Booz & Company
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Transcript of Booz & Company
Booz & Company
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London, September 2011
Succeeding in an Emerging IndustryARCSA Conference, September 27th, 2011
2
Why the rainwater industry is important to me
• Live in Houston – last 11 months the driest in Texas since 1895 and hottest summer in history
• Large water bill - ~$300 per month
• Wife is a prolific sprinkler, but there are severe water restrictions and potential fines
• Water will be the next high priced, scarce resource
• Have built several businesses in emerging industries – lived through the good, the bad and the ugly…
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Today’s discussion
• Rainwater industry growing rapidly
• Key factors for success in an emerging industry
• Questions to consider
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Rainwater industry growing rapidly
2005-2010 15%
2009 35%
2010 88%
Reported growth rates are explosiveAnnual growth rate %
92%
Source: U.S. Rainwater Industry Analysis
Most businesses are growing% growing
93%
79%
U.S. rainwater market to exceed $1 billion by 2015
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130
225
0
200
400
600
800
1,000
+15% annual growth rate
2015
$1B
2009
$426M71
With Significant Growth Potential
Total Market
Government
Commercial
Residential
35%
25%
40%
Accessories
Labor
Tanks
U.S. Market
100% = $426 Million Revenue, 2009
$2B at avg. reported growth rates
Source: U.S. Rainwater Industry Analysis
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Drivers of industry growth
•Increasing water costs
•Water scarcity
•Desire to conserve
•Growing awareness of rainwater solutions
•Government incentives
•Go local movement
Demand side growth•Industry standards developing
•Improving reliability of solutions
•New technologies and product offerings
•Robust industry value chain
Supply side growth
Industry Growth
Source: U.S. Rainwater Industry Analysis
Robust industry value chain
Designer
Average number of employees per business = 14 ( range from 1 to 400) 81% of businesses have certification or license
Over 50% are ARCSA certified Average number of years in business = 6 years (range from 3 months to over 50 years)
Average number of systems installed per business per year = 40 62% of installations are active vs. passive
80%
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Manufacturer Wholesaler Retailer Installer
23% 25% 35% 71%
% surveyed participating in value chain
Source: U.S. Rainwater Industry Analysis
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Today’s discussion
• Rainwater industry emerging and rapidly growing
• Key factors for success in an emerging industry
• Questions to consider
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Feedback from rainwater businesses interviewed
• Interviewed a cross-section of businesses (e.g., designers, manufacturers, distributors, installers)
• Discussed biggest challenges and opportunities facing their businesses and the industry
• Excited about the industry potential and facing many of the same challenges that other small businesses face in an emerging industry
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Key factors for success in rainwater
1. Coherent business definition
2. Customer focus
3. Partnerships with real value
4. Digital capabilities
5. People (recruiting, developing and retaining)
1. Coherent business definition needed
Source: Booz interviews
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“I need to get clear on where I am taking my business”
“I have no business plan yet, but I really need one, and I need capital for inventory, where will I get it?.”
“I need to figure out which customers to target – what industries,
geographic focus, types of customers to go after”
“It’s easy to lose focus in our industry where there is so
much opportunity”
“In the U.S. cities and States keep changing policies, it is hard to decide
where to focus”
“Need to figure out who the customer is, architects, city,
end customer?”
Winning with a coherent business
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The Power of Coherence
Right to Win
How are we going to create value for our
customers?
What do we need to do well for our customers?
What are we going to sell and to whom?
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Coherence creates more value for companies
32
28
24
20
16
12
8
Portfolio Coherence Score
100806040200
P&G
ConAgra
Kraft
Unilever
PepsiCo
Clorox
Sara Lee
HeinzKimberly Clark
Wrigley’s
The Coca Cola Company
Nestle
Campbell’s
Consumer Packaged Goods Industry
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Sources: Booz & Company; Capital IQ; Bloomberg; Automotive analysis based on 2003-2007 financial data
EB
IT %
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
20
22
Portfolio Coherence Score
1009080706050403020
GM
ToyotaPorsche
Nissan
MitsubishiMazda
Hyundai
Honda
Ford
BMW
Passenger Auto Indusry
VW
EB
IT %
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Capabilities must support each other
Example: The Pepsi-Frito Lay Capabilities System
Continuous innovation of new
products with store level response
information going directly to R&D
Skillful global consumer marketing to rapidly build demand for initially successful products
Direct-store delivery (DSD) allowing easy testing of new products by introducing them in a handful of stores
Way to PlayRapid innovation, distribution and marketing to stimulate and meet
customer snacking needs
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Building a coherent business• Define what your business stands for and what
differentiates you from your competitors
• Determine what products and services you will and won’t offer…focus is a good thing
• Decide what skills and capabilities you need inside your organization…focus on those that will make you stand out…less is more
• Put together a business plan with goals, timelines and a financial plan
• Determine where you are going to get capital and find people to help you make it happen
2. Customer focus critical to grow the industry
Source: Booz interviews
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“I stand for transparency, my reputation, customer service and I
don’t burn my customers .”
“We can’t put people at risk, we are talking about their drinking water.”
“Biggest problem is awareness and education…people don’t
realize rainwater is great resource”
“The best solution is a reliable one, it just works
“Solutions need to be easy and complete at the right
price”
“We need to get more case studies out there so people
see the benefit”
“People are actually coming back for more because they
love the experience”
“Everything depends on word of mouth, it’s critical I
do the job right
Booz & Compa
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Zappos best-in-class customer service
:
“No questions asked” return policy
Customer-centric call center reps
Best-in-class product information
Real-time product availability
Net Promoter Score
18
7477
90
0
10
20
30
40
50
60
70
80
90
100
NPS %
Zappos Service Principles
Delivering a winning customer experience
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Installation and service
Conversion and transactions
Awareness and leads Retention and loyalty
• Understand marketing ROI
• Decide where you are going to excel vs. just compete
• Make the customer experience as simple and easy as possible, people want less interaction…not more
3. Partnerships will help drive growth
Source: Booz interviews
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“We need better defined specifications and standards.”
“Regulatory groups are holding our growth back, we need to partner with
them to grow the industry.” “We need to work together as an industry to grow the pie, that means teaming up with our
competitors”
“We need more technical training available in the
industry – partners should help.”
“I always refer customers to my competitors when I can’t meet their
needs…we need to support each other”
Importance of partnering – PC industry example
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Vertical Integration
Horizontal partner ecosystem
Vs.
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Partnering to grow
• Look for a few win-win partnerships across the industry to grow… be careful not to over extend
• Help set open standards and specifications that build credibility
• Support competitors– the goal is to grow the pie
• Invest the time to manage partnerships effectively – they take as much work or more than managing customers
4. Digital capabilities will convert customers
Source: Booz interviews
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“Digital is one of my main marketing tools, I got 3X the
clicks when I started blogging
“The big challenge is going from awareness _ that’s a cool idea – to
conversion, I want to buy a system”
“We use twitter, Facebook, blogging, and online newsletters –
this is the way to go”
“Part of our mantra is to be green, that means we should be using
online marketing, not paper”
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Digital important element in finding customers
19%
25%
29%
57%
78%
80%
Networking events
Referrals
Websites
Internet advertising
Local advertising
Direct mail
Marketing tools used today% using
Source: Rainwater Survey
Digital tools
Digital tools connect businesses and consumers
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DigitalSmallbusiness needs Consumer needs
Mobility
Social media
E-commerce
Cloud computing
Connect and buy local
Save time and money
Get advice and direction
Compete with big enterprise
Benefit from digital world
Solutions to grow, transact and be
efficient
Social media example - Tumblr example
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Reasons for Success Micro blogging for topics of interest,
not friends Simplicity - no learning curve, set up
of a page takes minutes, little time and effort to maintain a page
Easy to share – Re-blogging and other social capabilities are native to the platform
Mobile device compatible – Unlike other blogging software, excels in usability on mobile devices
Source: TechCrunch, BusinessInsider, Press Clippings
Actual blog
Interface
Tumblr growth impressive Vis a vis Facebook
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Tumblr Users vs. Facebook(Monthly Unique Users, million)
Source: Quantcast, Tumblr
WW
WW
US
Social monitoring – Bazaarvoice example Leader in social monitoring and
management (ratings and reviews)
243 billion “conversations” to date
Social commerce partnerships with Facebook and Google
Authentic social monitoring
Helps small businesses be found
Increases conversion rate 77%
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5. Finding the right people is essential to growth
Source: Booz interviews
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“We are dealing with home owners here, this requires great
people skills.”
“If I try to take on more jobs without the right people, my work quality will
suffer.”
“It’s hard to find people for this industry”
“It’s better to focus on fewer, high quality people
than to overextend”
“Finding people is the biggest barrier, they need to be passionate about water”
Booz & Compa
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Managing talent as you grow
Develop• On-boarding• Leadership
Development • Learning & Training• Best Practice
Sharing & Communication
Retain• Compensation• Incentives• Career Advancement • Succession Planning• Release
Management
Attract• People branding• Sourcing• Recruiting
Motivate• Values• Purpose• Pride• Emotional Commitment• Psychic Reward
Align• Vision• Strategic Plan• Performance Management• Workforce Planning• Skills and Roles• People Systems and Processes
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Today’s discussion
• Rainwater industry emerging and rapidly growing
• Key factors for success in an emerging industry
• Questions to consider
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Questions to consider
• What products and services do I want to offer?
• What types of customers do I want to target?
• What makes me unique and valuable to my customers?
• What are the capabilities I need to deliver value to my customers?
• How will I create a great experience for my customers?
• Who are the right partners to help me and the industry succeed?
• How can I better leverage digital tools to build awareness, educate, convert, transact and retain customers?
• How do I find the right people to help me succeed?