IBM - UTi
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Choosing Your Innovation Engines Dr. Bill Davidson May 2012
Getting Started
If innovation is 1% inspiration and 99% perspiration, strategy is 50% contemplation and 50% implementation. Where and how do we focus our innovative energies and talents?
Innovation Arenas
• • • • • •
Product Process Solutions Channel Organizational Business Model
Core Strategy and Business Model BUSINESS STRATEGY
Structure, job roles & reporting lines Organization
Beliefs, values, norms & style
Culture
Business Portfolio And Model(s) Systems
Processes, infrastructure
People
Skill levels, Management and Leadership Capability
IBM’s Client-Centric Solutions Model E N T E R P R I S E R E S O U R C E S
Front –End OMS
Champion
Proposal Team
Opportunities
Proposal
Delivery Team
Back- End Function and Infrastructure
C L I E N T N E E D S
Entrepreneurship And Order
“At IBM, we tolerate wild ducks… so long as they fly in formation.”
Tom Watson Jr., IBM CEO
Core Strategy and Business Model BUSINESS STRATEGY
Structure, job roles & reporting lines Organization
Beliefs, values, norms & style
Culture
Business Portfolio And Model(s) Systems
Processes, infrastructure
People
Skill levels, Management and Leadership Capability
The Volvo Way
Strategic Coherence – Focused set of similar businesses based on common technology • Market Leadership positions • Global strategies • Departure from the consumer automotive business
Strong Management System – Core Principles and Practices • • • •
Team Focus Consultative/collaborative leadership Enterprise Functions and Processes Limited Entrepreneurship
– ` Audit and Intervention Top Executives Leadership Program - Learning Expeditions
The Volvo Way
Clear Business Strategy – Global Market Leadership in Long Cycle Industrial businesses with common core technologies Single environment type, single strategy permits single organization and management model Very clear, explicit Management System ~ Volvo Way
Right Results Hi
Performance
Right Way Lo Lo
Hi
Conformance
Top Executives Leadership Program - Learning Expeditions
The Volvo Way
Team Focus
Customer Focus
Clarity of Goals
Human Potential Conviction
Collaboration
Trust
Respectful Communication and Feedback
Relationship Focus
Volvo Production System
Top Executives Leadership Program - Learning Expeditions
The Volvo Way
Team Effectiveness Reviews Organizational Survey of all teams, plus Senior Team – “if the senior team is not working well, it will waste the
teamwork of the rest of the company”
– Numeric ranking – scores below 75 receive intevention – Were goals clear? Inclusion in setting goals? Quality of PBP review?
Universal Leadership Development Process
Annual Ratings and Reviews
Personal Business Plans – all employees
Management Team Reviews of Personal Plans
Succession Planning
Top Executives Leadership Program - Learning Expeditions
The Volvo Way
Introduced Matrix in 2005 – “If you get agreement in a matrix, you win”
“No place for entrepreneurs”
KPI was reducing number of systems
Harmonizing processes
Standardization not centralization
Lean corporate functions
Went from 2 Business models to one(auto)
“Not new but a discovery of who we were already”
Company has Chosen - FIFO
Top Executives Leadership Program - Learning Expeditions
Volvo’s Integrated Value Chain
• Complementary Businesses allow effective integration of Product Development, Procurement and Power Train technology(PPP1) activities in a single supply chain structure. • Significant gains realized also from PreProduction Planning(PPP2) to align design, supply chain and production.
Wal-Mart's Strategy Diamond G,SA/Sales ↓ GSA + GM < Comp GSA Procurement “Buy For Not Sell To”
IS Suppl y Chain
Cross Dock DC DTS
Trucking Store Network Location Strategy
CGS ↓
Price < Comp Cost
Low Margin High Volume
Real Time POS IS
Inventory Turns ↑
Sales/SF
Limited Competitio n Labor Costs ↓
Store Config.
Real Estate Costs ↓
Low Everyday Prices
Starting A New Cycle
The Critical Duality
Operations Optimization Discipline Processes Metrics Functions Internal Bottom Line
Perform
Transform
Strategy Innovation Creativity Customers Markets BU’s/Projects External Top Line
The World's 50 Most Innovative Companies* Stock Revenue Margin Returns Growth 2005- Growth 2005- Known for its Most 2005-08 * 08 ** 08 *** Innovative
2009 2008 Rank Rank Company HQ Country 1 1 Apple U.S. 2
2
Google
3 4 5 6
3 5 7 12
7
15
8 9
13 10
10
23
Toyota Motor Microsoft Nintendo IBM HewlettPackard Research In Motion Nokia Wal-Mart Stores
(in %) 5.9
(in %) 30.4
(in %) 15.8
U.S.
-9.5
52.6
-8.2
(% who think so) Product (47%) Customer Experience (26%)
Japan U.S. Japan U.S.
-20.7 -8.0 36.7 2.3
4.2 13.5 61.1 4.4
-35.9 -1.3 20.6 14.3
Process (35%) Process (26%) Product (48%) Process (31%)
U.S.
9.1
10.9
31.6
Process (39%)
Canada Finland
24.6 -8.3
74.1 14.0
11.2 -10.3
Product (53%) Product (38%)
U.S.
8.0
9.1
-2.1
Process (49%)
*Business Week 2009
Supply Chain Innovation
Apple’s Strategy Innovations Reverse Razor and Blades
OPB
Virtual (not vertical) Integration Supply Chain Innovation Cycle Time Acceleration Negative Working Capital
EcoSystem
}
Market Development Focus Black Hole Sector Strategy
Parts to Profit Cycle
KISS
Smart Phone As Black Hole Music Systems
Watches PC
Protable Music Devices
Smart Phones
PDA’s
Digital Camera
Mobile Phone Portable TV
Utility (e.g. Leap)
Calculators GPS
Dictation Device
TV
Management Model and Strategy Focus Innovation
HP VIRGIN
IBM NOKIA
Autonomy
Enterprise
GE EXXON TOYOTA Optimization
Business Development External Customers Markets
Growth
Optimization Internal Assets Metrics Returns
Topline Sales
Bottom-line Operations
Creativity Standardization
Economic Cycles % of GNP 100%
Hunting & Gathering
Agriculture
Industry Info Bionano
Cisco’s Innovation System • Cisco outsources more than 90% of operations – More than 90% of manufacturing is third party • 1000 plus component suppliers • 31 EMS/ Contract Mfg partners • 17 logistics providers
– More than 90% of sales and service is third party • Thousands of channel partners
– Focus on Value Chain Management, Strategic Alliances
• Company focuses on opportunity identification and development – 30 plus strategic development initiatives • E.g. Telepresence, IPTV, Smart Home
• Half the company is current business, half is strategic initiatives
Cisco Strategic Programs China 2.0
Virtualization
Cisco 3.0
Video Compression
Emerging Markets 2.0 service) Green
SAAS(software as
Smart Grid Connected Buildings
Cloud Computing
Smart Home
Innovation Processes • Geoffrey Moore Playbook – Find/Filter/Incubate/Initiate/Accelerate • I Zone – Idea Zone on web • I Prize – global contest for new product ideas
• Sales is as active as engineering in development phase • “Sync or Sink” • Agile Development – “scrums”, lots of intermediate releases, quick turn around, wisdom of crowds, ecosystem
Cisco’s Innovation strategy • “Collaboration accelerates productivity, growth and Innovation” • “A lot of our life is in the strategic innovation/transformational arena” • Innovation Ecosystem includes Governments, NGO’s, Industry Associations, Academia and supply chain partners
• Global Program office oversees the portfolio of 30 plus strategic initiatives, each with its own leadership board(virtual) – 23 Councils, more boards and more task forces • Distinguish between Ops half of the company(structured), and strategic development half(virtual)
Business Model Innovations •
Informationalize the business
•
Smart Products
•
Product to Solution migration
•
Service Innovation
•
Value Proposition reengineering
•
Channel Innovation
•
Customer Centricity
•
Mass Customization
•
Market Redefinition(Seize Transition opportunities
)
Netting it Out
• Numerous Opportunities for Innovation • Supply Chain is particularly fertile ground • Customer Facing process Innovation delivers strong, sustainable results • Business Model Innovation is most powerful and most demanding • Collaboration is critical inside and out • Nothing focuses the mind like a crisis
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