with igh analyteal
racy es key 1 al prey to
‘his malady than ody’ eterprie

‘There are thee very distinct ways
‘that organizations can fal ito

the analysis paralysis tap. ne
managerial tendency “over
‘he curve"=a statistical term that
efes the diminishing value of
‘dona data once a pattern or
une. the graphic sens) hasbeen
‘ound. Data collection has price,
nacion has à pic nd an a
«all eat organization wi any
‘derstand the ost o over tng

‘The second cause of analysis para
sis salting for at tat py des
ot exist, whieh eles an ab
to design experiments to generate
the need dt. As mention above,
‘experimentation asa pie and in-
‘tion has pie, s an analytically
erate organization wil be charac
terized bya clear understanding
of data gps and te value of exper
‘mentation o break the login,

‘The third cause of analysis paralysis
{ste fact that most companies

do not know o articulate thee sk
tolerance clearly and are much
more likely to penalize filed
many managers do not act unless
there Is enough data to assure
them of successful outcomes, An
‘analytically trae organization
ill have arm gasp ofits sk
tolerance. With guidelines and
modes for ation under uncertain
wi estore the symmetry bee
tween bow it eas failed action
and inet,

Intuition’s new pulpit
Emplrcióm and analytics sound
death nel for such vaunted
usines tats a nulo, gue el
ile instint ands fot ight?

Wrong.

Scence ls purely empirical and
ispasionate, ut eens ae ot
Schnee is objective and mechanical,
but tals values scientists who
ate creative, Italie am can take
leap ol

Data, by ist, ea be interpreted
in many ways imagine apse or
usines phenomenon that produces
long sequence of data: 1
2, 6,24, 33. Perhaps ls a factorial
Sequence with 33 as nose ra
Sequence where every fourth tem
Is twice multiple ofthe previous
thee Or perhaps every ith terms
fie sum ofthe previous fur,

Al are indeed comet, To prove or
disprove any theory you aed he

next several terms ofthe sequen,

A good semis knows when there
Is enmugh data o warrant a theory,
sen there fn, what new data o

father and how o design a experi
‘mento gather the ght data

Apple's Steve obs is known ex
ity count the vale of surveys

ad focus groups or desiging new
products. How do you explain this
parent anti?

One explanation i hat, much
Ike a erative scene people
ike Jobs recognize when there Is
ot enough data or the right Kind
of data to forma theory. They
recognize that, for completely new
lies of products that wil change
à users experience or behavior
{he only useful data is expert
til dat, not commentary and
Feactlons from those who have
never used the product

nbs and peopl lik him ar akin
Scientists who recognize what type
of data needed o suport a theory
Gin ths cs, whether a product will
succeed) recoge that such data
cannot be gathered through focus
soups one type of experiment)
and boldly design new types of
experiments lease the product
and gather experiential data

shouldbe noted that some prod
ucs=in Apple's ease I was the
Newton-do not succeed and are
terminal. nation, rate aps
amd clever experimentation are not
fact the vale of these ats wl be
even beter understand in the ure
‘enters y analogy to oia
and experimental cents.

“The enterprise ofthe future, based on
ni and analytical decison
‘making, wl Indeed be considerably
different From today enterprise
You may wel ask; Do you think
¡his is true or do you know?”

Touché

Kishore. Swaminathan is based
in Being.

Kssnaminahangascenturecom

|SEUGYUBIVID) ===
Contents

Perspective Features
Longview nom Busnes ain
1 New ideas, 8 Jumping the S-curve: 32 Melding marketing and

new opportunities How to sustain long-term re you ready for
Pen Nant performance the digital revolution?
fy Pal Noes and Tin rene Bi rena Brian We
Fr te ir De To make the jump from one Before the ultimate promise of
2 Growth through market-leading business to the digital and interactive channels
collaboration tet ssl companies can be fled, leaders must
Br avi Cta manage powth acres mie make ure that marketing
from Professionals work arr
th the T department=and
on he Ee geome ass vee ven.
3 What the C-suite should — 14 team you can count on
Know about analytics His cueros
By Kishore S. Swaminathan and David Smith 42 Has the cloud made
Anais a transformations! The best companies surpass outsourcing obsolete?
phenomenon hat wil funda: comprit in ar by acting imp Harts an Gain Mish
rental change how bisinss and ring serious talent The shakeup within the bus-
cou wl condo and people atthe top of thee eee ean maes
decision wil be made Professions, mare complet, na les

resulting ina critical new role

nia for value-added outsourcing.
22 Harnessing the power

‘of social meda "att & Organizan Peformance

By Carine Fito and Raben 52 The talent to grow

Vian By David Smith, Catherine 5
Fare, Diego Sanchez de León and

'ompanles hat actvel

Seinen wih sac mein Ser Got

in their business processes will To drive growth, companies

‘transform the relationships need to embrace a human

‘with customers and crete value capital strategy that more

in unforeseen ways. closely links workforce plan
ing to business objectives
and th organizational culture,

For toa tg nent rom A, ng te Acer te fr
igh Pomar and Acer Technol Labs, pense si wenacentieconfe

meng Mates ‘overeat
62 Why the West 78 Joining forces
needs to learn about By David À Wn, Michael Hey.
workaround innovation Di. Mee ad Joso Berk
By Karen Cennan and Carla Cruz Collaboration isthe key to

effective government in an era
of fiscal auserity-and not just
because I cuts costs

A different approach to

novation pervades emerging
conomics expressed in levels
of ingenuity, resourcefulness
and drive that are harder
nd harder to find at Western
companies.

ens High Tech

70 Connecting for
competitive advantage
By Hans Von Lewis Armen
rans and osha 8 Belin
Smart clectonics and high
tech companies ae forging
and strengthening alliances
and partnerships to capture
new growth opportunites,
fl capability gaps and get
doser to customers.

fact eet tans bone arten

High-Performance Business

Jumping the S-curve

How to sustain
long-term performance

By Paul F. Nunes and Tim Breene

Successful companies often manage growth to the curve of their financial
performance. But that isn’t enough. High performers also manage the
maturing of three other equally important elements of their enterprise to
make the jump from one market-leading business to the next

High-Performance Business

Back in 2003, when Accenture began
ts program of High Performance
Busines esearch, there was a tof
{alk tout good companies becoming
sa. À generation care a similar
‘convertion had focused on the
meaning excelence” In busines.

Yet our ongoing research bolstered
ty Lessons rom global clint work
cross dorens of industries, has
‘ugh us that high performance.
fant just about achieving rate"
or excelence.” concepts that are
far too static Nor Is just about
suring long-term survival by
building a company that will st
High performance about outpe
forming rival again and alo,
even as the basis of competition
fam industry or markt changes.

Try great companies show the
or that hr frst areola op
tras nt an acid. To do this they
Sccomplihed à dificult feat: They
Jumpel what Accenture als the
S-curve of busines performance

When we say Surge, we mean
the pattern of revenue growth in
‘which a successful busines starts
Small with few eager customers,
rows rapidly as demand for the
new offering well and eventually
peaks ad levels off s th marte
matures High performers nt only
manage o succesfully elim
S-curves ascach business perfor
mance curve bait aten they
Jump tthe start ofthe next curve

String of successes
‘The ability wo both climb and jmp
S-cuves is what separates high
performers rom those hat never
nage to translate a ee period
‘oF accomplishment witha single
winning offering int a tring of
Mines success.

Making the jump again and again
Is crucial to sustained business
success and eutperformance of
Industry competitors. Consider
{hat once a company bits a major
stall ints revere grt

Matthew Olson and Derek Van
"ever note in ther book, Stall
Points as ess than 10 percent
‘hance of ever fll recovering
“Those arent good odds, and they
do much to explain why two
third o stalled companies are

later acquired, taken private or
forced into bankruptcy.

There are many reasons offered
For my businesses falto avoid
sta Some companies simply
‘on se the end coming, preferring
{0 view slowing revenue growth

a the result of Ind economy or
an industry slowdown, no a
fefeenut on their own products
for services: aber dont recignize
ow tin tei chances frat stage
recovery and change ely are

fin ths fi to muster the urgency
‘eed to jmp toa new Surv

se icone when we rt in
‘hese pages about the role ofthe chief
strategy ocr, many companies
pe they can pl ofa elavention

The hidden S-curves of high performance
Thee key ape of ines mate an satt dele much faster than

‘he francia perfomance a company

pme
Sore

laten the game by appolminga.CSO commit toa new business model, about why companies fll jump

ra chief imovaton afi. But no Introducing the wrong products their S-curves. The secret. we
matter how ood the executives put. amd relying on the achievement of found. is In understanding the
fmt such potions ar, they usually massive scale asa strategy rin hidden S-curves of performance
are tale weer place ofa sraegy) The focus of We observed that too many com

Such cris has typically been panes invest mast or ll oftheir
Sil companies se he problem om fixing what i eealy broken energes managing to the growth
primarily as one of execution. with a company. But at that pol, curve of thee revenues. Inthe
Observer after factoRen accuse Hs almost always too at process, they fll 0 manage
companies of sticking to close © three much shorter but equal
Ler corer of moving too far Asa result of our esearch, we. important hidden S-curves (ee
from i They falta Fllreto amet a very diferent conclusion chart, opposite)

‘The hidden competition curve

Long before a sucessful business manufacturer an service provers. he shift and create the next bass
hits its even peak the basis of a shifted several mes from pre of competition in her industry
compl on wicht was founded w network coverage othe value even as they explo an existing

expres. Consider cll phones. Com- of Services to design branding and business that has not yt peaked
petition a that industry, for bath applications. High performers see

The hidden capabilities curve

An cating the offerings that will the capabilities curve may not be of capabilities, including new
enable tr to climb the nancial apparent to executive until üme Sls in office services and st
S curve hgh performers invari- to develop new ones has runout. war came in tie. Bu for Pola
ay create new capabilites they Take Polaroid and Xerox two Iconic rol the next round of distinctive
fare sucessful these capabilites companies whose names were once capabilites fale to materialize
become distinctive. But dstine- synonymous with their afferings before the company wat forced
tiveness Meeting, As with the and te distinctive capabilities they 1 Ale for bankruptcy protection
ass of competition, the end of possessed For Xerox the renewal in 2001.

‘The hidden talent curve

White companies are in some

Focused onthe revenue growth

senses always onthe lokout for both headcount and investments S-curve-tbe high performers in
{he Dest talent bey often lose” in talent, amd wil increasingly our stad had typically started
focus om tetaiing in quantity, focus on alent that can best the reinvention process well be-
What we call serious ttent-people execute the existing business fore tele current businesses had
With both the capability and he model. This has the perverse ven begun to slow. In essence,
‘ill to drive business growth, fect of driving away the very they had the foresight and nhere-
‘eople—theentreprencural isk witha to begin to fix what dnt
When the business is succesfully takes and busines bullertypes~ Yet appear tobe broken.
hugging along but has wot yet est abe to hep them reinvent
peaked, exectivs fel that op- the Business. 1, act this should be manage
trations can be leaner-they ve ments real agenda, how do high
moved fr down the learning Asa resalto managing 0 these performers create an organization
Curve by then-and meaner, since hidden curves-and, itmust be that manages to all four curves

they are under pressure o boost. emphasized, in ation to keeping simultaneously?

High-Performance Business

They do so by engaging In three
distinct management practices
eating strategy fn a way that is
“edgecentrie” changing the top
team wel before i appears neces-
sary: and ensuring that they have
‘more talent than secms required
by becoming hothouses of talent
These and other important isis
gave rise o Accenture new book.
Sumping the S-Curve: How to Beet
lhe Growth Cycle, Ge on Top and
Stay There Harvard Business Re-
‘lew Press, 2011) which presents
the latest indings from our engo-
ng High Performance Business
research

We will return to these and
other topes in Future issues of
Outlook a we continue o report
on new insights drawn rom our
Ongoing esearch. In this issue,
we introduce one of thee essen-
Ail busines practices a company
must employ to successfully
‘limb the S-curve of business
performance.

In the folowing arc, we examine
the practice of being “worthy of
serious alent Ris critical.
‘Mactan retain the right alent
forthe right reasons, something
that iat the core ofthe perfor=
mance anatomy we have previously
described as necessary for high
performance.

‘The article makes clear how hah
performers tur the war or alent
‘ons ead. Rather than battle
for high-priced stars they focus
‘on creating a corporat environ.
ment and altre that tract
and retains employees who have
‘oth superior sills and a strong.

desire to thrive ina demanding
‘environment with equally se
<ollcagues

severe downturn has made t
‘venting the business that mere
Survival was an accomplishment

during the past two or re
years and may even continue to
beso inthe nea futur. But such
reasoning is Mane.

Many managers believe that à
recession Is primarily a time for
retrenchment, ble-ightening and
‘redoubled focus on sling But
‘Sconomic slowdowns alo calor
¡rete attenton to innovation

ain Increased preparation to Jump
an S-curve One reason for this
rgncy: Rduce als and increased
discounting tend o Naten the
revenue growth S-curve whieh
‘on limit availabe Funding for

[Another reason: As a downturn
Bottoms out the S-curve does
ot regain ls original shape: ths
companies donot regain ime to
ecoup ther osses. Here ar four
why this sso

Intellectual property continues to lose protection as patents expire

‘The patent office doesn put years
hack on the clack jot because à

company’s sles have tapered off in
ad economy. Such an unfortunate
act of corporate fe can have a dev
stating effect on some businesses.
In pharmaceutical, or example,

patented drug are under continual
Assault fom the relentless tie of
prove generis 2009, the FDA
“approved 112 new gener drugs
aimed a spain the recent ash of
ockbuster patent expration known
Inthe industry asthe patent li

Technologies continue to evolve rapidly

Economie downturns can slow the
Introduction of new technologies
But they dont hold ther Back
{or long Disruptive technologies
panies struggle in Ian esto
eco thelr Investments In older
technologies. Wines the fate of
plasma television

‘The recent downturn has pushed
‘consumers to seek smaller te
sons at lower price points. Ex
pensive large-sreen plasma TVs
Rave hard ine competing with
the improving quality of LCD and
LED televisions, The Intense pice
‘competition atthe lower end and
reduced potential for sales atthe

With the patent lock ticking,
companies must be prepared for
Theil effects of a downturn at
same point during her period
‘of protected rights.

high end, along with other Factors
Me LCDs showing better Ina tore
setting: have caused Vil, once

à leading maker, to exi the plasma
Sector and the former top plasma
taker, loner o ext the television
market altogether

Competitors continue to enter industries
and press advantages

During downturn, the competition and Redbox hich offers DVD
an become even ercer. Cam rentals through Aish for 1 o $2
anis may be able to grow sales pernig gained market share and
‘only by seling market share from enjoyed suging revenues. A varity
competitors and already weakened of new channels for obtaining
since face posible extinction moves drove the final all Ino
with further slips. ln 2010. both the coffin of brick-and-mortar
Hollywood Video and Blockbuster onlets constructed by the titans
filed or bankeupcy, while NetTix ofthe VHS rental

Consumer tastes and preferences continue to change

Novi wears off with time, Sen changes beyond thee conta.
regardes ofthe strength of the Witness the automakers that nro
economy. Therefore, products ed new pickup trucks targeted
Introduced ina downturn often at American construcion workers
{allt capture thei fll potenti, Justa he housing market crashed.
Consumer tastes advance. ad lost
sales can never be reclaimed Bottom line A strategy focused
mainly on retrenchment during.
ven daring the current downturn, tough economic mes strategy for

forexample, consumers accusiomed continued table during the env-
tothe ea fast fashion will ot er The ogi ofthe Scurve demands
mers Inst year styles. ar innovation and preparation fr
‘And innovators have o prepare or heJump regardless of GP rot,

or companies that want wo be high performers, he lessons that result rom
‘hese insights may sound couette But what matters most ong
term performance isnot so much what you d to reach the top tough that
8 certain important-but what you de 1 crossover othe bottom ofthe
‘ext S-curve and begin the climb again. Silay, he secret sucessfully
Jumping the S-curves not about what you do ator near the top ofthe
‘curve, Dut what you do o prepare for the next Jump on the way up.

For further reading
“Te ler on ise pg 82

“Rac te che stg” Oto way 008
“Mars non Oak ue 2008

coro! performance anatomy Ota, October 2004

For ese ad other ates, pete wstsecentarcom/Outlook

About the authors

Pu Nunes isthe excite sete
of research a the centre astute
for gn Performance His wot has
peur replat In Hors Business
eu and in numero other pu
‘ons cali he Mel Stet eel
Met hector of Mae flere:
7 New Roles of Marketing 1 odoys
Consumer Warard Business Scho!
Pres, 2004) In sion, Me Mes
isthe senior contain editor for
‘too. He is based in Boson

poulsnnes@accertrecom

Tim Brenes te senior managing
rector of centre States nates
fd the CEO f Accenture tect,
‘Since ining he company in 1985,
Mc Bene as ed umber of sor
pestis nang Accenture’ chit
Strategy an corporat evelopment
fe ap ie rh of eer
turis Conan and managing
parer of ecru Sei Sees
Mc Beene ssl Bso.

timbreene@acenturecom

‘StudyHub.vip mean
High-Performance Business Il

A team you
can count on

By Paul E Nunes, Tim Breene and David Smith

The best companies surpass competitors in part by attracting serious
talent—people at the top of their professions. And they keep them on board
by ensuring they are part of an enterprise staffed with extraordinary
individuals all striving toward the same ambitious goals.

o

# S

Remember Shockley Semiconductor Laboratory?

High-Performance Business

If you don’t, you're not alone, Truth be told, the lab is
much more famous for what it could have been than for
‘what it was. That's because, back in the mid-1950s, Mountain
View, California-based SSL could boast some of the best
‘minds in the electronics industry. The lab was hardly the
ideal workplace, however, and in 1957, a group of SSLs
top scientists (later dubbed the “Traitorous Eight") would
leave to form Fairchild Semiconductor.

But Fairchild itself would suffer its own share of defections,
losing supremely talented individuals whose names read
like a Silicon Valley hall of fame roster: Bob Noyce and
Gordon Moore, cofounders of Intel; Jerry Sanders, cofounder
and former CEO of Advanced Micro Devices; Charlie Sporck,
former head of National Semiconductor Corp; and Eugene
Kleiner, cofounder of the venture capital firm that would
later become Kleiner Perkins Caufield & Byers.

What happened to SSL and Fairchild? Why do some companies.
lose world-class talent? And perhaps more important, why are
high-performance businesses able to retain such individuals?

‘Through seven years of ongoing research into what separates
high-performance businesses from the rest, we have come
to understand that the most successful companies surpass
‘competitors in part by developing a superior culture of talent
They attract what we call serious talent-and then keep top
performers on board by making it clear that they are part
of a serious enterprise, one that is stocked with committed,
talented individuals all striving toward the same ambitious
goals. In other words, high-performance businesses make
themselves worthy of such serious talent.”

es
cet the aes gs Acer ng pra of High Peoman Busnes earch.

By serious, we ae not talking
about stars with big egos. Weare
talking about people who ae atthe
‘op of thie professions the est
researebers nthe pharmaceuticals
industry, for example as well as
those who are very good at what
they do (such a salespeople who
consistenly land big new accounts
We are also refrring tothe In
Avda for whom work isnot
Just a ob but rather à source of
personal pede

Put another way. employees who
are considered ers talent ave
both superior capability ond the
right ante

We nave found that organiza-
tions are to turn themselves ito
‘magnets for serious talent, they.

must estalla of perpetual
‘hain action in which topic
‘workers atrac otr highly capable
copie Those workers must place
expectations af mer on themselves
{tha are every Mts high a those
they place on recruits. This turns
the focus of the "war for talent”
‘on ts head; shift the emphasis
from enticing “tar performers to
creating a company any employee
Serious about his or her work would
want to bea part of

High performers establish an
environment in which thre Fun-
damental and equally important
quali desired by serious talent
ours The first i copabiliy.
Serious talent want o know that
the team they join has what i
takes to succeed in diffu st

Capability through pervasive competence

Incompetence corrdes an organiza
tins ay o he worthy o Serious
talent neffctal employees who
are alla o Rep tios ar the
token windows in undown uae
eghbathoods which, according to
‘hear, gra a absence a concern
And contre that encourages further
Aline. The presence of inept em-
oye sends. signal to coworkers
Customer, partners and others that
o one cares how they perform and
{hat in any vent no one has the
owe to change thing. High per
formers know that werting work
that does meet hgh standards
destroys the trast and confidence
ofthe best employees.

‘That's one reason companies need
pervasive comptence-emplayees
With the ight ow lege, hls,
“bilis and other characteristics
at every level. Another reason
When an organization Is pushing

Atel tothe imi of what can be
done, seemingly minor lapses can
ave large repercussions. That

ia. la top-performing Business,
the fault oerance before Faire
occurs usually much smaller
To achieve pervasive competence,
companies need to know what
inde of sills and capabilites are
required at each evel of the og
ization. and they ned to enforce
hose standards across the board

Defining competence
High-performance businesses have
their en definition of what com.
etc sand rigorously adhere to
that standard. They define not only
‘what onsite general competence
ut alo the specifi elements hat
are known wo drive busines succes,
Requirements for oe are clear and
‘consistent and people throughout
‘the organization are aware of what,

ations Employees observe this
{hough the perresive competence
of those around ther, The second
lis un Ieihod el suces serious
talent demand to know what they
can expect from others. High pr
formers generate his through a
widespread commitment to mutual
tccountbiy.

“The thied reliability, Serious
talent believe they must be ale

10 count on their cllagues to
othe righ thing. Ts rust arises
In high performers when an implicit
Culture of honor is preset. In
addition, serious talent need to

be working with thes who share
à mindset that won't settle for
harmful compromises and who
aie for continual improvement

{hey need o do w perform thle
Jobs well ACUPS for exampl
truck drivers need to know the
"HO methods” which se out every
thing from the mest efficient way
to carry keys (to avoid fumbling,
forthe) tothe number of sep per
second that would be considered
walking ta bs pace

When corporate as change. dei
nition of competence must change
too tn the eat 200s, Procter &
Gamble e out o encourage more
Innovation I began by conducting
Survey of 2000 former and eurent
{employes to Hey the leadership
behaviors that would best foster
Innovation. Using the resus I
implemented à new performance
alain system hat emphasis
key attribue, including he ability
to generate innovations hy building
callaborative relationships Those
were then used to ases

managers regularly and those who Wat do minimum high standards
fale to show a consistent record of look ike ta high performer?
basines-builing innovation were Consder he approach Best Buy

allowed wbecomeline-group pres took with ts salespeople when
‘dens even Uy ha demonstrated it launched an native o sh
‘outstanding quals in ber areas, roma product-cemered strategy

toa customer-centrc one

Enforcing standards new hres, after an iia

Atlow-andaveragepeforming four-hour clastoom sesion, had
‘companies the so-alle Peter Princi- 0 undergo online training and
ple_in which employees are promo then ake an exam after each

Merle ofincompetence-of oué segment Afr tat ination,
ten seems o Dn efec Notso at ty shadowed a more experienced
high-pertormancebusneses which salespersn unl they were ready
ont fallo the apo trying tot Ay soo. Even then, they com

esp people happy wäh int tes tinued to receive monthly training
ve the company an up the pay. to stay abreast of ne Chaos

With that pposch to many vice and they were response far
Presidents and asocio decors leaning about products outside
Fl ral ices, and many of those their department so that they

Domed are in over their ieads. would be better abe to cross se

them to customer
igh performers actully pefrto

‘Inthe ether direction paying, The sfespeope who showed
employee well into the next tle leadership promise wrent then
range as the person develops but promoted automatkally into mana

Dating tack on the promotion self geral oes. Instead, they had ©
tiber’ o questo tat the role take a four-week training program

requirements have been fully met. witha coach, undergo more job
Within ol, stretch project are shadowing, and work on sal toms
assigned to Bul! and ases campe- 10 solve real busines problem
tence for future les: they are not Tha typeof employee development
assigned as an erly test fora ney doesnt come cheap-Best Buy was
promoted employee. anything, spending the equivalen of about

“employees at high-pefomancecom- 3 percent of ts payell on valning
ans are typcalyoxergueliied for at Uh time, reported more than
thee postions y Industry standards. anyother realer

Predictability through mutual accountability

Nigh performers are known to ability. The purpose ses about
‘operate ike welll machines and holding employees fect othe fire
‘ing o requires mor tan rule, tha ti about geting ta place

regulon and stas requires where employees know that à
“employees who deveron heirprum- comorhers words his or he bond,

ss on ime day and day out. ‘making future actions and results
My predictable. This increased
What high peormens employees aby o count on coworkers to

are a sens of mutual account: deliver gives employes and cams

the confidence they ned to ake
on the more challenging tasks high
performers tend to engage in

Two principles ae crítica! o making
this work, The company must
constantly measure ls progress
against its own stated goals, as
‘well a those of individuals. And
accountability must be a two-way
Stet working ot Just rom employ
{to supervisor but in the otter
‘ection as wel

system of mutual acountabilty Is
‘only as goo as its weakest ink No
{mpage can be exempt rom this
‘lation, and nobody mnt even à
top executive wih eros past
corset iso er rs
be allowed to “retire in place”
Accountability means making god
on promises, or paying a price.

That kindof philosophy à à
llar of high performers like

UPS, a company committed 10
measuring everything to ensure
that management and employees
remain accountable 0 ach her
ss wellasto customers UPS lies
On à variety of metres, such as

3 customer station index that
fakes into acount hw the company
ls doing with respect to package
handling claims processing, bling
aná pricing, And customers are jus
{ne of four majors of emphasis:
{he ater thee ar nant, pop
and internal processes.

AC hah performers. mutual ac
ountabiit is oth ater (between
‘ower and vertical between
Supervisor and employee. Asa
‘es these organizan mae he
evelopment of people an bligation
‘of company leaders~and they
measure these leaders on their
Skill at his ask ln cotas, many
donada performance base
ses make te mia fc

Reliability through a culture of honor

To maimtain order and punish
misconduct, societies typically
the group enact and enforces à
body of res and regulations. But

à culture of aw by Is not
Sufficient in society o in business.
“The primary reason shat nt even
able inaction and enforcement
an be costly and impractical

For companies in particular a
second reason i that serious talent
‘want to know that thei colleagues
tions are not governed by rules
alone, o when an urgent situation
Ariss, hose olleagues wi at out
Of duty. conviction and courage,
not mere compliance. In that sense,
Serious alent look for companies

‘tht ate not only reliable followers
ofthe rates but also reliable in
Sis And that why hiper
‘mance business als te to ey on
nother systema cular honor

Ina culture of honor, when
person violates some generally
ccpte nor, others in ne gro
osraciz or otherwise punish that
individual wily to set an example
Because people are concerned with
mating the reputations an
‘timate. hi bono within the
ltr, they are ess prove to become
‘transgressors and more likely to
‘nish hase who transgrest

People can find loopholes i laws
or otherwise discover ways to
deste a rule or regulation, but

nt on upward blgtons-what
mployes must d fo crosses.
[Atop performers, mentoring, com
Seng ad eaderip development
programs are not just añ ip service:
they ae taken seras Nove Nord
Is, for example, assesses ts manag
ers pay by how wel they develop
and real talented employees,
‘Thanks to that approach, he com
pany boasts toss no more than
4 percent as top talent every yea

ALS, rng ousles fr any
{hing other than entry-level post
tions is generally owned upon,
Specifically rase questions
about the managers involved
ould’ they develop someone
laterally for that poston? UPS
expects its managers edite,
Feglona and senior levels to have
In plac succession plans that they
must Keep updated so thatthe
company always has an accurate
iw of shader pl

they can never ely outsmart ode
honor because i self plc
‘Tats why cultures of honor can
be particularly ete fr main
taining order in an organization
stocked with serios talent, because
{hose types of Individunstná to
be peca concerned about her
professional reutaions (swell as
{he reputations of be groups hey
assoc with

eis important o note that the
objective here ot o create
vigilante justice and boardroom
Intrigue. Rather, cultures of honor
Being abot conideace in distribute
Justice, with pros going fly o
those most responsible fr creating
them; procedural Justice, ensuring
that a system of patronage and

High-Performance Busines I

The best way to establish
a culture of honor is

to have zero tolerance
for violators, no matter
how far up the corporate
ladder they may be.

{ors doce overwhelm effective
processes; and interacional Just,
which requires certain measures
lf rexpect be shown to ll members
fof the organization in their day
to-day dealings.

Going above and beyond

One ofthe best ways to establish
cultor of honors to hire people
Sut height vals the ft pace
“nd then enone tote qualities
ela a process that aes acan-
cea corporate commitment Novo
Nordisk Isa case in pot. "Every
a, site and selection wol bas à
Strong component of individual
Value and alignment wich our
culture Jef rar, Novo vie
resident fuman resources alt
‘Media Marketing & Media. “culate
and values area significant compo
nent of management traning”

To continually renforce a culture
of homo, many Dit performance
usineses rl on Judios story
telling the stuff of corporate re.
AUS, managers Frequently tell
anecdotes aout employees who have
sone above and beyond be cal of
ty ike the drive wo was diver
ng a package on Christmas Eve to
military base in Aberdeen, Mary:
Hand, The address wasn property
filled ov ht instead faving the
package at the ase 0 be owed ater,
the diver made th exe lot o
oct the sold who was grateful
because contained a surprise git
line kets fora Might tr tat
day that woul alow him be howe
for Chrismas. Such stories regulary
‘make the rounds at UPS, ni
{he core values ofthe company.

‘Typically cultures of honor require
gars inition for nen mes
bers: Atthe mun olla ol
Field series provider Schlumberger
gine ied out college must

6 though years of rigor waning
or they become fed engineers
in North and South America They
First ec to complete an intensive
three-year program that includes
«sr work training centers
as well as onthe jb experince at
various sie After that they have
Lo complete a poet that adresses
“al sise need nd only those
‘who pas ha st are be fr
promotions According othe com-
any, 40 percent of te newly ied
engineer dont make I hough
thelr third year

‘Staying true to the code.
Perhaps the Bestway to establish
‘culture of honor sto lead by ex
Ample and to havea zero tolerance
for vols, no mater ow high up
‘he corporate de they might be,
Tis one ofthe most conter
aspects ofa culture of honor, but
{Ws crcial that people eleve the
punishment for violating an honor
‘ede wi be swift and harsh even
{or senor executives Oterwi they
il qui se ath inthe system.

after reading about cultures of
honor you begin to wonder why
your own organizations comment
te honor seems to have slipped,
that a good sign. Writes James
Bowman in his book Honor: A
istry: "Honor cultures always
ter 1 e nostalgic about the past.
Since honors tendency to venerate
the authoritative and traditional
naturally creates a bulla isa
Isfacion with he presen.” In ether
words, people in honor cultures
ten worry that hee Best days are
behind them. That's a god starting
ont for working o improve the
ture in presen

Shared sucess
When companies provide a work-
{ng environment with thse three

«sent quallties—capabllty,
‘predictability and relability-they
Sette stage fr serious talent 10
Shine and for the organization as
bale o tive,

Perhaps the best way to assess
whether your business Is worthy of
Serious talent sto ask yourse his:
Are your employees so god that
‘hey are being recrute heavily by
‘competitors? And when they choose.
to eave, ist because they are

the most talent i the industry
and have ben persuaded by gener
ous enticement? Most important,
ave you managed 1 attract and
etal sufiien talent tht you
an sustain the loss?

At Shockley Semiconductor, the
loss of superior talent was enough
o doom the company. In contrast,
high-performance businesses ike
PepsiCo, PAG and Danaher Corp.
ave become veritable breeding |
rounds forthe future executives
father corporations while mai
taining thelr own extraordinary
level of success Former Danaher
managers, for instance, are now
the CEOs of several other indus
Arial companies, including Belden,
IDEX Corp, and Polaris Industrie.
And ersthile PAG employees
‘who have gone on to run major

For further reading

corporations include Je melt
(General Electric Co, Jim MeNerney,
(GM, Boeing Co) Meg Whitman
(eBay) and Steve Ballmer (Miero-
soft Corp

Here we need to make a crucial
distinction: The nature of your
business ot neatly as Impor-
tant asthe nature of your organ-
zation. By that, we mean that any
‘Company can become a magnet,
Tor serious talent, regardless of
the products it sels. Yes, Apple
attracts some of the best minds

ln its industry ut that’s not
necessary Deas makes ona
buzz worthy product like the
‘hone and iPad, Companies that
sel more mundane lems, such
astaundry detergent and disposable
pers, cam also become powerful
‘magnets for Serius talent PAG Is
one example,

Wha do Apple, PRG and other high
performers have in common? A
en sense of purpose and consta
tv wo be the best at what they
do, as well as an organizational
environment with demonstrated
capa, predictabiliy and sli
ability. These characteristics make
nem worthy, in the eyes of highly
Sid and dedicated individuals,
of serous tale.

“Jumping the -cure Hw to sust long-term perfomance” th us page 8

“The talento gon hi sue page 52

Fr these ad other ris, pee it accentue com Qutioù

About the authors

Poul EF unes e erste Gt
of esearch atthe centre Institute
for igh Perfomance His wor has
appeared regulary in Honored Business
even and in numeros other pu
‘ations cig the Ma Sec umo
Hels ako he coor of Mae ene
7 Mew Rales of Mokeing to Todays
Consumer ara Business Schol
Pres, 2004) In ation, Me Nunes

is ne senior contig editor for
Outlook Hes base in Boston,

pultanes@acntrecon

Tim Beene is tn senior managing
retro cena Strategie tates
and the CEO af Accenture nective.
‘Since ining the companyin 185,
rene as eld umber of senior
postions ining Acer’ chit
Strategy and cop cevlopment
fe ru out of ese
ture Busnes ost ad mans
parer l centre State Sens.
M Bron cin Boston

timbreene@acenturecom

David Sth te manag rector
fe centre Tort &Ognaaton
Performance see ine He has been
à guest lecturer at Warton Business.
‘Schoo and Batson College an isa
frequent speaker a industry convenes
and event, Me Sith who is bas in
Haro, Connect Ps pubis
ars artesa papers, hs com
trated is ewpaits on te buses
impact of human capita strategies to
vacas media and indus publicas,
nd the nator of Mere of pe:
Fevoutioning Tolent Management
Trash Otomo lan Buses
Pres 2000.

nisysmitngarcenurecon

Harnessing the power
of social media

By Caroline Firstbrook and Robert Wollan

The impact of social media is embryonic today but could ultimately surpass
the predictions of the industry's most daring visionaries. Companies that _
actively experiment with embedding a social media mindset and capabilities
in their business processes will transform their relationships with customers

and create value in unforeseen ways.

Masieting

Facebook, Twitter, YouTube: To some executives, these
and other user-generated-content sites resemble little more
than social networking soufflds-Auffy, youth-focused
concoctions with more empty calories than real content.
Known collectively as social media, you may not associate
it with sweeping business change.

Think again,

Social media ia genuine game
changer for business. Companies
that invested early to harness the
Power of social media cai retar
{shih as 200 1, th eve greater
sins predicted tobe on the way.
Mean, tote onthe wrong side
‘ofthis customer driven uprising
have already amd the hard way
hae quickly bands and reputations
‘eam be alor destayed-by this |
Phenomenon

Many companies have recognized
the potential of social meas
à new communications channel
But the rely that its impact
‘wll be fe along the etre length
‘ofthe vale chain, Companies vi
be forced to reexamine outdated
Business practices and creat op-
portunities to leverage these new
able in powerful ways

‘The repercussions wil be fle
throughout the organization,

Marketing

“The snes function most common
ly charged with engaging custom
«es through social meda has been
"he marketing department. However,
the growing prevalence o online
‘communis tht allow consumers to
‘xchange information shout product
‘eserves and to compar pices,
Among competitors, has also meant
{hat marketers have lost control
‘overhow and where thelr products
‘are presented potential customers.

Some of the more sophisticated
‘nln retailers have used his rend
to tbel advantage, employing recom
mention alors, user reviews
and unique customer-generated
Content 1 all trust and increase
«consumers propensity to purchase
Varie of elie players, including.
Amazon.com, Netix and internet
radio site Pandora, are recognized
For having sae near reco
smendato systems that effectively
‘ach customer with the pads
‘movies and musi they love.

‘Soca networking lo provides an
cite channel for nrducing new
oducts and series to customers
hile gatbering raie fein.
Ford Motor Ca bate with ration
yanching ts 2011 Bxprer cos
‘over ve on Facebok, achieving
Higher levels of customer interest
‘han an ulra-expensive SuperBowl
comercial fic ran to early 53
talon for a 30-scond spot In 2010)
forsignfcamly les money.

Even minor bands can bene om
Vial marketing campaigns that
plaie on se ligne o pass
on elvan or eteraining come.
‘ne example from Europe: Tipp-Es
brand of correction Mal. A
hunter shoot bar” the company’s
Interactive “ippexperience” vide,
the hunter the lp applies Tp Ex
to the word shots nthe tile and
then ass viewers 1 type in a apple
Alternative, such as hugs or dones
veh ach change generates a di-

‘erent ending 1 ih vio ving it
an appeal tha ese in mor than
min him the it si wee
after being posted on YouTube,

Other campagns tke advantage of
the immediacy of Social media to
rent eme o urgency regarding
Limited offer. Aline nlud-
{ng Ju and United have bg
ing Titer promot fixed aval
sity o last-minute igh deals
fasts eal suited othe dynamic
environment of sca media. Online
Store and community Woot which
focus on selling oo stu cheap”
‘as built a strong lowing on he
‘asi of sling oneal onl ne em
pe day ata discount

Customer insight

Social media creates opprtunites
{or companies o supplement tad
tonal source of customer insight
sith a eat of information gah-
‘ed by lstening in 10 community

The rising tide

sles such as Facebok, Linkin,
and Titer, a well a customer
forums and product vie serves.
Socal meda monitoring gives com
panies unique access to unfiered
{ede from customers and ata
scale unavalale via other means
sac as focus groups and surveys

Technical challenges abound, how
‘ver sich a the neto understand
ne contest in which comment are
‘eng made ando dsl ey themes
And sentiments fom unstructured
{ext T lp companies tae aivan-
tage ofthis growing dat source,
‘ew players have emerged, offering
technologies and services such

as web crawling, web serai
(orextacting at ram este,
ext mining and sentiment analysis.
Companies that want to experiment
with monitoring the Web can
‘outsource the entire process 10
{third partes, or build the cap
lies internally. However, the
technologies are evolving rapidly,

‘Tre vito sca networking sits andthe time spent on these stes have grown ts sine 2007,

Masieting

Social media has an
increasingly important
role to play in helping
companies identify
and address unmet
customer needs.

so rms need to choose carefully
“and avoid locking themselves into
solution that constrain their
future capabilities

Social media als opens ways 10
‘conduct market research more

‘quickly and cheap than ever
Before, and o engage In ea

time dialogue with a wide range
‘of customers, replicating the
Insights traditionally provided

ftom direct customer feedback or
‘expensive and time-consuming
focus groups. Electonlesretaller
BestBuy. fr instance, engages in
shout 5.000 customer dialogues
per week through online forums,
and has more than 1. milion al
Towers on Facebook, with whom |

it interacs regulary This direc
Interaction an alo help companies
benchmark themselves against the
‘competition and gather valuable
Input on what shoppers like about
them-and what they don.

Sales

‘The once clearcut boundary
Between marketing and sales
continues to blur as online a
‘verisng and links to thir: party
«omparison sie allow companies
to dive trafic o their etal web
sites, As a real, fms can rap
lal convert shoppers into buyers,
and those buyers Into salespeople.

lon that Invited customers
In Singapore and Canada 1 enjoy
‘volume discounts by Joining group
parchases, The ests ofthese ts
have et plans ro out similar
apps on the company's webs in
200. Mobile aps such as Find Star
Buck alo allow customers locate
physical outs quickly. while oth-
‘rs sich as Dunks Donuté Dunkin"
Run make it possible to compile

orders from friends or colleagues
{hat can be picked up by on person
Inthe group.

Customer expectations regarding the
nie purchase experience continue
10 eli as ladingreillers uch
as Amazon com continue to alse
the bar by eustomlzing recom
‘mendations providing itive,
straightforward online navigation
nd mining te mue os
needed to complete a purchase.

Innovation

Social medi has an increasingly
important ot o play i helping.
companies entity and address
‘unmet customer needs, Firm
can engage employees, customers,
suplir and eier third parties
as active parleipats in the In-
‘ovation process expanding the
‘ange of ideas and gathering ral-
tie Feedback on her potent
take-up. For example, Nokia oper
tes an online lab hat allows users
around the world to download beta
{applications and provide feedback
10 ts product deve

This provides an erly oppetanity
to identity potential problems and
lens the developers o customer
Aitferences across geographic mar-
ets that need tobe adresses.

Companies can als tap customers
directly for new product and
Servic Mes. Austrian crystal
“nd jewelry fe Swarovski has
developed a software too! that
customers can use to design and
then create their ov Jewelry By.
stringing together crystal beds.
peal, tones or pendants ordered
from Swarovski Elements. Energy
Brands (alo known as laca), à
US enhanced water manufacture
Introduced a new black-ch
ande Aavred drink developed
and named (Comu y Facebook

users-and awarded 55000 lo the are using socal meda to be more from soca media tes withthe

frand prize winner and each of proactive im secking customer structured Information gathered
the four finalists fr plying key edback and engaging customers through ling and CRM systems
roles in the process to diagnose and resolve problems. can be a daunting challenge, one

{hat requires IT manages to become
From Microsoft Dell and from expert the use a api evolving

ee Best Buy o Comas, companies technology.

problem resolution

are using social media to enable
Social media sal upside, how- customers to get answers directly That's avery diferent task fom
ver and ls potetal o dramatl- from other customers or specially installing ant supporting mature,
ally publicize poor performance trained employees-empowering sable systems. Asa ral, IT most
as been well documented. Blog heimostknowledgeabie customers arm to cope with an unstable and
posts and YouTube rans can atract w serve as an informal ecosystem complex environment, oe in which
Wide readership and ease signi ofansuercete Or innovations

ant damage 10 brand reputations. include cloud monitoring services

Musiian Dave Carol YouTube such as thos offered by RightNow peat within afew months as tae-
video “United Breaks Guitars” re= amd Salesforce.com, which provide fs chan, and where data sol
id more than 94 milion views the ability o tack andrespond continue to grow exponential:

nd secured what nin months’ te Twitterbomne and other online

nes crrspondence via phone, complals customers make.

Human resources

email and fax with customer service
‘ould not-an oe from the lin
10 repair damages to his gut, as

In ie rapie, ale wort

Information technology [aprilia

els Mg vouchers worth $200. The neto neraeinformaton (tes and hr employees ned
froma wide range ofimmature and concrete guidance rearing how
[At the same tine, one ofthe lange ap evlvng sources res new and when to ract-and when not
st opportunities 1 ap the poten- challenges fo often poory prepared o. At the extreme, companies could
tal of social media sin customer FT department For example com discover overzealous employees
Service Innovative companies Biolngunstuctured customer data. revealing the organizations most

Overnight sensation

Te mt of option asc mesa has een restating ook 38 year for
‘aso Rave SD milion srs bt tok Facebok ss han fr pas

3
z
a
$
s

Masieting

closely he secre in online forums
Concern about the potential for
Industrial espionage ne reason
that one European carmaker
locking employee aces 1 soci
‘medi ke Facebook and Xing.

Organizations thus need new
polices 1 govern the use of socal
‘moda tha outline what employees
an and cat sy on publ websites,
nd her authority to respon
‘tstomer comments and queries,
he while ensuring tha dat
Privacy laws are upheld Employ-
rs liso wil be competed 1
recalbrate their own responses to
the online musings of employees
In the United States, for example,
the National Labor Relations
Board has accused an emergency
medical response company of
¡legally terminating a medical
technician for critical comments
she made on Facebook concerning
supervisor

Social media also offers new
avenues for recruiting, allowing
companies o spread a much wider
ct and 0 differentiate theme
Selves o younger generations
One company seeking a marketing
director with a strong Background
in social media used Twitter
dent and ultimately hie the
‘eal cand

Driving cultural change
Integrating social media wil compe
companies to make dramat cultural
‘changes, shifts ha will imately
became ese for any organiza
Lion hoping to thrive inthis new
Interactive environment

Companies ned to adopt new
tudes and behaviors, and to
learn many ofthe Lans of |

the past 20 years. Take customer
service interactions In purslt of
ficiency, companies have made

‘hem increasingly structured
and sripted, allowing relatively
Tow-skiled ow-cost personnel to
perform these roles. Agents follow
Strict escalation rule, andthe
resolution of problems can take
days, weeks o even months

Wie was pas acceptable in
wor where customer support mas
‘the fin sand only paco a
help. today’ customers wi sad
bypass thecal systems, connect
with one another and take their
problems public in a Mash. Tis high
cd envionment ary requires
much faster, more exible response
from companies hat wat to voi
disaster Southwest Airlines Co.
hongo ground ay socal media
problems before they ai alude,
Figorously monitor Is Twitter
and Facebok page, enabling the
‘company to respond promptly to
customer complaints. With more
than milion Tite ans and lose
tothe same numberof Facebook
followers he company atively
sc social med to Interact with
‘customers, drive sales and build
brand loyalty

Furthermore companies no lon-
ger havea monopoly on Informa»
ton, Customers are much beter
Informed than In the past=a0d in
many cases beter informed than
‘even companies and thelr agents
{Conversations and situations that
once took place in privat, with the
‘company fn full control finer
tation, can now take place in the
public ye, with highly damaging
consequences ifthe company gets
At wrong. One passenger, rapped
aboard a grounded aline at John
F Kennedy International Alp
decided o record the saga of his
Aight rom London to New York,
which ok 16 hours rather han
‘ight, and post ton Yue,
After viewing the excruciating

documentary the company’s CEO
personally called the passenger
16 apologize, and then refunded
very passengers money forthe
Aight and gave cach $100 off their

Social media provides the infor-
‘mation companies can use to seg
‘ment customer groups more finely
‘than inthe past long with the

st tailor product, services
And communication campaign to
Salt the needs and expectations of
Individual segments. This spells
the end for standard responses
and one-siz- tal oferinge,
Customers increasingly demand.
tobe treated as individuals-and
WN give their business to supiera
that provide eter unique experi
ences or superior vale.

To leverage socal media t its
fullest, organizations need to
‘earl Social media rentes the
‘opportunity for much greater col
Taboration between departments,
engendering more experimenta-
tion faster decision making and
more precisely tuned responses.

Some years ago, telecom slant
IT asked employees to begin
sing a variety of social media
applications such a social net
rks. blogs, praectfocused wikis
nd podcast collaborate beter
cross diferent time zones and
locations. Today, he organization
routinely shares knowledge via
BT's Blog Central, or example,
and provides tol hat enable
employees to search al ofthe
Intranet’ content from one place
Asa results people have boosted
‘heir innovation productivity.
developing products and getting
‘hem to market aser. The company

Pipeline to collaboration: An energy industry perspective

By James Arnot Cag Heer and Bian À Miler

Most ofthe news aout business ss for nine clara
has been about consumer praduts and Series companies
(Ge stor But an wis, Dos and social near play a
Sprint oe ina ea industry he ol and gas?

Tre pote test lance seems enormous ite ay goal
industry. a as sde byte need to unite fang
Works, arc the et set, ate partners aros
cruise ron 10 robles ina ne

To ete understand his su, Accenture and Microsoft
iy under two-part sta on the se o colatrain
too in theo and gas industry. Te bal study which
overs the views of engine, encens executives and
project managers from a ange of companies, attempt to
Qua the inst perceptions regarding he business
‘ale of sei meda and the raies of i and gs pots
Sion o se ot over and geoyaphcaly Te reser
‘eva an Industry that ray recognizes the bans ale
of collaboration technologies ar s sl along eional Ines
resurgir.

Mes quarts respondents see te business vale
of coabaratig via social mei, and almost 40 percent oy
ls sc has improves prductity y 10 percent 025 percent.
‘st ont Pal inet at sail mea ol fae eel
them to reduce rave expenses ape fom 1 percent
1080 percent, we uty 5 percent asser the tel
es rete wor ex.

Vide clboraton plays a itera par in the ly work
Ives many ol and gas instr professionals, corporate
‘endorsement of colaboratve ecologies is Is than
Enthusiast with just over 10 percent of ai mei dope
tin bing ven byte execute suite, Te main concern
Behind ths estay is serutyoneary 4 percent of tase
Surveyed were porrensie about the aby to contr r
secure collaborative environments, eventhough nea 75
percent aeay had seu pots in place

= © ©.

Fespondent Hom the Asia Pac elon lead theaters
ya wie margin in sing social meda 1 do business
When it comes o instant messaging, vieoeonerencng,
sci networking ites, mobile phone text messaging, io
‘sharing and Woging Ada Pace prfesna sometimes
suassed ote ren y 101. In fat 37 percent of Asa
Pc respondents ny ail mei very asl or
work euer.

Nearly 70 percent of respondents, including many fronting
work groups and ol and as asset management ms view
the use ofthese tos as an effective may to boost mark
perfomance In fact, most DO percent of respondents
Spend up 1 four hours of er word colaberaing wie
tore tan 20 percent indicate hey abord mare ths
‘ear than a. The ty shows that colaboran is akeady
An integral par ofa land gs rtessonats day wer
‘erarement and wine in importance ging oma

The survey shows that social meda tools enable ol and

98 players to work smart and more effectively aos

Companies and continent aie. Survey respondents value

them because af he abi a pro produit and ware

performance compare wit more traditional elaboration

mets. nether wore, social media gives wrkrs the
wok the way they want to work.

fey

Masieting

Players in a number of
information-sensitive
dustries may decide
that that they need to
restrict their particip
tion in social media.

rim om pg

claims hat every £1 spends on
das intranet provides a €20 return

Wide opportunities for expeimen-
ttl and collaboration abound,
Fiskaverse cultures wil benef

far less, as wi firms that engage
in lengthy and bureaucratic dec
sion making or that have overly
Siled organization structure.

‘The newness of many ofthe social
media technologie and the speed
with which fresh ones are emerging
Will require a highly ale response
from companies that interact,

with them

‘The I function in particular must
alter how it interacts with other
parts o the organizaron and adapt
lis working style o Incorporate a
higher degre of experimentation
and iteration instead of egy
dherng tightly controlled build
And lease processes.

Ultimate, players in a number of
information sensitive industries
may decide hat ty ned to esti
{hee participation in sacl medi
Already. a majority ofthe blue
hip firms on Germany's DAX.
Financial index have Banned the
voriplace use of Facebook and
Twitter with many companies
from other regions undoubtedly
ready o falo si

Broader each, gener connectivity
and the emergence of special
Interest communities with ever
‘ore powerful online viral word
‘of month wll alow customers to
‘quickly and easily nd products
that meet their neds, As a result
genuine successful innovations
wil rapidly find the customers
who value them the most

Companies can use socia! media
10 ap into the power and wisdom
‘of virtual crows, enlisting them
In support of other users and
‘empowering employees to

Agents for he company. Doing
So can generate a huge customer
Service multiplier effec, allowing
‘organization o more rapidly
identity, diagnose and resolve
problems while simultaneously
elvering exceptional value.

Netix, the aline movie purveyor
proving ts im recommendation
flgrithm tothe onlin re
offering a prize of St milion to
“anyone who cou Boost the systems
even y at east 10 percent
In true social meda fasion he
winning entry nmounced in 2008)
‘racked the problem through crowds
Sourcng-the unorganized, for.
al lning together oa variety of
“diferent teams, none of which bad
{the whole answer alone bat came up
with by working other

‘The impact of social media on busines remains embr yoni today, but

A could aime

pas the musings ofthe Industry most daring

visionaries, Despite such uncertainty. companies can safely make several
Informed bet. First the impact wil be bigger. nt smaller than that
currently anicipaed, Second, companies that actively experiment with
‘mbedding à social media mindst and capabilities in thet business
processes wil transform thee relationships with customers and create
‘alu ln unforeseen ways. And thd, organizations suck In wait-andsce
‘mode wil face brun competitive challenges when they do finally temp

to cach up

About the authors

Caroline Fstrok i the managing retro Acentur Strategy in Europe,
‘he Mite at Ai and Lati Ama Ms Fst hs euere expen in
MBA strategy ad re vation mere notation posting fr ratito
and nen mare ety strategies aco a wise range ins nation ther
consulting experience she pent five yeas as an entrepreneur set up and later
sell Erre, an Intemet retailer of crop inputs 1 farmers and partnering
with scenes company Syngenta to explore biotech venturing opportunites.
Ms stan based m London

carlin fintronk@acceturecom

Boer Wolan he tbl managing rer ofthe Acenture Customer Felt
Management sevice ne. Wit mor han 20 years of experience, heads global
team ol pectin tomen mating ae eve and customer pros;
vanced segmentation ga ansfomaton oc CRM; multichannel customer
contact an enterprise sence die ars he 9 nds Accenture ems
(Job. Hei seg in Mneapas, Mane

reberewalan@scenurecon
James Arotis te gba lea forthe centre alert OrpaiztinPeomarce
Resources group Now ass in Perth, usta. Mi At previ headed centre
Energy in Spin, Portugal and South Ain.

Jamesarot@accenurecom

Base in Houston Tras Clg Hier he Net Amer ed ore cent Tent
8 OrgarizatonPerormancefEery grup. Me as more tran 20 var experince
working wi i and as cents on change programs.

rig ser@accentrecom

ian A. Miler is senior executive In Acenture Energy in North Amis,
response fr the group's technology growth platform and its Aranadeallance.

ic Miers bass in Houston Teas.

bana mier@acenturecom

For further reading

The Socio Medio Management
Handbook ver bing You Need o
Know Get Soa Medio Viking
in Your Business, by Rober Welln
and ick Sith (Wey 207)

“Meling marketing a I: Are ou
ready for the digital revolution?”
tissue, page 32

018 6asColatraton Survey 20107

Mero and centre 2010

‘The ancient Greeks had a word for it: kairos-the supreme
moment, the right time.

Mareëng

Right now, for many chief marketing officers, that moment
keyed to digitally bred real-time customer expectations-is
slipping through their fingers. Marketing former lock on
branding, messaging and positioning has been weakened by
the increasing influence of peer-to-peer, crowdsourced and
affınity-based interactions.

‘Tech-savvy and endowed with a kind of digital omnipotence
regarding product and brand comparisons and deals, today’s
customers have vastly different expectations than they did
Just a decade ago. Yet many marketers fail to grasp that they
need to respond to the profound changes ubiquitous connec-
tivity has triggered among consumers

‘The emergence of massive online communities, social media,
mobile marketing and interactive advertising has changed the
ways customers want to deal with companies and, in turn,
how firms can respond to customer needs. These digital chan-
nels and capabilites mean organizations can reach customers
‘now~in real time, all the time, anytime. Just as the inventions
of the telegraph and telephone effectively shrank distance, the
digita revolution is compressing reaction time itself, forcing
companies to step outside long-established comfort zones.

accentue com QUO

‘The ultimate promise of dial This artile will examine the
and interactive channel sper~ challenges "real-time marketing”
Sonalization: bringing timely and resents and explore ways companies
elevan offerings and experiences Can leap ahead ofthe competitors
to customers wherever they ae, at in the use of digital, interactive

‘that moment-hars, you will” customer channels that cam create

when intrest and opportunity deeper and more profitable long.
translate into a sale term relationships

But many companies lack the Te ight dita, the right me
technologies, analytics capabili- sounds fin srightorward
ties, leadership and organización. deliver personalizad relevant ae
structures to capitalize on this timely offers and information to
sis hil, A recent global ctomersoinlence thi loyalty
research study, conducted by and buying patterns. But without
the CMO Council and Accenture the right data atthe rh tine,
Interactive, of more than 600 this kindof real-time marketing
senior marketing and informa- remains pipe dream,

tion technology executives found

that just 1 percent felt very Data inthis eas includes contextual
prepared o exploit digital mar- information about the customer
keting channel. ‘ack ground location, interest,

Talking past each other?

In recent cet Interactive goal research sc, CMO sid he hie estado implemento
‘igi soluto I rt departments dan tac matting 6a pry, According to COs homes,
‘te biggest ote st gl solutions ar complex and fie te neg.

rong set ache wet "=
ice et ang 3

ony forte nen

Sn neg

Mareëng

relevant communities ands forth functional silos anymore, Compa
{hat enables companies toast the nes need a unified IT backbone
customer experience in realtime. amd infrastructure that ink data
Companies need to collet data, house in the far reaches ofthe
integrat hat information using organization often in diferent
realtime analytics 0 synthesize forms, as wel as information held
Findings, and then use the Knowl- outside the company.
edge generate o support ongoing
relationships and more personalized Furthermore, leaders need o pur
products and services sue technology-based solutions
sometimes across partnering
ite acess to the most relevant crunch data beter and faster as
customer data wins, el as predictive analytics that
make I possible to personalize the
Becoming diligent data mineris customer experience ln as close o
one thing: making sure company real times possible
access wo insightful customer in- One online powerhouse that already
Formation quite another Inor- plays a leading role when comes
mation cant remain packed away 10 enifying customer interests
Indiferen organizational and and actively generating product

Slow to commit

(0s an CMOS indicate hat companies have Been ati slow to atopt interactive
tal marketing sei.

recommendations recently raised
ts game noticeably. The company’s
technological partnership with a
Sie fr customers 1 ink thei ac
Counts at both portals. AS à result
‘he onlin taller has improved ts
ly to suggest products by also
{aking io acount the nerss and
Activities customers ist pally on
{hei social media pages

Focused leadership
Ait glance, the bigest challenge
in meeting the needs of realtime
stoners appears be echnlol-
SI But strong purpose! leader»
fat the Accenture Ineracive.CMO
Council resarch suggests that in the
rca are of integrting marketing
“ná IT efforts, much remains be
one se chart, page 39. Ufo
‘ately, many companies al short
in thee attempts to meld marketing
and technology in this manner,
eran leaders alo ensure hat
‘marketing professionals work

ace with she IF department (and
Vie versa] to make the needed
changes happen

‘The global study found that while
some marketing organizations and IT
‘departments are moving inthe right
“live, most ar falling behind
(see cart. oppose. The problem?
Digital marketing practices and
techno base customer anaes
solutions are simply changing too
api for companies o keep up
Hacking the required vision and
Leadership. the majority ends up
taking aby steps toward erating
an trac ad truly gl mar
Ati function: by ih time each
step has ben completed, suo ae

‘These organizations risk losing
out wo more nmble and digital
‘confident online competitors that
Are by say executives who,

mach ike the Native Ameri
horseman an envious American
general once observed, seem bors
to ride this backing bronco.

To catch up, leaders have o make
ew investments nthe tale, eh
logy and process need to ore
a new ea of cooperation between
marketing apd and make this
transormation an organizational
‘mandate. This new, aligned strategy
ust deny the investments
teed for bisneswide growth
and optimized customer experience

Filing the gaps
‘clonal tacks companies face
en tempting 0 use diga chan
tive capabilites effectively se char,
page For example sending often
Fals Rep up with needs or worse
feo the wrong areas. Asa rest
the bel of everaging deal
(anni, thy often mae ite in
the way of cordate Investment.

One company’s experience perhaps
Ie proceeded actively, financing
one-off technology projects and
Implementing programs inremen
tally. But these moves actually
made the problem worse by creating
more complexity without a corre
Sponding increase in tanspareey
Such unceordinated efforts make
At arder to put together an te
rated, holis solution to drive
relevant and real-time consumer

Companies also face an expertise
sap. Most dont have the talent
Ade problem. lan: they need
fewer people with olted IT and
marketing ss and more generat
business managers who really

While executives may
loudly proclaim the
benefits of leveraging
digital channels, they
often make little in
the way of coordinated
investments.

Mareëng

Leaders need to create
new organizational
structures that are
nimble and responsive
to an environment
packed with uncertainty.

understand business recommen:
‘ations andthe optimization of
‘customer relationships.

Aigally empowered marketing
are instantly recognizable. They
cle personalized and relevant
‘experiences to customers though
the channels and im formats that
onsames demand. They work hard
{ons and brand experiences across
bath digital and aline channels,
and ave the capacity to rack and
respond quickly customer behavior

Real-time marketers focus on
becoming more data-deven, and
‘on creating a more measurable
And transparent marketing depart
men, one where managers base
Strategies, campalgns and budgets
‘on verifiable Insights into markets
develop systems and process Inv
bed withthe agil and exit
to respond to changing customer
preferences, usines conditions

Pushing the envelope
Is pushing the real-time marketing
‘envelope witha Titer based service
that allows ito qulely tap nto
the experi afitsemployes Asa
rel the oranizatos own eis
‘customer questions rapidly, resolve
‘service sus and troubleshoot
robles, alin rea time, whenever
‘some concerns arse. The serve
provides a significant competitive
vantage one that ete pos
tant elemen of marketing ste

One clea ifferenee between
succesful real mers and other
Player can be seem in the manage

ment team’s knowledge and under
Standing of online technologies

A generation gap of sorts separates
‘hove companies hat get the pom
ise of digital. interactive channels
in rastorming how they conduct,
usines with customers and those
that dont AS a result. eventhough
Increasing numbers of people

now live and work In a always
connected way. many companies
{Continue to teat the phenomenon
8 fad or minor iste

Fist steps lessons learned
Asa cit ist step, companies
‘need to acknowledge and get
{eel forthe size and bef ofthis
transformation. rs big, compar
able in potential scale and scope
Lo other major market disruptions,
ke television or the automobile
Companies alo need to map aut
deal change pah-one that
Incas some imite, shorter
Several yeas ito the ature. And
they should actor some expe
‘mentation nto this mbx—pursulng
small. manageable chunks of digital
sabi which can enable them
to measure busines returs before
‘aking larger investments

While no hard-and-ast als exist
for sucessfully navigating the
dial wort, six experience-based
suggestions can provide insights.

‘Nurture an appreciation
for ambiguity

Dig developments rar proc
im a straight line. Instead, vinning
products and applications emerge
{rom a combination of vision uk,
‘fot. In such an environment,
doggedly adhering 1 a traditional
business strategy wil vietally
ensure that company gets conti
ly bind.

Instead, leaders nes to create new
‘xganizational structures that are
nimble ad responsive an en
One leading consumer products
‘company is moving tomará an “open
marketing mode y shrinking
lis core marketing team, whose
member then Ida network of
Specialized external partners. This
vay. the company alvays has imme
iat acces to the latest thinking
and newest approaches regarding
real-time digital marketing.

Put digital decisions on
the board's agenda

As the Accenture nec CMD
Council study shows. many compa:
es continu 4 fal short when i
comes 1 capturing dial promise

Underfunded

ventre comOuroot

For instance, one prominent com
pany simply outsourced te ste to
à couple of vendor employees, with
fact the change required represents
à Fundamental ranformaten In
the way uses don, mandating
nothing ess than a CEO-evel
‘endorsement of and engagement
in. both the strategy guiding the
“change ahead apd its bust exec
Yin. Anything les wil key pur
à series of one-off efforts hat
Simply increase organizational
complex and Inefheieney.

Rethink investment approaches
Moving toward now marketing
requires companies o maintain a
delicate balance a risk, innovation
And earning. Although going

‘ine Is and COS were ate why tirant were nt prepared to tate abantage
‘of he opportunities pride y digita mart bth gos sts suit unig” 8

mos imponan factor

sonne e
State Be
ee. A «
a [BDD »

DD -

Mareëng

ital will involve significan
technology Investments, the
return-om investment eye will
Standard technology ralout Ifa
“plat” payback curve ls gauged
annually. a digital RO] could take
five yeas or longer, and may not
produce returns at al.

Given the artos state ofthe econ
omy this ambiguous, long cr
investment approach wil ely
ae considerable organizational
pan. But seg the wrong expec-
{ations wi be even more dtrimen
{alto moving forward asthe log
{he potenilypotractl return
timeline, companies shoul chasse
restes turns and take them on
In leas pecs,

One high-tech frm has earned
reputación for Mentifying and
Capitalizing on innovative business
‘leas trom everywhere, and one
way the company stays on Inno-
‘ations cating edge involves its
submited by employees to find the
Liter concepts the company neds,
and then helps solved employ
es develo the business plans in
Support ofeach ide’ feasibility.
eas generated bythe process have
already led to the startup of mate

‘Abandon best-of-breed systems.
and focus on flexible platforms

The gta revolution could
ultimately deliver rue sement
pod on that promise, however,
Companies needa united data
backbone one capable of delivering
the highly relevant data hat gen
sate valuable customer insights

In turn. this formation enables
marketers to tailor coment o
individual customers,

However, because many companies
‘operate on a hadgepodge of es
‘ot eed systems, most ck an
Integrated technical infrastructure,
Today, marketing and IT can no
longer implement solutions that
dress only the needs o tel re
Spective funcions. Moving forward
Bailly requires leaders to develop

a unified, companywlde vision of
the en state require 10 make now
marketing a realy

Dont just mine customer
data—engincer it

Datamining digs up lts of facts
Dut fe eal isis. Teams instal
nee 10 “engineer information.
rain insights and understanding
test relevant customer experience
An ra tine

For instance, an auto insurance
company ofes a free iPhone GPS-
to record information sich a an
them take and send damage phos
and makes it possible submit the
necessary insurance forms from
the scene, The app als offers ways
wel a contacts rca autres.
save time and money, andi
Increases customer satisfaction by
reducing uocertainy and making
il tation more manageable

To continue providing customers
withthe bes gal experience,
‘opie mus cota anticipate
And respond 1 evolving consumer
heeds across an expanding aray
‘of medi and digitally enabled
touehpoints, But getting there

requires developing capables ready serve long tall” consumers
that provide an em-to-endcus- in way that adress hindu
tomer view. needs insta of simply recomendo

tng mama tage
One leve way to gine aa
sana cy eva Pt our talent

search queries and scanning for ‘management models

ote customer gel evens” Mich the vay te anios vo

fon websites and elsewhere. By on eclipsed vacuum tube exper
puzalng out he meaning Behind se compan today face a dia
earch query daa from onste talent divide. Finding, anracting
Searchengines. eams can gain and etaining tomoreow’ digitally
kale insights no what con- savvy leaders will force organza
sumer actualy sek tons stp outside of thelr current
comfort ones as they search for

A number of technology platforms people capable of dealing with the
make this typeof analysts posible high uncertainty levels this new
cal, enabling companies to digital marketplace cts, and who

provide the est customer experi untestand and can act capture
nc posible Asa result Gems ean the enormous vale a sake

‘The gal revolution taking place now, in eal me, revocably changing
the rules that deine company-costomer relationships. To win in this
bartiers that prevent the free low of customer-relevant information, and
Instead cultivate anew breed af leaders capable of accleating company
performance to fe sped

About the authors

Tim Brenes senor managing or of Accenture Sate its an the
GEO of centre Interactive Sic join he company 1998, Me Bene a ea
à number af senior postions, ning Accenture chef strategy ar corporate
deveapnent office group ie nette of Accenture Busines Consulting and
Imanaying partner of centre Sate Sees Mr Breen bse in ose,

timbreene@acenturecom

ian Whipple as been with Accenture fr mor han 1 years enn in a vay
0 rats ad coming res. M While was aso techie operating oie of
“an aoverising and marketing services fm; the managing stor ofthe nothesst
reson ora Fortune OD got! technology serves company and à senior vice
reser ar marina ec ane of te won res dec maten agence.
‘Since 200, he hasbeen managing recor of Accenture Interactive Me Whipp
‘sted in Boston,

nie acer com

‘StudyHub.vip- nee
Outsourcing

Has the cloud made
outsourcing obsolete?

By Jimmy Harris and Gavin Michael

Many cloud enthusiasts—proponents of a simple utility model for providing
business services—have written off outsourcing companies for dead. But the
shakeup within the services industry has meant more complexity, not less,
resulting in a critical new role for value-added outsourcing.

What if you could access information technology and business
services as easly as a homeowner accesses electricity?

Ousouréng

That's the promise of the “cloud,” as it now called: a
utility model for computing capacity, software and business
functionality that is redefining how organizations operate
and how they serve their customers and constituents.
It’s also redefining the role of service providers and out-
sourcing companies.

‘The big question: Is the cloud making outsourcing obsolete—
or more important?

‘The utility metaphor is inevitable. It also explains why
some might think that cloud technologies enable a kind
of do-it-yourself approach to business services, eliminating
the need for value-added outsourcing. Afterall, homeowners
don't need a personal contractor to integrate the coal compa-
nies, turbine manufacturers and engineers behind electricity
delivery. They pay their bills and turn on a switch.

So is a similar kind of easy access to business power the
inevitable evolution of the services marketplace? It might
seem so, Companies already can simply provide a credit card
number to a cloud IT provider and get computing capacity
within minutes. They can contact a software-as-a-service
provider and get ready access to robust cloud-based capa-
les in areas such as sales, CRM and finance. With that
kind of responsiveness and ready capability, will a CEO
or CIO need a service integrator-a traditional outsourcing
partner-anymore?

‘The answer is: Yes and no.

‘The cloud ls indeed simplifying
some aspects of he IT and business
services word. But its also making
many others more complex. Some
ind of services might actually
come almost as easy tuning
on the lights. On the other hand,
«customers often need more than
{straw power. The electr compa
‘Is nthe Business of proving
vie about what appliances your
home neds, for example or about
ow al you faney ew electro
equipment works together Different,
os ned diferent strokes

So the various levels of service
eed in the new do envionment
‘wll inevitably result ina kind ol
‘shakeout within the outsourcing
industry il resulting in à range
of providers offering alternative
‘ale propositions ata variety of
ice pois.

Ie danger for corporate customer
this pain in the evoition of
‘oud services and outsourcing ls
An overemphaszing the easy parts
hile paying insu attention
Lo the hard pats

Complex environments
From an I perspective, the intro
diction ofthe cloud model actually
means that CIS now have to
‘manage an even more complex,
hybrid environment: externally
provided cloud services along with
aged in a lod Me manner, as
well as older legacy applications.
From a business process perspec
tive, Integration pints Between
differen functions and processes
eed be carefully (nd commer
aly) manage, since a utility
‘loud provider mos key wi not
ave à perfectly cea sense of ts
lents overall business goals-to
Say nothing ofthe needs of the
clients customers

Given the host of other challenges
companies face with cloud services
security. data integrity and sevice
availability chef among them
the important integration role
played by some outsourcing pro
der sn going away anytime
Soon. Indeed the ability to advise
companies on the proper design
‘of thelr business models based on
‘multiple servic providers. and 10
cp them harness the potential
nations ain fom the ner
son ofthese provides, wl inal
elibood usher In a totally new
era a outsaureing-for providers
ready to meet the challenge,

Beyond the hype
(One thing that obscures a tue
and serious read on cloud comp
ns impact onthe outsourcing
Industry Is the Inevitable hype
that accompanies the introduction
‘of any new information technolo.
Dr. Leslie Wllecks of The London
‘School of Economies and Political
Sclence—vith whom Accenture is
‘currently conducting research nto
the impact of loud computing
calls hi a "miseading narative
Sftransformaten

According to Wilcocks, IT
Industry hype about echnlagy
asthe primary drive of sustainable
Change has been associated with
vitally every new generation
‘of technology On the on hand,
ou ca se the alos religion
‘overtones in some ofthe-the need
o be bom aga and leave the ol
‘wold Behind On the other hand,
he continues, “there fs also some
sense in which converts speak
ofthe inevitability ft alaba
{these are predestined forces at
work and thatthe effects of thi
technology will he liner and
predictable”

The important integra=
tion role played by some
outsourcing providers
n't going away any-
time soon.

Ousouréng

A number of false
assumptions lie at
the heart of some
claims made for cloud
computing.

Wha the hype ignores the
complexity o change and the
‘Considerable sake that the current
players (bth buyers and providers)
have in what's happening. Com-
panes are no. In fact, pow
tits buffeted by uncon
forces; most are savvy enough
to understand that technology
evolution requires the evolution
of business modesto.

‘eis highly unlitely that large,
soba etrprises wil simply toss
fut those IT slutions that ep the
Tights on today in favor te th
ly de jour A the same ime IT
And business proces outsourcing
providers are acutely awar of the
Implications of cloud services and
are actively working o evolve and
leverage thelr owt capable in.
Tight ofthis change Through her
existing client relationships, more-
‘over, they are in a strong position
to shape how these new cloud
technologies develop.

Bel and whistles
{Looking beyond the hype however,
‘tisundoubedly tre hat a number
ofthe aspect of cloud technologies
and business services do indeed
‘qualify as revaltionary.

First barlers o entry for new
players any Industry, and the
competitive constrains onthe "ite
aya? are dramatically reduced by
{he cloud model A smaller company
doesnt need ts own data centers
‘now to handle mass applications
like mal nor des I ned a costly
Infrastructure fr hiring, taining
and retaining clica or variable
workforce that may need 1 be
sealed up only ocasional.

This tty mode extends the
benefits ofoutsaureing-defined as
{he external provisioning of basie
servies-to a wide community of

organizations Essel services
fare now accesible affordable and
{quicker provision and tha

hr, makes i easier compete

‘Second ooking at the financia
side ofthe equation the cloud can
eier some astounding results
Software-aeaservice applications
castes to implement and malntan
than a company’s own applications.
And because providers offer soft
are for multiple cients running
on ther cloud, marketplace compe-
tion rats stronger incentives to
‘entinaously Improve the software,
‘making sure all the ne bells and
Vhisls a there fr lets as they
Are made avaiable That generally
does happen as efetvely for
companies running ho shops,
providing services only to neral
istomers and competing for scarce
Investment dollars with other Fan
tions and business nee.

From an infrastructure cost peape
{ve the architecture that underpins
2 serious cloud provider’ products
Fedefnes presumptions about data
storage costs and may make Ka
‘osbraine to use cloud provider
rather than maintain a company’s
wn private datacenter Some
stimates place the cost or storage
‘on the cloud a site as 10 cents
2 month per gigabyte, compared
th much a 25 dllar a month
for storage inside company’s own
firewall Fora large mulintiona,
those savings can amar 1 millon
of dallas per ea.

A number of false assumptions
leat the heart of some claims
made for cloud computing and
companies that proceed based
fon those assumptions could find
Aemsehes in trouble,

For example, some commentators
he he au a Kind of dost

yourself mode for business and IT prise perspective that meansıhat Its Important o understand

vice apparent presme that executive now mist manage what Integration Is all about in
<oud-bascd offerings wont require multiple external cloud providers the traditional outsourcing mode,
Any modification or costomizaton. and an internal IT environment” versos how it wil lok in a cloud
For alge energie that ls sekom that isin all telibood a hybrid based environment Today, n=
ever the case or wil befor only between taditonally run services tegaion i really about getting
small and discrete processes that do and others un ina loue multiple vendors, across systems
rot require much coordination on” manner, as well as various legacy and Fonction, to work together to
Sri bass and whose Impact — systems that cannot readily be manage base services Ina common
{sth less widely felt ven up o the coud and consistent way. Kan api

In ges doen the company
‘The ide that a cloud-based model Finally, and mos important, ihres ing the desktops needs o
willinerently simply services the not inconsequential mater of be able to work easily with a
ls also a dubious proposition, even service integration. which plleatons providers o solve the
te basic evel of procuring raw bocomeconsiderably more complex customers problem,

computing power. Yes, an onfani- asthe number of provides increases.

zation can easly acquire storage Atthe moment such integrations To an environment where companies
nd ron applications by eating not part of the business model of are sourcing business and IT
Server copar. But from an enters most uly cloud providers. processes onthe lud, however,

Cloud on the horizon

Bu ses nd exce ser ae ol ou compa cts many pes ale ee. Ars hall
te busines exc ames bie! cs tes ml era eto: o ans ir es
‘tj te freon tt, Dee ares tbe oem mr Sep.

sete do pain ie a?

sg tone won

on none po cons
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ad

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Ousouréng

The cloud will hasten
the emergence of
multiple classes of
outsourcing services
and providers.

"he rete negation challenge
wll be integrating data consistently
across multiple services and then
Understanding the end-to-end
business process hats being served
so that company can be confident
thats employees and customers
are being served propery.

Take a common financial process
like order to cash Ina cloud or
sotware-as-araervice environment,
à company might use five diferent
‘lon: based services to ron tha
tnd-o-end function, Bt from the
companys perspective. al executes
realy wantto know i how quickly
{hey cam get from order o ash,
and how the sped, efcency and
cost of doing so can be influence
in a postive way. A this point,
monitoring and managing that
Ingegetion-Reeping ln mind the
ulate usines ol of the service
[sa capability well use the com
fort one of est loud providers

‘uty’ cloud provers ar also
becoming avare that lens expect

Category 1: Utility providers

As suppliers of power or basic
basins process functionality, the
vale pop fruity proves
‘locus primary on le.
nd cont

For example, we worked with à
large ogists company responsible
for sipping hundreds of millions of
tems around the word every ye
ch with unique barcode. Those
barcodes represented hundreds of
sigabytes of data that had o be
managed cach month. As part
ofits quality conta processes,
{he company wanted tobe able
to ready entity errors such as
diferent items accidentally Being
assigned an dental Barcode That

them to assume ality or data
Security and Integy These com.
panies ae, afer al product and
Software vendor at heart. Being
able wo do more than sos pero
Software updates and atend to
{he hardware detallo tend o
the data aros services and ensure
Is safety and Inegaiy-requirs
sil mindsets and sins modes
‘that most ail providers do not

tas system
‘The ole of sourcing s changing
<ramatically and wil continue o
do 0 as companies increasingly
rely on the lou for I processing
and business envies. Me re, in
fact entering a period when the
‘loud will hasten the emergence
of multiple clases of outsourcing
Services amd providers. A least
three service categories are likly
to emerge. And at this point in
the evolution o the industry, it

Is possible wo Sdentty some of the
Ley sucess factors that wl bein
place foreach one

mca fairy massive undertaking
In terms ofthe storage and com
puting power needed to perform
‘hat Kod of analysis

‘When cloud solo was impe-
‘mented forthe company. it involved
150 servers a ttl annual cost
5191000, By comparison, ithe
‘company had attempted to imple
ment the same copay within ts
‘own IT department I would have
required the purchase of 54 mil
Hon high-end server In addition,
the processing power ofthe cloud
Solution was uly remarkable

‘The company was able o process
an entre mots worth of data i
49 minutes,

‘soos Katar The essental
capabilites ofa uty lad se.
‘ies provider wil be driven by the
‘sessions of typical CID, whose
primary concern ls the arab
sf services: On à percentage bass,
how often isan service up and
running when ned i?

or executives the gold standard
of avallability and reality has
ines hat ls services available
199999 percent ofthe time. Cloud
providers ae already coming

‘ose, by developing industrialized
spas to deliver that level of
Assurance. For example, Amazon
asie Compute Cloud (Amazon.

CA) Ie a web service that provides

resizable computing capacity in
the ud, Amazons service level
agrements with lets already
tarte 995 prce availabilty.

formance make a huge difference
‘over the course oa year Ifyour
network availablity ls 99999
percent a igure often achieved in
the tlecommunications Inst.
the amount of downtime over the
course ofan entre year ls only
about five minutes. By contrast,
99. percent avalallty means
‘that applications are down almost
ine hours a year.

“That downtime translates into ost
productivity, missed sales oppor-

Category 2: Business function providers

‘The second category of cloud or
Outsaureing companies wil niche
providers with deep experts ta
particular funclons suchas sale,
iR and customer support enabling
them command premium for
thei servees- To use the ty
Analog i the st stegry is
‘mae up of the electric companies.
this category is the company that
provides the refrigerators, dshwash-
‘and home theater and ado
quien you ned forthe home

For the busines Function provider
the vale proposition wil bet make
sure your company ges a busines
funcion the “appliance thats
open configured fr your neds
Im other words, ot just any old
refrigerator but the one tha us

in your kitchen space and hols
the amount of fod thats ight for
your Family's eed

For example, consider one multi
natona risk management and
Insurance brokerage company that

vas sing varity ofsaks manage
ren ols in diferent locations,
‘making i dificult and me con-
Suming to generate an accu
ba pipeline a orcas Without
transparency nto the pling, als
management di not have the info
ration needed male effective
‘decison about which opportunities,
ruled dedicate saute

‘The company went witha sftware-
asservie spplein ths case,
Salesfreecom-0 provide common
means of enabling an accurate bal
line and forecast Although the
Inia deployment was substan
Involving 1200 users, tok only
four months, The company now
has a much clearer picture of the
sales pipeline, whch helps i align
resources more effectively: this
in tur, has improved cien ac
in al penetration. By redoing
the numberof diferent als man
agement applications he company
has also saved significantly on
application maintenance costs

tune, poor customer service
and more. For highly transaction
¡ntensive applications in indus-
tries such as nancial services,
stages can cost milan of dollars
per minute.

‘ther consideration that wil De rt
Halo tb sues of uly providers:
ecoverabiiy-that si there sa
air, how fast the service back
py and is all my data salen,
ofcourse, Security At the moment,
‘here so denying that data security
and Ingry are sing pol for
the ascendancy ofthe loud business
mode ening who response
{ocrisk management and mitigation
among the new players inthe cloud
coser will be essential.

Susann The goal of he
second grouping of provider
Specialist groups with deep Indus-
{ty and functional knowledge
il be to design applications
and services, at sale, that are
securely configura

lo a client's specii environment
needs and business goals. These
providers will continue to afer
important vale to thle cient,
since engaging a sftware-as-

service provider is significantly
less expensive than a company’
buying and maintaining I own
Functional

One Important advantage ofthese
provider hcir ability to offer
access to the latest generation of
Software. Beyond hat, however,
Successful companies In this cate
gory will ned to be able 1 drive
{hei ofevings, as west che
thelr solution asa modular com
ponent in a more comprehensive
business design.

Ousouréng

For further reading
“coos comping Were tem
Cul Oct 2010

Age Riveting the enter
Quoi, ne 2010,

For these and other artis, pease
vit acenturecom/Outook

Category 3: Integrators and value-added

business designers

"The third type of outsourcing pro
‘vier wil be one that recass sell
a “buses design” constant

In addon to serving as an ag
rar and integrator of rtd
Services, That such a company
Wil lp is clients become “oud
Enterprises organizo that are
more dexteoss and agile Because
{hey can adapt thet very business
design on they Offering this Kind
of business capability wil require
an outsourcing provider o develop
‘higher vl of sophistication in
Integrating son adobe serves
and in managing them seams

Consider the complexity involved
even in a rather nascent form of
{his busines design consulting hat
‘mss from a oad based environ:
‘ment One gol financial services
Company inated anew strategy
vo improve is let acquisition and
penetration ers, ad to enable the
Bester allocation a care eses
10 business opportunites. The
solution was hybrid between what
eve terme the “tly mol of
raw computing power” ad the sales
functionality delivered through |
a software-ataservice model

The implementation strategy was
based on an extremely age a
proach-string with a common
Fre solution and ihn radiating
tutto more configured solutions
for uns in diferent countries,
in an unusualy fst, ight neck
timeframe, Offshore resources were
‘ed or thera tly needs, such
1 data conversion. The result was
{hat the company met ts goals for
transformation at scale in à come
presse, accent timeframe

Sa or ar fom patin
outsourcers and integrators ot of

business, he new cou environ:
ment ls el o take the services
‘ofan iterator even moe etal
to becoming a high-performance
‘sins

‘The spe lean integrator plays
sill chang, however Critical,
will involve managing a more
complex, hybrid computing ene
ronment For many companies, an
Integrator ating sa tasted broker
wl be ende lo solve the Inte:
‘operability and security challenges
flo services. Such an integra:
tor wil be asked wäh taking
Dale view of FF and business
services acres an entire enterprise,
helping mitigate sk and improve
‘quay by managing some or

‘of those services ed to end. Tis
means that a successful integrator
‘wil ave 1 be more than a pure
«consultant, and will need to have
deep opetational experience across
all majo business processes and
technology solutions.

camping maturity curve, consis
tent standards ae ot yeti place
It part of process sun by one
provider and another part by a
Aire provider, the smooth and
scamies integration a services
Tey to bea challenge, specially
as companies eventually sek to,
mich providers to improve peror-
anse or reduce costs An Inte-
grator wil be able 1 afr better
severance o harmonize the pieces
and also to ensue that clients
Infact, making proper use ofthe
‘ompating and proces resources
for which as contacted

‘The integrator should aso be
able to provide what we can cal
iones business design

Aldea by the other two categories
Oo outsourcersutlity services
and business Function provider
Fntegetos will work with cients
to combine, recombine, commise
Sion and decommission different
componen of fll IT and business
solution. This can ede the friction
of functions operating in obsolete
ways, or of newer functions that
are not adequately integrated into
{he business. Companies should
beable to acquir à service use
where makes sense and then
say goodbye wo It when I no
Tonger needed.

Finally the ability to bring innova-
tion client wil bea distinctive
feature of succesful outsourcing
providers in he cloud era Our
esearch and experience Suggest
thatthe next stage ln outsourcing
will be achieved when service
providers and clients elaborate to
Inovae, and this is anather key
task ofthe new breed of integrator.

‘This novel kindof relationship
between provider and client wil
draw on distinctive leadership
Kills and plonerin contractual
Felationships where risks and
benefits ar shared more equally
Achieving such relationships

takes time and commitnent-a
commitment that unikely to
be achieved in a commoditizd,
loud-bascd contract but that
fan leverage those commodiized
Value pnts integrated into an
overall solution,

New game, new rules
(leans her are many unknowns
In this new cotas outsourcing

‘Wit tit providers beable to
make the jump from what we
‘might call "consumer grade"
Services to something that tray
Fobust enough to be enterprise
grade? Will software companies
beable to make the Jump to being
‘ue service providers? Will ne
stators beable to manage the
new complexity and encourage
the kind of trusted relationships
bir business designers or ree
signees?

What is clea is that tis i
en game that cannot be played
sucessfully under old rules. This
is another evolutionary shit

An he relentess way that value
migrates an Indus: What was
native becomes commoditized,
leading those who intend o
Bes lying e neto aer

Companies tha intend o be
effective in the new game need
to start changing te way they
‘manage thelr IT and business
Operations now. They need t plan
or the environment of the future:
they need to carefully assess the
tisk involved with deploying
new technologies and they need
to understand at an even more
detailed level the capabilites of
{heir supliers and providers so
they can choose hei integrator
prop.

Most Important, perhaps sto
egin (0 understand what it means
10 perte Ina multsurce envi
ronment, where the diferent com
ponents need integrating, nt jst
Once ina while bt constantly

About the authors

Jimmy Haris he Wahington
De managing crete of aud
soviet lr Accenture is rl, e
Works wi he companys consulting
Systems integration, usaureing and
integrated mares groups tient
dec andimpenent ou computing
solutions fr cents and ence
Accentures market positon in clout
computing, Previous Me Haris was
Managing irector or Acenues
{Customer Contact Sites and nr
rete Outsourcing Serves ros

Jamesharis@accenturecom

‘Gavin Miceli ecru mana
‘rector for inoaton a lance,
which nls responses for alle
anos thology tse motion
an Accenture Technology labs He
has more tan 20 wars experience
technology eden. Prot ing
Accenture, Dr Mita hl seer
cuve postions with maar mal
Series compas ning yes
Barking Group and National Astra
Bar Group Sane Aust. Hes
sein So franc.

‘semichoel@accertrecom

Talent & Organization Performance

The talent to grow

By David Smith, Catherine S. Farley, Diego Sánchez de León and Stephanie Gault

New research suggests that few executives believe their recession-battered
workforces are prepared to fully exploit the global recovery. To drive
growth, companies need to embrace a human capital strategy that more
closely links workforce planning to business objectives and looks at the
broader implications for leadership and the organizational culture.

For most of the world’s companies, growth appears to have
regained its place at the top of strategic agendas, displacing.
the cost-control mentality that has dominated boardrooms
and executive suites for the past three years. That's the
good news. But by having eliminated tens of millions of
Jobs during the Great Recession, are these companies now
‘unprepared for economic recovery? Do they, in fact, have
the talent they need to grow?

Talent & Organization Performance

Almost half the compani
2010 High-Performance Workforce Study report having a
smaller workforce than they did before the recession, and
almost two-thirds of them say they do not intend to return
workforce numbers to pre-recession levels within the next
couple of years. Add to the mix the fact that more than a third
of companies based their workforce cuts not on individual
performance or careful workforce planning but rather on who
responded to buyout and carly retirement offers, and you
have a situation less than ideally suited to assembling a team
of stars capable of driving growth.

Its nota prey plete Baste talent objectives and looks at the broader
management fenctions—cmployee implications for leadership and
Sourcing and recruiting or example the organtzational culture. New
have ben allowed 1 atrophy during approaches o employee development

the downturn Reduced workforce will als be essential,
umber increase the importance
‘incumbent workers fr driving The ongoing uncertainties ofthe

er productivity, et confidence current economic lutin under
In the kil levels of today’ eral score critical fact abou today’s

‘workforees isnot high Companles busines strategies: Growing ee
are increasingly aware of how the 2 the ight pace ain the

‘everchanging, mul ola mature isa way, tales alent
‘ofthe words economy places tough
new demand n ther global each Economist ae uncertain about

what wil happen othe narerm
Economy, bt most expect growth
ode some chanter deinen.
perhaps 4 percent and 5 percent

‘The broader implications DP growth globally over the
Developing the talent to grow will next year. But our research finds
require coordinated initiatives that companies across industries
that include developing a human and geographies are, In fc,

capital strategy that more closely focusing lesson cost control and

Tinks workforce planning to lines more on growth

In mid-2009, during some of the
worst months of the conic dwn
turn, 41 percent ofthe companies
strategies ated at Keeping cuts
der contro. Today, hat number
ls down to 27 percent. and executives
how a degree of optimism bout the
«ing year: Only 15 percent love
‘ost control wil be their exclusive
focus a year rom nom,

But looking atthe numbers of
workers sl im place today after
‘months of economie turmol one
‘might well have doubts about how
realist those growth plans are.
Shuy-thre percent of companies
slbally have reduced thei ull
time employee workforce inthe
past year Almost equal numbers
do not expect to add jobs over
the next year or eve In the next
two yeas.

Les than top-notch
Companies tha expect 1 execute
growth strategies with fewer em
oyees are pacing an addtional
hunden onthe skills of existing
workers to innovate and improve
‘veal productivity. Yet few eeu
tives express confidence that their
‘companies most etal workforces
ont positions such as sales
and service-are world-class

For example a majority of executes
who cited sales a her most impor
fant business Function sad thei
companies either lak the needed
‘ils inthe sales function (29 per-
‘ent or that a significant propor-
io ofthe sil they do have in|
sales are out of date 24 percent
Disturbing low percentage of
‘executives see some oftheir other
important workforces as top-notch:
‘engineering 00 percent, training
(5 percent, customer servie 30
percent I (22 percent and site“
Sie planing (23 perce.

Overall just 16 percent of respon
ents consider the utensil evel
oftiretir more s duty
leading, Worse, 30 percent said i
il take a year o longer or their
‘organizations workforce shill to
{etn to an effective level. The
situation appears tobe especially
‘woubling among companies In

the insurance, chemcals/atural
sauces and banking sectors where
Only between 6 percent and 8 percent
‘ot executives said their overall
otre has industry-leading is

Did companies at east make sure
to keep trop performers during
the workforce cuthacks af the past
‘couple of years? The analysis is
again troubling Thiny-fve per
et of companies based decisions
about severance ln parton who
accepted a buyout offeror early
retirement. Jost over half sed
performance criteria make such
lower at government agencies 24
percent and health organizations
(21 percent.

External marketplace and industry
shifts alo focus attention on
‘hanging sill neds. For example,
sales expand thee online and
‘ole presence, they need more peo
eut ig SNS and fewer for
"radical in-store poston. Finan-
«a services companies ar looking
Tormore workers wäh Knowledge at
risk management. Many Industrien,
rom manufacturing o high ch,
require more employees with scene,
technology engineering and math
skis han are readily avaiable,
especially in many industrialized
‘ations This skill gap explains the
number of nf Jobs=3 milion
nie United Stats and similar
number in Europe, according tothe
Bureau of Labor Statistics andthe
"European Commission spite of
high unemployment ates,

Companies report that
substanti

workforces lack resilience
and the ability to
manage through change.

Talent & Organization Performance

The global nature of competition
also has executives looking a the
effectiveness oftheir operating
‘model In the United States, for
example, recent data shows that
6 percent of the profits a S&P
500 companies come rom abroad.
We spoke recently with an exec
tive of US-based aerospace and
defense company looking t address
situation in which 70 percent fs
employees are inthe United States
but 70 percent os customers are
‘ota station that can make
Aimeut for any company respond
equtely local needs.

Even hen the capabilities to manage
{his kind o change xi they often
leave much oe eed Companies
por that sutatal portions of
{hel eadership and workforces lack
sense ad the ably to manage
through change Just peren ot
survey respondents sad thei work
forces extremely well prepared to
apt and manage change through
pets a economic uncertainty.
Only 23 percent strongly aged that
heedershp wasup othe ask.

Puting the rg capable in place
to dive expansion in he coming
years will depend in part on HR
abies in areas such as sourcing,
‘aye development and per

‘mance management, yet ut made
during the reson Rave weakened
that part of most organizations.
Nearly 30 percent of companies sid
they have eter reduced ar mie
limited campus erating, alent
Sourcing or experienced recu
tive erating inthe pst 12 monts
Fou 10 companies said twill ake
hem teas year fot mg 10
turn hi talent management apa
ities to the appropriate eve

Differentiated capabilities
A cal aspect ft Accenture
High-Performance Work Study

Isa comparison of ang companies
and theirlower performing comer
pars acosall evant tale and
organizan performance domains.
Leader were Mente a hoe com
parle wth he highest tl coin
An test of thr capa
‘les acos al cial men
ns. including workforce planning.
training performance management
soueing and ership development

Overall several characterises
“separate leaders fom laggards a
terms of thee readies or growth,
For example, leading companies
Inthe talent arena are more likely
than laggards (5 percent versus
43 percent) tbe balancing cost
‘contol and growth strategies instead
‘of focusing only on cost. Leaders
were also more key o have
retined a more robust workforce
Planning capability (42 percent
versus 36 percent) and employee
‘evelopment programs (47 percent,
Versus 3 percent)

more organizations are o become
leader in he areas of talent nd or
{aviation performance ad suport
Better execution a à growth strate,
we bee they ned focas spe
‘ally on the lowing arcas.

Workforce planning in the
context of a human capital
strategy

‘One of the rca dimensions of |
“ray execution today i taking
‘more hoiicand proactive a
roach to workforce planning that
Us. planning forthe types o sil,
where and in what numbers, an
organization needs to ramp up to
4 new level of performance.

Whether they call HR, talent
management, workforce planning
‘or something else, Industry lead
ers have always had some means.

‘of putting in place the people and
Sl needed to un the business
“tive Inded, by 42 percent

10 36 percent leading compa-|
ls our workforce study were
tore kl tha aggard to have
Increased thelr use of workforce
Planning over the pas year. This
Finding supports the bee hat
busines eectiveness depends sig
nificantly on better planning about
"he workforce capabilites needed to
cut strategy.

For several reasons however,
‘economic challenges and the speed
‘of marketplace change have out-
Stepped the abit of tational
workforce planing to meet days
Business neds As rest abou
executive may fel they already
havea workforce plan in place, it

Is requntly nowhere near hust
‘orcomprehensive eng. I may
address traditional matters such
sourcing hiring, traning and
rewards. Bt thee touch omy some
‘ofthe critica dimensions of human
Kapital erm that capas the ca
‘of eacctives treating employees
‘san asset thatthe company an
Invest in and, based on bow that
‘opts murtared and treated, see

Executives must now pure a
more comprehensive human cap
Strategy across four interrelated
dimensions talent leadership,
culture and organization structure
A human capital strategy helps
Put in place the right Leaders o
source, develop and direct the
Fight workforce talent, supported
by the right culture, organization

‘As with a busines strategy, an
‘effective human capital strategy
Intorns many o the company’s
mos important decisions about
where and how to compete, and

supports the enterprise a ba
tances short-term decisions with
longer-term imperatives. In this
way can meet today” business
needs and stil be agile enough
{0 reposition self support an
enterprise ongoing market cam-
peitiveness and growth.

Several examples o the mult
dimensional aspects ofa human
‘pital strategy highlight its
importance 1 à company’s growth
strategy. National Grid. ne ofthe
largest utes nthe word faced
pressing need to api develop
‘ew leaders throughout a business
nt facing unprecedented competa
tive presures The company crested
‘leadership development progra
tied a transformational business
Strategy, that connected manages)

Under pressure

"Neath of executives sumeed say tei companies hae male otre now tan before he ecesion-ang
ost words of tse executives port the have o fm plans to nera Henn 1 presos leves

persona eaersip experiences to
‘eal business problems.

According o John Petr the
‘company’s former executive vce
resident for US electric distri
tion and generaron and current C00
ofthe company’s UK Gas Distribution
and Metering business, National Gi
needed o extend Is Iadership
development focus more broadly.
There had to be a new mindset
about who our leaders are he
ote. “We had te develop an
extended leadership team that
‘would become more accountable
{or our busines ests”

‘The new program combines in-
Aiviual coaching with a series
‘of learning forums supported by
clon earning teams-groups

‘is puts presen ogni oct à grotte we storandes

Talent & Organization Performance

banding together to work toward
common gals and share leadership
lessons from hat work,

‘The company’s transformation
program, enabled by the develo
‘ment of new leaders, has produc
‘numerous business bene. For
example the number of "ost time”
Injuries has been halved over the
pas two years. National Gris el
ability mer are also markedly
ete resulting in adramate re
duction in egulatory penales for
ng to comply with acceptable
standards of letrity up

An intersting example of
ing culture and growth strategies
‘somes rom work tha one large
‘Aslan manufeture undertook fol
Towing a European acquisition, The
executive cam defined he bles
and values that were to guide the
refshione European unit art
signed these à new global
operating model. A mix of exec
tive inervens, propery surveys
and workshops dove cory and
Alignment. The executives nt
fed existing Belief they Felt would
‘wok inthe new company. andthe
‘merger integration project team

8 no details to make sure that
‘mindsets about stretch age and
accountability were understood the
Same way in both companies

‘The team explored areas of as
agreement working these ou and
Schieving consensus for moving
forward. The top team attended
daylong workshops each month (In
tonto work Between meting)
In diferent contri in which the
company operated One important
result of this work wa a strongly
aligned leadership team with deeper
felatonships aros silos and shared
Experiences of working together
effectively. Three year ate, he
European business unit continues o

grown a challenging make and
to expand int global markets or
Increased proa

Growing skills

Even if they te aware ofthe stil
challenges they're facing across
most corporate functions and in
dust, many companies will find
A ia to get Back onthe path
to growth in an improved economy
“This is especially tre or organiza:
tons that prctkalysht dwn the
talent pipeline during the reesion
and y wont be hiring In the
ea future

‘An academy” approach 0 learning
1 one highly effective way to ge
extended wrkfrees up sped
fase, and to ensure a more con
tent tl level across a particular
Functional workforce, while provide
Ing the exil o accommodate
the neds af ther workforces and
Individuals. An aıdeny'scurku-
Tum generally Is developed withthe
help of outside exprts-eaers in
the various fields covered dy the
academy's courses-and is designed
to build competence rita to the
effectiveness and productivity of
‘specifi employees and their jobs.

International beverage and food
company PepsiCo has used an acad
my approach to build consistent
‘ils within ts finance workforce
Ina more global operating environ
en. PepsiCo has ben expanding
Int developing nations, including
Russa, Brazil, China, Indonesia,
Eastern Europe and the Mile
East. Yet, as Richard Goodman
Former chief financial ofr nom
‘executive vice presiden of global
‘operatians-looked aros Pesos
finance organization, he saw à
need o provide alvancekaring
‘opportunities to hs finance pro
Fessonals-both to met rowing

functional demands goal and
10 respond accelerating Business
¡growth in the company developing

Goodman and his senior ance
leadership team developed à om

prehensive roadmap t addres this
eed. The real was Pesto Finance

onde st of sili ts nance
otre and distribute those sills
tally In turn, this approach coal
Improve retention and increase the
impact ofthe finance function om
usines resul

Using an academy-based learning
‘model was important for several
reasons Mistrial, enterprise
Learning for the finance function
had emphasized divison-specific
on-the-job experience and Indie
dual coaching. Only about 10
percent of karing ocurred as part
fa common, formal curriculum.
Now, however, the nance orga:
nation needed to get consistent
training and information to al
finance associates,

PepsiCo Finance University packag-
+ cabe online offering based
on carefully defined cueiclams
“and organized Into “oles” repr
Seating specifi subject components
ff the overall finance crrcum,
The university uses a Blended
learning model, employing inno
tive elearning sel paced courses
and virtual kaming experiences.
‘The courses ae enriched with
PepsiCo business content which Is
drawn from sujet matter experts
and thought leaders throughout he
organization.

(ne ofthe most distinguishing
features ofthe university i ts
focus on applying course learning

to al business sues, Groups come
together, In person or virtually.
to tak about problems facing the
business and they work to solve
local business challenges. Hands-on
practice and vital learning labs
Augment e-learning o renforce
Knowledge and desired behaviors

PepsiCo Finance University has had
oh quantitative ad qualitative
effects onthe performance of Pepsi
05 finance organization andthe

Serious skill shortcomings

busines asa whole For example, in
Tight o global economic conditions,
the company recently increas its
focus on overall cash Now across
the company. So the university
‘created anew course to disseminate
more effective cash management
practices thoughout the company.
"Thre months afer completing the
course an analysis of sil devel
‘opment found that 60 percent of
participants reported improved per-
formance ash ow management;

oc tal wo the succes of companies may nt hae te sills reos
to ive growth, Among exce keting the felling wororces a ica
sigan percentages of respons note ers sil shoconings.

eens

Ste as

arena on

ston a es

Trig ado

weaccenturecom/Outook

Talent & Organization Performance

Managing talent across
national borders is
especially important,
given the global nature
of most large companies.

5 percent of participants manag- caphal Isle tal costs and
ers reporte seeing this change im Investments in people

behavior as well and nearly 50

percent ol participants reported For example, on aerospace and
Improving cash Now accuracy. defense company set ut design

and staff new business unt and
wanted to ensure could source the
Fight kindof alent. Companies in.
this industry continue to strug

Creating a more strategie
HR organization

One of the biggest disparities with finding adequate engineering
between leaders ad Inggards im talent ine he demand for eng
ur study was inthe effeiveness neering ils is growing even as

ff thee HR organizations Leaders the sippy dwindles

BR and training organizations are
auch more prepared o afaptto and The company adopted a mult-phase
manage change through periods of approach called "smart sourcing”
economie uncertainty. Eighty-seven Workforce planning tok place to
percent of leaders, versus just 20. rate a competency framework the
percent of laggards ated their HR 204030 Key skills that would be
and waning ganizations as ether needed within the business units

well prepared or extremely o. workforce. Research was then used
10 map where the supply of lent

Neve sucess factors for HR have as kl be within the county.

arisen in recent years. Managing Fall sourcing strategy and

talent across national Borders recruitment campaign was designed

‘especially important. given the to meet both short- and longterm

global mature of mast lage compa- talent demands

les today this includes enabling

{he businesses to operate consie-” Through this work, the company

tently around the world while lso veas able to identify geographic,
satisfying the legal requirements. pocketsof talent and then drive

individual mations I's also targeted sourcing recommendations
sential to have better metrics, — om regional and national evel.
Which now means more than With recrutent strategy closely
simply monitoring administrative tid 10 he talent sources, he
costs To be industry leaders, HR company ca increases chances
‘executives now mist understand of drawing the sls needs fom
and measure the vale of oman the avalable alent poo.

‘The common theme crossing all dimensions of our esarch findings into
high-performance workforces she need o think mor srteical abou the
related dimensions of workforce, leadership, culture, organization traning
and HR. In some areas the work, great dal o timo is being pal to
whether we wil be mire in a Jobless" recover, But few executes actually
think hat way. Those companies that plan to grow know that to execute
‘hat strategy hei workforces will ned to gro as well The questins are:
When and at what pace?

Among the most important characteristics of tomorrow high-performance
businesses wl be thelr abit o optimize the val of thee human capi
in part by eliminating workforce strategies and frs that ae not aligned

wth busines va They wil achive Bete podi nd ber enden For further reading
Of top performer a els Improve since alt [ide fer

product innovation, higher sales and bte customer service leading. A team jou can count on this
Increased market share isu page 4
However as they aso find untapped vale wih ss redundancy and waste TN change -cpaie organ.

In workforce performance-and in managing that perormance-organizaons sl Other 2010

Wil be able 1 redirect those savings into new resources and capables à re of one” Outlooks
focused expli on new busines needs. Tha ably to renvest willbe ones"

of the hey ways that high performer wl find the talent 1 grow

Fer these an other ailes, pease
About the authors vist wwavaccenturecom/Oatook
David Smith the managing sector ofthe Accenture Talent Organization

Peromanoe seve ine He has bee» guest ce at Wharton Busnes Schal an

Baron Clege and a eisen speaker andr conferees a vets Me mi

ho based Marto, Connect hs une mesas a paper, os

(ont hi vipa nt sins eat of human capital sates toas

‘mea ad indy pain and isthe ua of Horace Ova

Teen Monozement oh Custom era Busnes Press 2010,

ai ysminaccenrecom

Catherine. Fry ends te Accenture Tnt & Organization Perfomance ene
linen Non Ameria Ms Frey Ps eve han 20 years experence vih morir
restructurings and the implications ol busines change on mule human capita
dimensions, cdi eeetive caera talent management, rgaiationl
Sur aná dsg leamin, tus eins and change maragemet. Ns Frey
has contributed 1 rice aná papers published in major US publican. Se
‘ated Seattle, Washington

atheinesfater@acenturecon

Dag Sánchez de Lab Is te Acenue Tal & OrgnzatonPearmane sevice
linea Europe, the Mie East Aca and Lain America He has extensive experience
orig wth intenatlnl compare, goverment and non-profit organizations
inte ares of talent management, aba operating mh, implementation,
HR cos reduction and culture change Me Since de León Base in Madi à
frequent speaker at industry conferences an has otre to artes publishes
in major mesi ots in Europe, Arica and Latin Americ,

diego deleongccemurecon

Stephanie Gault ess th Accenture Talent & Organization Perfomance serie
ii Aia ais wel as Accenture’ Management Costing business cress
Southeast Aa N, Gol secas in developing major change programs an
sing human copita aa HR statis mes improving a performance in
Trger orgias and governments. She à quer speaker a conference nd
a member ol Aare Management Cons Women Leader ness Board.
Me. Gatita in Singapore

‘eptanegut@accentrecom

Emerging Markets

Why the West needs
to learn about
workaround innovation

By Karen Crennan and Carola Cruz

Bold new ideas are not predestined to flow into emerging markets from

the developed world. A different approach to innovation pervades the new
economies, born of scarcity and expressed in levels of ingenuity, resourcefulness
and drive that are harder and harder to find at Western companies.

Over the years, the typical narratives about innovation
have had a distinctly Western bias: Edison and the filament
bulb, Marconi and the wireless, Berners-Lee and the World
‘Wide Web. But perhaps i's time for a new icon-or several
of them=to illuminate the fact that innovation today is
very much a global phenomenon.

Emerging Mates

Its relatively easy for business leaders in Chicago or Stuttgart
or Osaka to overlook the richness and range of innovation
in the developing world-innovation not only in products
but in business processes and behaviors as well. But Vijay
Govindarajan, professor of international business at the
‘Tuck School of Business at Dartmouth College, believes
that more and more innovation will take place in emerging
economies because that is where the bulk of tomorrow's
customers are. And anyone who still believes that innova-
tion is the exclusive province of developed markets has
‘Somehow missed the rise of nanotechnologies and biotech
Beijing, digital media and genomics in Seoul, biofuels
Brazil and automotive technologies in Poland.

But there is another crucial aspect to this innovation story.
It is not about where research and development funds are
raised or spent, or even about the innovations themselves.
Its about the innovation mindset that is pervasive throughout
emerging markets-a mindset born of scarcity and expressed
in levels of ingenuity and resourcefulness that are harder
and harder to find in the West.

We call the fruits of this mindset workaround innovation,
the entrepreneurial and usually resource-strapped approach
to innovating seen everywhere from Mexico to Nigeria and
from Vietnam to Ukraine. It is a way of approaching innova-
tion that businesses all over the developed world now need
to rediscover in themselves-and not only because they are
pursuing market opportunities across the globe.

‘Wit he spotight again on growth,
‘business Kader in the developed
world are placing their faith In
Innovation. Nearly 9.0 of 10

US and UK executives surveyed
In Accenture’ latest research say
Innovation Is as important, if ot
‘more important, han cost reduction
{oth companys ably tw achieve
future growth. And despite the
anemic recovery there Is support
Forinnovaton funding: Almos ball
(as peren ofthe executive polled
repart that funding overall for
{novation ities and activites
Increased in the sx months prior to
the survey. However, when comes
o putting innovation no practice
‘most ate challenged to rige the
cosida gap between Seas and
execution (e chart page 684

Falling behind
More troubling, those British and
[American executives and their
‘Wester per are not beeping pace
‘with thelr counterparts in the
developing word in terms of thee
ares o investing In esearch and
development Research plished
last year by RED Magazine and
showed that while RAD funding has
een largely lat nthe West it
set to sho strong gains in eerging
Economies, ath now and projected
Ant the ire, One saps: China
and India were forecast to drive an
aggregate 75 percent increase in
Spending in Europe was projected
10 gow ony 05 percent

[At the same time, the Accenture
Study found Naws in the way
innovation Is managed in the West
Including process shortcomings

cessful innovation. In addon,
among developement companies
there Is widespread aversion to

tisk and a fatlre to ean from
past mistakes in innovating.

There are bright spots, 1 be sure.
In recent years, Westen business
have begun touncouple their aver
al RAD forts from the In-house
sources available for those efforts
(Companies as large as Procter &
Gamble and EN Lilly & Co. have
moved assertively toward open
innovation" models. Those models
ranscend seaightforward ou
sourcing of BD activities they
se systematic Web-based "seek
role Hen exchanges and
*rowdsoureing techniques to top
ea from far beyond the company’
walls. They also actively involve
diverse university faculty and
Fellowes a esearch institutions
around the lobe,

But as many corporations continue
to strug reignite growth, the
need fra reenergized approach
16 innovation could be more
urgent Tiss specially Importa
as more organizations expand
Slobally, increasingly working
‘vith customers, employes, nan
‘ers, suplir, infrastructure,
legal frameworks and competitors
whose outlook and experiences
an bea world away from what
thelr leaders ate accustomed to,

Indeed, many developed-world
corporation, welded 1 approaches
And behaviors that have worked
lose 1 home, appear nat io
have full grasped te diferent
approaches needed to properly
address emerging markets

Out of tuck?
Ask any emergingmarket business
‘uit manager ata Westen mulina-
tonal, and there isa good chance
Shel il you the global leaders in
er organization have only Hite
understanding of fet alone direct

experience with, the complex ma-
cave and mutasking required
of operators in Latin America Asia
fr the Mile Est a hey sek 0
eet words business standards
while operating with minimal
human and financial resources.

“That is especially true when I
‘comes to serving the “bottom of
the pyramid marke segments
‘that tend to be highly fragmented,
hard to categorize and out orange
of conventional services, both
seographiealy and financial.
Yet such challenges ae taken in
stride by businesses that ren up
in those martes

Mexico's Grupo Bimbo the words
largest Dreademaker —provides a
compelling example. Emplsicing
the eshnes fs products and
serving a vast, complex ant wey
dispersa system of tational
srocery stores and changaros or
Stal shops, Bimbo has developed a
reed ystems for everything from
es and dstrbuton to payments
and inventory management (The
company fist packages of bread
ete transported by pubic bus to
Mexican grocery stores in 1947)

Bimbo invests heavily to control
las delivery chain to he plat
‘of sale ts capable in Meco
“ná Latin America, bon of endless
Wworkarounds as turned to
Unorthodox solutions o common

develop an efficient distribution
network when I expanded to
China a Few years ag,

‘This kindof hetradoxy can be
ted inconsiderate mesure to
the entrepreneurship that Nour
ishing in many emerging economies
Entrepreneurs are risk takers, and
isk taking is often he enabler in
ovation. By contrat thee at st

Emerging Markets

anecdotal evidence to suggest that
In en ers. mination from
the developed wold are more lian,
notes, on practices and protocols
promulgated at headquarters”

‘The facts of fe
In essence, a workaround ia
temporary fx that requires min
ma resources, tis an approach
to innovation that cis heavy
On judgment nd experience at the
pet af he problem and nat pts
à premium on sped

Workarounds are facts of if for
many in emerging markets: they
are necessary and usally rapid
responses to everything fom
blackouts and phone outages to
onerous bureaueracy and the daly
ind of poverty The scarcity and

Committed to R&D

unpredictability now seen as the
nen normal nthe West are
quite normal-and hardly nein
“merging economies

As such, «workaround mentality,
Is commonplace throughout the
emerging word. di in Fac
Is summed up ln the Hindi word
Jugaad. which Harvard Business
Review translate loosely as
“overcoming harsh constraints y
improviing an eectie solution
using limite resources” Indeed,
‘the strec-leve inventiveness and
resourcefulness on display from
(Cairo to Klaas egenday among.
world travelers and expatriate
workers fom industrial nations,

However iis essential to dis
tinguish between precarious

The Unites Stats pa nthe European Union are til spending more than Cin and Ina on RAD.

ower US Japanese and Eurapean esearch inestments Rave bee eer
Investments ring sign hina ad Inia

0 fling Since 208, wie RED

‘un
Bue

Improvsalon-thin o homemade
motor vehicle and Jury-riged
household wiring-and the kind
of genuine innovation often
characterized by out-of-the-box
{inklog. that con lead 10 lasting
solutions. Properly harnessed,
‘workaround innovation, ike other
forms of innovation, can generate
a sep-change in the performance
of a system, product or process.
fra material change in cost
Structure, I il usually lack,
‘conventional funding, however,
nd won’ within formal RAD
civic

Of course, workaround innova
ion is by no means exclusive

to emerging economies But toa
large exten, the Western world’s
resource rchness-ready access

10 technolo, Ananclal services
and tclcommunicatonsinfra-
structure, or instance -has robbed
or ts reliance on the native
imagination, dive and prse-
verance that helped produce the
“unprecedented surge of prosperity
seen in the global economy inthe
second Half ofthe 20th century:

Shining brighter ight on the
¿developing nations can also help
uno the bas Amp he tem
“reverse innovation” an expression
that effectively stigmatizesinnova-
tons that come from sa. Ida or
China and that hint comfortably
and often unfall, at patent or
‘copyright ineingement

Workaround enablers
Before business leaders in deve-
oped markets can stato conser
ow ty might ster workaround
innovation In ber owe organi-
zations, they need to ge inside
{the heads of today’s practitioners.
Here are he core attributes of
‘mergng-market innovators

They encourage and
support resilience

tis important to ensure enough
flexibility in policies and price
tices so that when staff members
ste hey have the lat
tude and space to find innovative
responses itis ls elu to
foster a culate that recoglzes
and celebrates reslene, so when
employees proactively bounce
ac from setbacks, reco
ties are acnowleged.

In he Une States and Western
Europe in particular, the average
middle managers not old
enough to have experienced
multiple economic slumps or
infrastructure disruptions so
he as developed few proven
responses to hardship, But bis
‘counterpart in Argentina or
Rossi hasbeen through plenty
of erises lage and small and
Having lived tel the tale
and perhaps even theved-the
Argentine manager bas the
confidence of knowing he ca
almost certainly surmount the

“They have strong stomach
for managed risk

On the whole, managers in
emerging nations are much
more Iikly 1 act without wal
Ing foal he relevant ato.
confirm their decisions. This
ls ot necessarily by hole: ln
most cases, emerging marte
managers have fte or no
detailed historic! data or sta
cal models on markets and.
emptor and what they

do have may be naccuraeor
Incomplete What's more long
lead times (or testing, modeling
and vallon are incompatible
With unpredictable Financial
political climats.

They are mare ely than
thelr Western counterparts o
leverage past experiences to
assume ago fori” approach
So the Brazilian manager ses
more risk In wo trying and
eleves there I much more
to be arme from rapid ral
word experiments

3. They operate with a sense of
ownership
Facing à turbulent como,
Western managers often simply
10 ride ou the sorm-slashing
costs and waiting for thes
Sion to return 1 normal. But
{he storm-toughened manager in
Russa or Brazil plans and ets
ifthe downturn or disruption
ls permanentcas if tis the"
normal” She knows from experi
ce that she il stl have to
met volume, market share and
profi ages.

‘She alto relie that no relevant
‘outside help wll reve at,
Teast, ot ln time to make a
difference, So she takes charge
ofthe situation, marshaling
the necessary resources and
committing herseifand her
team to resolving the issue and
meeting her targets

So what can business leaders
doo acquire and bene fom a
vetar mindset? We suggest
"he allowing guidelines,

Think “Spoke to hub" not just
“hub o spoke"

Most multinational companies
have stable footprints inthe
emerging wold so they have
Immediate access to employees
who are used o dealing with
Seatelty and uncertainty. Asa
resul those organizations are
well placed to implement “spoke
1o-hub" and even “spoke-to-spoke™

Emerging Mates

For further reading

frameworks where the brightest
stars from emerging markets are
able wo coach managers In devel-
oped counties.

“These modes ar nt to be confused
With programs designed to foster
Avery or inclusion; the objective
dlssemiating a workaround mindset
[sto Improve the organization al
round innovation capabilities The
mass on the exchange of ess
fon everything fom formal advisory
Boats to raining programs that
Involve case studs of est practices
From throughout the workiwieo
sanction, The objective isto enable
Western manages to understand
what thee counterpartsin developing
rations must deal wth and 1 ep
‘hem appreciate successes aber han
{lr own best practices buble,
which are often underwrten by an

pation in leadership development
Programs and corporate strategy
development programs with an
overrepresentation of leaders and
‘p-and-comers fom the organiza
Yon’ operations in th developing
voi Such programs send a clear
Signal that iis essential 0 pay
more attention to the voices from
the new markets,

Nor does a focus onthe spokes
minis ta ny may the lnea
bes practies. Leading companies
will understand how to find the
balance between encouraging an
‘entrepreneurial workaround mindset
fd marc tance hat threatens
o erat further alls and ed ts
‘own sapins.

Identity the workaround
innovators you already have

In practic, workaround Innovation
|shappening al the tine in almost,
all organizations even fits not,

recognized as such. In age mule
ational, there wl Mel e a lew
‘of smal daily examples in most
Functions, busines units and regions.
Iwill os take meh fot y senor
executive to sors e manages
tho are masters a delivering tong,
and growing pros on minimal
budget and with ny stats

‘The next step isto deconstruct
the workaround innovators
approaches and se what canbe
replete And then if important
10 begin to create a workaround
culture without diminishing the
alu of moe traditional innova
tion channels. That effort starts
by sharing and publicly celebrating
the achievements of existing werk
around managers

Shoot for the moon
Workaround novation an begin
vith what authors Jin Collins and
er Por have labeled “Big ey
‘Audacious Goalvsonary gals
that are sateglaly and emotion
ally compelling eal, these gels
should be voiced publicly and nt
tal by senior des.

‘That was the case at Indias Tata
Motors in 2003 when Ratan Tata,
‘chairman of parent Tata Group,
‘hallenged the company to develop
‘car that would compete with the
‘county’ ubiquhoas motor soos
Ad sel fr only 52,000. The result
of this“put-a-man-on-the-moan”
undertaking isthe Nano, a Low.
weight low-carbon vehicle with
many innovations in production
methods as well as features.

Look for and ute “leapfrog”
tools and techniques
‘Workaround innovation call
for less hesitation about using
‘euttng-edge technology if that
Is what provides compelling
usines advantage more quickly.

Banco Azteca sa cas In pot Then time ae valuable—but not as
final services provider caters valable asthe same innovations
to the 50 percentplus of Mexico's shared qui and widely around
Population wo cara to litle tobe the organization otha others ca
targets traditional banks. Azteca benefit rom them a new best,

‘opted for fingerpine-scanometres pace call te ea wil spread
Solutions author the Wen without the craton of bureaucracy
"es ol customers many of who ns wake the Hea network
lack vers lenses orothersecare should be largely self-managing.
forms fenicio. At auch,

the scanning system, rolled oat to That was the ase at a arg con-
‘more than B milion customers was sumer goods retailer which had
{he largest biometrics program inthe tecnicas who were 0 pate
un sector Today Banco Azteca about the company’s products

Is lso successfully allingouta that they devised workarounds
‘microfinance busines made across for installing particular systems
atin Ameri. in customers equipment. The
idea was promulgated via socia
Share ideas at speed medla~speifically, wiki that
‘Workaround innovations that ‘others bad a hance to contribute

solve sec problem ata point tothe evolving solutions

To some extent executives in developed countries have forgotten how
to innovate outside of ther codified estrato models, Weaned on
the vitues of standardized approaches and tight process cont
undervale “folk medicine” lite workaround innovation that can be found!
‘long rougher but reader growth paths

Give he proliferating uncertainties in busines today these leaders owe 10
themselves and hir sharcholes to explore and establish such new paths fo
¡growth Resouces must not he viewed a enilements, mic ess prerequisites
for action best practices should not be seen a the only rte forward.

And listening tthe locas is mandatory. Managers in emerging economies know
‘hat instinctively Manages nthe developed world mus gett know son.

About the authors

Karen Crennan is the managing
director of engraphie Strategy
for Accenture She's responsible
for identifying opportunites within
‘Accenture’ geographic porto
to accelerate gro, enhance
«competitive postion and improve
profil. Ms. Cena, uno

Ts bse in Milan. abo serves as
sian of he Doar of Accenture
Gba eres

larencremangaccentuecom

Carola Gars te martting lead
for Accenture in Men. For moe
an 20 yeas, she as worked in
numero eaerstip postas in
lage gun, mesa advertising
and publi ali nthe Unite
‘States, Canada and Mec. na
tion ter marketing responses,
Ms. Cra espino for decai
Comes ener mati
emerging consumes Shes bases in
esi Cy.

carlacra@accenturecom

‘The authors wold et thank the
fotowing abs tis arte:
Luzern, county managing recto,
Mee: Roberto Aare ola, county
managing cect, Argentina; Marsh
Mang, country managing rector
Inca and Pero Jose Gare, rector
of Ananda secs Latin Amer,

Connecting for
competitive advantage

o) By Hans Von Lewinski, Armen Ovanessofí and Joshua 8. Bellin

==29./9
Working with others to secure skilled talent and innovative IT will be critical
as electronics and high-tech companies emerge from the recession. That's why
smart organizations are preparing in advance—forging and strengthening
alliances and partnerships to capture new growth opportunities, fill capability
‘gaps and get closer to customers. It’s an example every industry should follow.

ME

Consider this: In developed countries, the average life
expectancy of a computer fell from six years in 1997 10 just
two years in 2005. And cell phones in developed nations are
tossed on average after less than two years’ use.

trois & High Tech

Always a ferociously competitive and fast-moving industry,
the stakes in electronics and high tech are getting even
higher. Being lean and mean will only get you a seat atthe
table. To win in this challenging environment, companies
also need exceptionally flexible operating models that
combine global scale and efficiency with outstanding
local execution.

Few are in a position to achieve that difficult balance alone—
and few would attempt to do so. Indeed, thanks no doubt

to its multinational heritage—electronies and high-tech
companies were among the fist to globalize-the sector has
long recognized that capitalizing on the strengths of outsiders
can deliver significant benefits. For example, as a result of
‘Toshiba Corp. outsourcing after-sales support for spare parts,
including repairs and returns, for several countries, the
‘company cut inventory levels by 10 percent and halved its
‘scrap costs while increasing spare parts availability from
84 percent to 95 percent, thus boosting customer satisfaction,
‘The industry recent past is filled with similar examples

of partnerships and collaborations designed to secure and
support competitive advantage.

urecomjOutook

Small wonder, {ain markets. And connecting with
rase for the e a wider network of stakeholders
plu, so many electronics and in tough times has specific aan
ge companies ar Making tages 00.

enhance existing business networks
or bulld new ones.

company’s chances of gti
Enhancing Mei. ‘off new, Iowcost competitors,

leveraging the strengths a variety for example, as wel a provide
sof players-teshnology, coment and more options in the strug to
service providers channel partners, satsty ever more demanding
Suppliers and even customers= consumers. Moreover, companies
San signiiany enhance the Nex- that move forward wgeher rate
‘ty companies ned to compete than separately. wll stand a much
effectively in vola and uncer. better chance of saying ontop

Operational imperatives

en ate wich operational iperatie became mor important dra the downturn. almost 80 percent of trois
nd high-tech eu suneye recent by Accenture ld developing and entancingalances and partera

Seg ca ri nt

ont ping ct

Dong tapi nt
oe ie

Inyo ect tm
pound ne

Suman

Deon tae pri nt
pr

Fad rol it tn

Moped ete ie pt
Inyo nyo nd

SSSR ede pods

NN

trois & High Tech

of change, denifying new oppor op
tunities and managing risk,

tng model and how close
‘ost of them are o having those
‘capabilites in place.

Alliances, after al, don't jst help

deliver integrated services and

lower price points.
tering with thes can open
up new growth posibilities-a
significant advantage ln an ndus-
try tat thrives on Innovation and
change. Wins, for example how
Cisco Systems has teamed with a
private real estate developer and
other technology providers to
ul a new smart city near Seoul
[se sidebar, below

solutions
Ps

There,

Key iferentiators
Consider pecas sills and alent,
and Innovative These two cap
lis were deemed critical to
cent and effective networking
y respondent 1 a recent Accenture
survey of 30 industry executives
from both developed and emerging
nations-a brad sample of elec
tronis and high-tech companies
‘with annual revenues ranging
From less than 4 billion to more
than $10 billion.

sure, considerable
disconnect between the capabilites
that electronics and high-tech

companies identify as essential
Bling successful collaborative

Moreover, these capabilities are
also key compet dlferentators
for electronics and high-tech com
panies. And alliances that provide

Cisco Systems: Partnering for sustainable growth

Making comectan comes natural to Cisco Systems.
Te lcrones powerhouse was among the pioneers ofthe
mtiprotecl outers tat st enables computers to
Comunica ces network bounties,

ut Cac’ cummiment to connectivity transcends soe
fiat ofthe WorldWide Web. Te Caltfomia-baes
Companys aa easing example of ho ning frees
vith ter businesses can support future growth ambitions
key gol for electronics and high-tech companies as they
prepare forte economic upur (se try)

In sess eae, oe amis are tld nee, The company
sims to become à major layer in mat cals “transforma:
rl stur tes and Serves at aes he ening
‘joa nae sotana utero. And paren erg
vt actions o note technologies and talent man
germen inte, pay a mar ein he Smart Connect
Communities strategy tat Os lances back m 200,

‘ic’ Smart Connected Blling sation for camp,
connects Biking ee an IP near to ente te energy
fic} owing buda managers to remotely monitor
erg crsipton and ast by ig automated demand
response programs ad taping reenable technologies. Tre
Soliton bing put to workina number f smart ies

that aco bung in arnet wth goverment property
developers and other techtlagy providers across Aia and
the Mie Est,

In South Kore, or instance, Cc I colabora with ake
Intemational a New Yor Ctybsed eal sae company,
Loi Nee Song on 1,600 ce of nd ce o Sous
Incheon intestinal Apart. Males à grotte fr tre
iy of torn, Songs smart ren na star.

Is bl have been designs to minim greemnouse gs
emissions they have ray eared Laden Energy and
Erirommental Design LEO) certo ram the US Gree
Baling Counci-and when fishin 2016, he ty wil
Beast a tl faute, prone by Co. The system
wi itegat Sorgo water poner, ali and telephony in
ange tere eabed iby tere fcitating pero
(fen an emancing enirenmental ista
through etter source management.

Bang on coloration wth Gl, co ps ta take te
mar y concep into Ch The wo compare il be mor
ing ogee o example, ero a smart cy pot m
Hoan Proc And partes with Saud and Mato
derloes,Cscos aso ron etmates information an
‘armanicatonstecmolog sains o Jazan Economie iy,
1 100-nionsqare-meter mar iy pret in Sou Arai.

access to specialist tls, te
nologles and know-how wherever
they may reside or orginte-po-

sition companies for competitive

vantage

‘The findings with regard to IF
are equally concerning, Effective,
Introperb IT infrastructures
are sential to efficient Roms of
information, knowledge transfer

and collaborative working both

‘These capabilites ln turn rely on
human capta, which more than
af of our survey respondents
singe out as having become more
important during the downturn,
Yetonly 17 percent strongly be:
lieve that they ae currently well
postloned to atrct and retain
the best global talent. À thie of
‘hem ar tl not going abroad for
new sources of either innovation
(oe highly skilled alent Im addition,
‘nly 15 percent o those that
leverage outsourcing are finding
access 1 specialized global talent
op bene,

EMC: Collaborating in the cloud

One fte hotest sos int 18905-EMC Corp. he wos
logs provider o enters ata stage patos rem
grace hen the doom bbe burst ody however EM i
Back, aching fr te sas

"Thanks to the company 200 econ to abandon its et
alone apre in avr o alabaation an partner
EM has no ony rat basen ts get oral.
lt asas become à der nte provision o ous com
ting teemologis~what CEO Je Tuc als te biggest
ave inthe istry o information technology”

Since 2002 MC as bought mare ta 0 software narrar
an seres companies, te same tine expanding ls
busines network of channel nd tenon parti
leveraging pres tenen thet,

One ofthe company's key acquiion was an 0 percent
stake in Cher cs VMware, whch specials i
ion software mat offen ety and ost sins
running mul computer systems on one ppal

within and between organizations.
Sixty percent of €00s sid that
building Mexibe and efficent IT
systems to enable relationships,
both Internal and externa had
grown in importance since the
‘owaturn-yet only 7 percent sad
lavas ap focus delving operating
model decisions

|What's more, the use of information
and commun ations technologies
that sup more oui operations,
ata mobility and global iner-
“connected i remarkably ined.
Only 24 percent af respondents use

Mea int venture wih Oscn dubbed VCE, Bundes
MC storage ga, VMware management tots, and Caco
‘eterna compa proses wih seite nee
Posting services Ye another partners, ne with
Del eps provide the cata center seves o suport
EMC Atmos cout pato. EMC has alo developed is
‘cloud technology, VLEX, which les organizations
te combine storage within heir ta centers int à ng
ruled storage poo,

The company ones much ofits success in cloud com
puting to wore caia aut by RSA Laboratories which
became prt fhe EMC Innovation Network when EMC
scies RSA Security in 2006. Since then, EMC Research
Chin, wich lo works on oud tchnlgies, has been
stables And in kong with the Iman Network's
moto "Espanol Incl; transfer Bal
the company emos Pate wok of cal researchers,
Vo ave often ected ner eng universi, is hare
(a telconerneing and socal mei) wih calengucs
JOR, an especial with hoe responsible fr product
evelopment

trois & High Tech

“crowdsourcing” or open-source
Innovation. fr example; ess than
vantage of vi

informe and a mere
1a percent use cloud technologies
Most striking of

{hed have fal o implement
any ofthese ritcally Important

a quarer take.
or mobile

IT innovations,

Boosting market position
‘The exception, however are
showing a clear way forward
Leading companies know that the

development of

erships and networks snot just
about strategie agreements and
‘common objectives, Realizing the
Full vale of such arrangements
“demands operational changes

en the may processes pet
and structures, as wellas people

chas

Acer: Leveraging channel partnerships

eat ae ofthe mais let computer makers Aer ins
tw erate Meer Packard Dewlpment Coa 2013 the
eating sol ser of portale computers Witsccet, the
Thann company wil one much of comment
on mate pros 1 ealobratin that lees
chanel partnerships t expan iba ach

verte past eae, Acer as ment ns rinsgented=
ts business model by pioneering an indirect go-to-market
approach in whien i develops complementary states
lances with key eels and stators. nio,
having son off manufacturing operations in 2000,
focuses instead a sling its own esto and mate.
systems 3 well a hose of ts acquistirs Gateway.
Machines aná Paar Bl,

‘Acer’ partershie-such a the Acer Cann Excelence
Program, which reads revelers ho de a minimum of
1020 im eatensaryear ale wi enhance sae suport
to them eles sti the company strongest prof
rot in near three years inthe fst quarter of 2010:
1p 63 percent on e same perio in 2008 And a Ace
sitions slo sl more male device In China and
ter emerging mares is mut-bran, multkpariner
approach proms to pay off yet agan

“and technologies are organized,
‘wore
a

As crucial important to ensure
that new organizational and gover
ance structures are wel designed,
‘ofcourse, But our survey reveals
{hat the industry recoge talent
nd technology asthe ray tal
‘components an optimized bal
‘operating mode. And leading
Companies have focused their
ctmork building efforts on devel-
‘oping these key capail

ces, Pa

‘When ft comes 1 talent, hey are
reaching out globally. Nokia, fr
example, has been working on
‘deepening potential global alent
pols by running an annual com-
“Calling All Innovators
whch challenges young application

In May 2010 for example Ace signed an agreement with
Founder Technalagy Grup Corp, the second tres PO
‘vendor in Chia, tando produ o te word's
test psa ation The agreement, ch aves Founder
In enge of production and aftersales service but gives
‘eer control esse Diese company's pling, marti
and supply chin management expeted toos Ar
busines in Chin signa

Tre company retos tat sales in Cina wi acount for 25
percent foal revenues In 01149 from percent In 2008
‘rants tits cllsoration with Funden Acer expects o

become the second-tgpst paye in Cis PC mat inthe
ext eu yrs, posing ange Lena, he omo

‘Acer aso ans to partner th comps in he Malin
mare, wert aay rank No. 1 tr a FC.
sin Ching, he lan sto strengthen postin by forming
nor to sel ne roc the Lames, an
reader tht cn accommodst up o 100 boss a elas
mar phones, mi dies an ew ef serves reed
At sal and medium si ess nee, Acer oaks to
wen its iret setae and comet, si mor la
altri ass ey eii markets sem ey

developers for mobil use and the working with technology partners
Web to submit etre for locally to fil capability gaps has put EMC
relevant content in Four eategoies~ Corp. on the leading edge of new
‘fbeing green, entertainment 1 computing tecnologies ar
productivity and lie improvement, example ce sidebar, page 75)
Cash ries range from $5,000 10

550000, (Since th competion vas Leading companies have aso
launches a ih category was ded: boost their marke positioning

the Economy Venture Challenge. y partnering with thers o expo
Developers compete fora 1 milion the range oftheir offerings For
prie forthe best idea fora neve example, Apple's al-inclsive

mobil produc or solution designed ecosystem of products and services
o improve the lives of people in owes is success in large pat to
the developing world) Winners strategy of leveraging what tbe

set the chance wo promote the company cals Apple Developer
applications though Nokia outlets Connections" with both are and
and other channels, And all winning small-scale product developers. And
nr ar reviewed for possible Ace hal negated rings
‘reloading on future Nokia devices. with channel partners suppor the

Talwan-headquartered company’s
Ws a similar story with the search strategy as competes ball on
for technological Innovation. Net- volume Se sie, opposite.

By broadening their options and making them more exible, collaboration
of all Kinds are helping these leading companies ada tei global operating
‘model tothe uncertainties ofthe upturn. Alliance partners have brought
{hem loser 1 consumers especial at he local evel sharpening heir market
intelligence and deepening thee customer connections, Partnership have
also contribted Key capables that they would otherwise have to build
themselves, fom serach

‘Asa result they have the talent and technologies that empower them to
expli opportunities carr and faster han thie competitors In tomorrows
hyper-competitive and capricious makes, such asset ar likely to prove
valuable Inde.

For further reading

“Open matin: Howto rea the it ew res, eh ay
‘tok Oros 2008

For these and other arcs, lease it accemurcom/Oulok

About the authors

Hans Von Loin ess Accents
ion & High Tehin Asa aie.
In ada, nei the gable for
‘Accenures Communications & High
Teo Orin up. With moe than
18 yeas experience with Accenture,
he previous led the company sippy
‘ain vale tansforaton gop in
Europe and ven Accent app
chain ri te leant and ig
te sti Units Kingtem and
ean Me Vo Lewis parts
regulan conferences and has
pales a umber of articles o
romance busines.

centre situ for HghPefanee,
her hs fus on macroeconomic
‘seep and business rend in
merino morts Me Dunes
launched te sita uc ni
rely with is esearch
‘on region spec vent, as weas

Ina postin inthe loa mom.
Most rect he as ben oven ce
etre seer on te te opening
mode of mtrationl organization.
Mc Dans wo manages centre
stage partners with te Wo
Economic Forums asin odon

amenoanesoff@accentueem

Jesus 8. Bein a Boston-based
rescue eat the Accenture
Insitute or ig Peformance He has
res intemationa opeting
mode a diene set fiat,
ining crois a high tech,
real, ol nd gs an ekommuni-
ins sighs have ben pubis
inthe We Street Jura MT Soon
Management sw aná Satay and
Leet. among other patins.

Jeshuahbetingacentrecom

Government

Joining

By David A. Wilson, Michael Henry, Daniel J. McClure and Jason B. Wolenik.

forces

Collaboration is the key to effective government in an era of fiscal austerity—
and not just because it cuts costs. By reaching out across jurisdictions
and involving all stakeholders, leading state, regional and local authorities
are actually improving the way they deliver services.

Government

From parks and libraries to sewers and cemeteries, there
are few aspects of civic life that local governments do not
touch. People have been relying on them to provide these
and many other services for hundreds of years. And until
recently, local governments had been remarkably resilient,
weathering economic cycles better, in most instances,
than private-sector organizations.

‘Today, however, the ravages of the Great Recession have left
‘municipalities from Waco, Texas, to Wellington, New Zealand,
awash in red ink-and struggling to stanch the flow.

‘Te dimensions ofthe current Fund of expected evens through 2012,
ing ers are dramatic Inthe United In Venice battered publ ances
Slats for example, declining prop- ave persuaded a reluctant cy wun-
‘erty Vales ad ehonieoblessness lo Sel off several store plaza.
Shank state goverment reses by Eve Noth Rhine Westphal, ne of
18 percent between 2007 and 2008. Germanys est sue, was fred

Meanwhile, ata time when demand to Doro reco amon in 2010.
for public assistance programs ls

mounting. sat fundingforlocal Bu selling assets and borrowing

government in he United States are oly stopgap measures fora

Predicted o al y Between 10 per~ problem key to endure for many
et and 15 percent anally between Yeast come. In the United States,
2010 and 2012; that's significantly fu instance, state revenues are

more than the percent opin the expected to remain stagnant or
Perio fom 2001 to 203, flowing, sluggish through Fiscal Year 2012-
the collapse of the dot-com buble, just as demand for core government
Expenses, meanwhile are staring, services acelerates, With cash“
driven by underfunded pension en- trappe national governments
lement as an aging publicsete unlikey to come tothe rescue and
workforce approaches eiement. rent resistance 1 ax Increases
Imtensityng, tough times fr sate,
Stil funding the pensons of publi regional and loc goverments

‘sector workers may well be only ar the new normal. They have
the tip ofthe iceberg For example, litle choice ew ways
according to à repart released in of delivering essential services.

‘October 201, the cites, counties
“and government authorities inthe Joiing forces

‘ate of New York have ct asie The good ews i that they have
‘virtually nothing to pay for more hegun to do So. Inde, when
{han 5200 billion worth ofkeath Accenture recently Investigated

benefits promised thee retirees. government responses tthe crisis,
tre discovered that more and more
"The situation ot unique wo the Jurisicins worldwide are joining
United States. Madri will be car- forcesto tackle By merging.
ying a debt burden equivalent to coordinating or consolidating

‘between 115 percent and 170 peremt Services such as pole, fre and

ransporalon. for example, cy
‘oils in California have signi
‘antl reduced wasteful duplication,
And soe juridictions have reached
‘outside the publi eam, seking
efficiencies by partnering with
private eis by outsourcing
Services to them

Crossjurisiciional models come
in al shapes and sizes.

Some forms af collaboration are
well established, originally as
‘money-saving measures. Local
spvernments in New Zealand
Tor instance, have been working
sucessfully together for decades
pure by sucesivo pieces a
Lego designed to create more
client ad costeffecive service

Building the right model

To desde which implementation method et or rose utsitirlcolatoaton mode,
ta with th dees outcome and wor tnd the beginning,

EA de
an ect
ds reas
oe Soa

However, our esearch which was
‘ondicte inthe summer of 200 and
Included in-depth interviews with
‘more than 0 public-sector leaders
in he United States and experts,
An government, and fom which
we developed more than 70 ease
Studis, alo revealed newer models
‘of collaboration. Such colboraon
ls renventing the provision of
public services so radically that
local government may well never
look the same again

In Suto, England, for instance,
the county conil plans o act as
Virtua authority, outsourcing

A but a handful of services to
private companies or 1 so-called
ll etrprises (businesses and
onproits with primarily soca or
environmental bjectves-envieon-

en

ee en
bene ‘Soa aoe

nn

Government

mental protection, for instance or
support or specific minoriy Ine.
{st} The fea coud save sustanal
‘sums of money, shaving some 30
percent off Sul €

budget. Transforming councils rom
let providers im service enablers

Involved in implementing almost
any Kind of collaboration ire
‘whether coordinating services
across jurisdictions, merging or
rating new entities to provide
tose services or contacting
‘hem out to external providers

lion

represents a philosophical paradigm

change nthe way publ services

are delivered

Such a

Ieee, oral ts succes the Sue
mode highlights the cultes

New Zealand: A nationwide approach

New Zealand fis stated reviewing the oe ofthe state bck
in 1984. subsequent decades NS sal Pace nation has
introduced ame ofthe words most radial ná fencing
erre reform

Success egin designed to improve efficiency
effectiveness an acourtabiity af goverment has ot oly
(ram shunken the number and a of asian
has also encourages olaberation among ety, dst
and regional cous across ne county.

ln 2002, te Local Goverment At regi local autores
Lo calabrate with the community and tie agencies o
strategic paning, antrating or tendering ut sees
ao cales or e esabiowent of cumin age
izations, C0s~conpaiesoegaizatins in ie one
‘or mae acl authors ort appoints) contol est
SD percent ofthe vts, A CO pars toes andi accountable
tots oa autores for ts performance, and the ca
that, in tum, are account tthe community or
Bot hir imeluement ith the CO and the performance
the CO et ever series rom water a fr o
‘apart and property management.

matic sift would be
politially unacceptable to many,
ofcourse Im fact the plan has

dy run Into opposition from
UK labor unions and other rites
Who warn that at time of rising
Unemployment, thousands of publi 1
Sector jobs could heat isk

Labor union poston can be
particulary powerful Inthe United
States and many other developed
‘counties, public-sector workers
have negotiated contracts ver he
years hat ensure hem tenure and
guarantee multiple benefits rom
health Insurance pensions Is
Justina collaboration eds
the creation of shared services

nains at whieh benefits are
reduced, organizations wll have to
Work through necessary changes
with thee ar partners

The results have Been encouraging nes. One diste
‘aun fo example has achieves cst savings oF 30 percent
tw 40 percent by contracting out the bulo ts work and
Services And when New Zeland Department neral
‘tars recent surveyed the country 86 oun down
from about 030 in 1909-7 ut a 10 ai hat ne Benes
‘of colaboro, in terms of bath beter vale for money
An beter outcomes, wre 9 significant that they woud
De nens tri frs in the coming ya.

As sra gl tala, unitary tate ih a name
Parlament and no single document fora contain,
New Zealand obese, jo some unique antes as
à pone rca goverment rear 8 apor o som
has ee ton beaut cities —incluing Ino anon
Imembes—have acepte he nee or change.

{Organe abo it the ony sum
ing block Plans to consolidate
Furiscions inthe United States,
Forinsarce, have often Noundered
canse eens accustomed o their
‘wn school districts and municipal
oundaries have made clear they
would vote against attempts to
change them. People may not be
ily delighted with the eurent
Quality of publi services, but
persuading them that radical new
‘llaboation models wil oa beter
[pb promises to bea struggle.

A collaborative approach dest,
vet allenate large sections ofthe
ct, however, r labor unions
{earful fr ti bs. On the con
rar: Some leading organizations
ave managed o ens the support

innovative colaboran modas tha.
besides cutting costs and boosting
efficiencies, actualy Improve
services, simply interactions with
‘ines and even rece iequte,

Take Sacramento, the capital of
California, which has contracted
‘out the provision of health and
human Services information,
planning aná raining to aspe-
‘alized nonprofit organization,
fd coordinated with a local,
employment and training agency
10 Joy deliver chil, Family and
Jobssceker services. Consde, oo,
he 2009 merger of he cites of
County, Georgia, which as ested
in an entrely new (and leaned)
Jaca grvernment enti imine

fal stakeholders by creating the up

in of services

A joint venture in Silicon Valley: A platform for post-recession imperatives

‘Tne Grat Recession as taken a heavy tll on Carl’
Seon Valley te 30-mie-on sip of el estate south
(San Francisco tha’ home o sich can companies a5
Google, Ap, Facebook ana Yahoo, Between 2008 and
2009, bout 90.00 jobs wer lst Ine, hovering around
pere uneploent in therein above he US atonal
rage An combination o Coms ste gio
And tri ofghteh ras rom China an na ests
Song shadow ve the ares legendary tats a the was

Stan tat stos as been te core mision of he
porymous nonprofit Joint Verte: Sion Val Network

A publi pivnte partnerships cren cha are the
‘mayor of San es and Acentrés managing Sector for
Calor, And sine the one of te receso, the orga
izations colaboratv approach to ca calenges as

Accent complete tits nee Anc tr escri.
ich set out 10 Bost aging educational achievement in

theres school by partesig with Stanford Unversity
and the Resource Are for Teachers to motivate and improve
the wang of teaches, seal i ath related workforce
‘evelopment program toute pinte buses,
local generen, bo and comunity organization nan
lor o impo Ss among o sexe

Mos innovative o however ia renewable energy
procurement projet, whieh ins 10 Le te largest such
mju tive in he Unite Sates=70puble-
Seco stes, rom bs depos aná eat cents to presa
paie ats rom nie ea government tons er he
tbe of ine eal pone prea ae oe
tories re wong o eur uf css of ung
nd sting renal cry techno.

What's more, thinks 0 an emphasis on local vendons and
technolo heya encouraing the cen of he carton
neutral os and nese tat cl iit Sen Vale
Innovation engine While over pate registration in

the region have ben in cine tae for ren ectraless
sured between 206 ad 2008 and Sion Vly now act
{era going perio o geen patents atone

Government

Is expected o save more than
$100,000 in property taxes.

‘Anew social contract
‘These organizations are nt only
saving money for hemselves and
hectare Leading local author

‘ly Hall. By colaborar cross
internal jurisditionst crete
feines and by partnering
‘with specialized providers outside
the organization, governments
stand ber chance of meeting
‘hove demands

ties also recogize that mes, and

“tiens, have changed.

“The traditional social contract
‘he administration of which has
become sleroic with bueaueracy,
|sevolving Local votes, now
accustomed o high levels faces.
sible, accountable aná

‘service from the private eco, have à
Started to demand the same of

What’ more, they will be much
Better positioned to respond to
rex and potentially costly longer
term imperatives, such a climate
‘change talle congestion and ae
al. In California, fr example,
‘ne ofthe natives ft Joint
Venture: Silicon Valley Network,
i private partnership, is
renewable energy projet funded

parent

Ohio Shared Services: A pioneering partnership

Wan sing te. mpg rears sng epee =
ai ata tine when aha proprio fofo pps
‘Rtvonent-One's rater are ma fn om the fg
Sate germes ars recessed Amen. 1
to hese ange have as een aurai

Infact Oi Share Serves. wich the Bac Ste ct in
2009 he et ste ares serves coter for date
‘encton te Une Sates, cud prone a model or more
effcentandcostefectve gmermment wore

By processing a number fy narcisos yale,
inc cs. Va xperserembusenens ant ens
maintenance an management at were reia sea
‘mang inva tte agencies, Oni Shared Series is
reducin pican, feng agencies t focus on the core
Functions ana at pican os fences.

Tre tte as aleay resize 15 percent 1020 percent
improvement productivity wl ot for processing
travel and expense reports have been ut by o.
from $2 1812 pr transaction. n im, One exes to
achieve out $26 lin in average anal singe oF
Shut $500 men aver 20 year.

Perhaps mos sigan of alin ia ofthe abr unio
resstancetathas proven tbe ane ofthe ages Sum
‘docks to condition coloration tite ce

Stor Oo Shares Serves ens ne suppor of the stes

rest employe abr nin te Di Ci Sere Emplyes
‘Assocation In fc sor lei wa intime ive in
the design fs operations. And a enpayes wong atthe
center tante volta rom ter stat genes fly
“are hat work In er new enironment wo be met
‘ase and at performance wuld eso monitors

Ip Pels rt the shred seve eter hich housed
ina omer alt ay, was dese to encourage ce,
‘alboraie wating practices an boasts state-of-art
tue Y rt can De shifted seamless 1 different
osas sede, Morea employees ar proved wth
ces to ad o tren eos "Sl Hos
‘acount pal wae and expe vero mueren
“att cer The greater he uber ofl Backs emplee
ar eri on, the higher ther compersatio il be

The est? Amore ele an knowledgeable moitrce
that ean move witha the organization, depending on work
voue, staff hänge and other variables that can have
an impact on productivity

Fans al forte center to expand, Human sources may
‘con be ade. Tans to salte platform, Oi Sure

Seres co veal Si in ie ith on excepto
travel reimbursement nd expense reprting=ageney pate
ination in me center reins veluntary But se beefs

fits ale stand approach o common transaction
become incre apparent, mot and more agencies are

ley o tte fl vantage

lth pooted resource (se sidebar, layer of goverment ts mor than

age 83. 1600 employees ince specialists
across al areas of esponsibility,
‘Avoiding the pitas From park rangers 1 tando,
‘There are toe sure, plemy of p+ Whats more, the regina utority's
falls on the path to more cllsb- financial teng on 18 percent
‘rative government. t's crucial, o ts operating budget derives from
for example to clearly define roles property taxes: 54 percent comes
and responses within the new rom current revenues (with ete
power-sharing structure. And est prise activities, such as sll waste

practice requires strong leadership disposal, providing the largest
And à stractured process to evalate amount of fee-generated revenues,

fallaboration opportuniescespe- at 49 percent and the rest comes
ayas these may expand overtime. from excise taxes pad by users
‘The most successful forts have of Metro services—has bolstered

achieve consoldation by flowing a pull perceptions that he authority
Systematic methodology. porting I efficent as wel as effective.
desired otcomes and working back
‘ward rm there se chart, page} One roadblock o consalidation i
the fat shat many governments
In Oregon, for example, Metro isa simply dont know wht thelr bus
dec elected emerJuriditonsl ness processes cost, or how thet
regional goverment serving 25 cles cost compare with thse of sim
Inthe Portland metropolitan area Tar organizations, That can be a
with a conc president andanaudi- significant handicap in developing
dor lcd resonwid, six councilors a busines cae that justifies eos

lected hy district anda C00 ap- jurisdictional collaboration, Which
‘pnt bythe conc. The auborty Ts why when Ohio moved 10 à
‘a tal responsible for man statewide shared services model in

‘ing urban growth, transportation, 2008, i brought in outside help o
‘waste dipnaland the Oregon Zoo in. conducta through benchmarking
Ferland at ow hs a much wider analysis before moving forward
‘rvronmental and cultural mandate, Oh puli-sector unions aso
participated inthe operations design
As is porflio has grown, Meteo process sieht, opposite-a
Tas ben careful to ensure hat Kisut mov tht secured the support of
Viewed as just another mushrooming, this ey group of stakeholders.

Making the leap o cross jurisdictional collaboration can be ctllenging
‘sue But itis, incrssingy a necsiy and not jst because govermments
‘gent eed o be abe o do more with esas he global economic downturn
‘moves into year four and high unemployment continues to welgh heavily
om tate and muna services.

A more sophisticated citizen, advances I technology and transportation.
and a growing awareness of environmental threats have rendered he od,
Dureauerati government structures, with their multiple levels of service
‘provision, obsolete By embracing new, coaperative models of public-service
provision organizations can find new eficlencles, generate new sources of
reve and deliver better programs, products and eres. Cros jurisdctonal
govern, nother words good government

About the authors

Davis À son's the managing Sector
fer centre Caras nd US Sure &
Local Government gop. 25 yes
wth he company he has wre wi.
turers goremens and rentes
10 hep them operate more effectively
and een, it à focus on ac
fc tem and hare srs
Me Won ithe coe er
Minneapolis Mines, fee

avid wisonaccentuecom

Michael Henry a New Yrkbaseé
senor excite in Recentare Strate
Me Mery wos with cents in cn
America, Europe an the Aia Paie
reso, epg tem develo mate
‘ron strategies, impr operational
performance and redesign the orga.
izan to Better ut ter snes
sages

miebelheny@acertr com

Dane J McClure, senior manager
in Accenture’ Heat & Pub Service
‘soup ha tive exprese woking
it goverment agen on organiza”
tional design human capital develop.
ment strategic planning perfomance
management ana project ene

Based in San Fanci, Mr McCue

Vas authors severa artes foca
ltr and deters ours.

dsnitimeure@acerur com

son & Woenikis San Franco
Based manager in Acenture State.
M Weenie whe develops inmate
operating modes for sect ces,
led Accenture rosca
oben research er arme
‘hip with int Ventre Son aly
etwa and designed es justin
nero modes for organizations
os the United States

Insonhmolenik@acsentrecem

Company Index

‘The flowing companies and organizations are referenced in hs ise.

m a
Acer 167
‘Advanced Mico Devices

‘le

Banco Azteca

Belden

Blockbuster

Boeing Ca

ri

ico Systems

Comcast

Danater Com.

Dai 262,75
Din Domus, 26
‘eMachines 76
ayy a
Lily & Co. 6
EMC Corp. mn
EMC Innovation Network 75
EMC Research China 15
Energy Brads (Gac) 262
Facebook 24, 25,26, 28, 30,03
Fahd Semiconductor is
Food and Drug Adminsraton (U) 2
Fond Motor Co. 2
Founder Technology Group Corp. %

Gate International
Gateway
General Eee Co.
Gode
Grupo Bimbo
Haras Entrainment
Henlet-Packrd Development Co.
EX Com.
ee
int Venture: lion Valley Network
‘eine Perkins Cad & Byer
linked
‘Te London Schoo of Economics
and Poltica Science
Met, Oregon (regional goverment o)
Microsoft Com.
National Grid
National Labor Relations Board (US)
[atonal Semiconductor Cop
Neti
New Zealand (Goverment of)
ovo Nordisk
Ohio state government of
Ohio iil Service Employees Associaton
(Ohio Shared Ses

1.2430
ons
rn
e
a5

Oregon 200
Packard Ball

Pandora

Pepsico

Pepsico Finance Univers

Pioneer

Polar Indios

Polaroid

Preston, Georgia cy government of
Procter & Gamble (P86)

Retox

Resource Are for Teachers
RightNow

RSA Laboratories

RSA Secu

Sacramento, California (ty goverment of)
Saleforcecom

Schlumberger

Shockey Semiconductor Laboratory
‘Southwest Anes Co.

‘Stanford University

Starbucks

Sula England

Tata Group

Tata Motors

Tip-Ex

Toshiba Corp

Tuck School of Business, Dartmouth College 64
iter 24, 25,27, 28, 30,37
United lines 25.27
urs 7, 19,20
US Green Buiing Coun n
vor 15
Visio a
Var 5
Weste, Gorga (run goremmento 83-84
‘Weston, Georgia (ty goverment o) »
Ken ni
Xing 2
Yahoo >
vost 24,25,27.28

>
« Consulting» Technology «Outsourcing accenture

Accenture Outlook Journal February 2011

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