Building Technology Organizations of Tomorrow
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Transcript of Building Technology Organizations of Tomorrow
This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulated or reproduced for distribution outside the client organization without prior written approval from Zinnov.
Building “Technology Organizations of Tomorrow”3rd October, 2014
2
Zinnov is one of the world’s leading management consulting firms with a focus on helping organizations globalize their business
Started in 2002 with a focus on helping technology organizations globalize their operations
Operations in Silicon Valley, Houston, Bangalore, Beijing, Singapore and Delhi
120 consultants spread across these locations
Evolution
Service offering
Customer Type
Focus Areas R&D Innovation Talent
Global Business
Corporations
New Age Digital Firms
Government Associations
Balanced globalizati
on
Setup strategy
Growth strategy
GAPBusiness
Transformation
Technology
3
Zinnov’s consulting clientele has a heavy representation from the top 10 of each industry vertical (illustrative list)
ClienteleVertical
Semiconductor/CE
Manufacturing R&D
Enterprise software companies/ storage
Companies
Telecom and Networking
4
Zinnov is a globalization advisory firm with strong capabilities in defining the globalization roadmap for organizations
Engineering & IT
Excellence
Globalization Strategy Review & Definition
Location Analysis & Captive Set
Up
Sourcing Strategy, Vendor
Selection & Vendor
Management
Globalization
Accelerator Platform
Industry benchmarks and
frameworks
Networking opportunity with
peers
Thought leadership and
on demand insights
Branding opportunities
Business Strategy & Expansion
Business Strategy
Account Management
M&A/Operations
Optimization
Customer Connect
Emerging Markets
Direct Sales Maximization
Channel Design and Monitoring
Solution Ideation
Opportunity Assessment & Go to Market
Service Offerings
5
Legacy organizations are being disrupted and are failing to keep pace with the hyper-volatile business landscape
The competitive landscape for organisations has become more dynamic. 465 companies moved out of the Forbes list from 2011 to 2013 and were replaced by a set of new entrants. This is expected to increase to 550 by 2015
465
Companies moved out of Forbes 2000 list between
2009 and 2013
465
550
Companies are expected to move out of Forbes 2000 list
between 2013 and 2015
2000 1535 985
FY 2011 FY 2013 FY 2015
Forbes 2000
6
Top performers of the past have failed to maintain their growth trajectory
141.47There was a drop of
5.2% in the aggregate sales for the Forbes top 10 companies from 2009 to 2014
USD Bn12.56USD Bn
2/10Revenues plummeted
over 6% for these companies from 2009 to 2014
Only 2 out of the top 10 Forbes companies in 2009 still remain in the 2014 top 10 Forbes list
Top 10 (2009)
Decrease in Sales
Decrease in Profits
Retained in Top 10
7
They are facing existential threat because of the dynamically evolving market landscape. There are three key propellers that are driving this disruption
Globalized Markets
Digital at Heart of Business
Hyper Agile Competitors
8
Traditional Enterprises are facing competition from a new breed of companies which are agile by DNA
Emerging Markets Competition
1 Startups2 Tech Mafias3
Adopted a multi-market growth strategy coupled with strategic acquisitions of IBM Peripheral divisions (‘05), Motorola Mobility (‘14) and IBM x86 server business (‘14)
Global leader in PC Sales Global PC
Market Share
16.7%
500M users
Effectively moved SMS from telecom networks to the Internet making it transport agnostic and disrupting the age old telecom industry
Technology diversified company
8%(2009) (2014
)
Loss in SMS Revenues of global telecom service
providers
USD7.5BN
Market Capitalisation share
USD1.5T
N
USD6.1TN
(2013)
G100 companies
Tech Mafias
Search, Google+, Android, Google Glass, self-driving cars – Google is evolving in almost every direction at once and disrupting newer verticals
9
Every industry is facing digital disruption and organisations are in a race to be the digital leaders
Using User Data for Product innovation
The Digital Age
A third of world’s population will be on social
media by 2017
Cloud & Analytics Social MediaCloud applications will account for 90% of total mobile data traffic by
2018
2 billion smart-phones by end of 2015
Mobility
Companies are adopting digital at the core of organization
• Harnessed data analytics to bring them back to the forefront of the industry in 2009 after reporting a loss of USD 12.6 B in 2006
• Leverages its data analytics lab in Silicon Valley to help with real-time analysis for the driver, future vehicle designs among others
Using User Data for Channel optimization• Engages with its customers and captures
the real-time data generated for providing information and alerts
Predictive Success Gauging• Ran social media analytics to assess the
buzz generated by the movie (Pitch Perfect) pre-release
• Data mining from Twitter helped them change their pre-release strategy for the movie
10
USD 30 TNUSD12 TN
USD 26 TNUSD 34 TN
World Consumption( in USD Trillions)
Developed Markets
Emerging Markets
FY2013 FY 2025 ( E)
Rank Country2008-2012 Internet User
Adds (Mns)Y/Y
Growth1 China 264 102 India 88 263 Indonesia 39 564 Iran 35 2055 Russia 33 66 Nigeria 31 157 Philippine
s28 32
8 Brazil 27 69 Mexico 19 9
10 USA 18 3World 902 8
The majority of
the new internet
users between
2008-2012 was added
in India and China
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Rest of WorldEUUnited StatesRussiaBrazilIndiaChina
Eastward moving centre of world economy is putting further pressure on these organizations
Global Middle Class
Consumption, is
expected to majorly increase
from emerging
economies 2000-2020
11
“Organizations of Yesterday” have failed to respond to these challenges and hence are struggling to survive
Organisations of
Yesterday
Hierarchical Decision Making
Solitary/Siloed organizations
Lateral focus on the international markets
Technology dictated product roadmaps
Accelerated growth in focussed verticals
Digital as a choice
Accelerated growth in focussed verticals
Technology dictated product roadmaps
Digital as a choice
Lateral focus on the international markets
12
Organisations of
Tomorrow
Agile decision making
Hyper- Collaborative
Lateral focus on the international markets
Technology dictated product roadmaps
Accelerated growth in focussed verticals
Digital as a choice
Disruptive growth by entering new verticals
User experience dictated product roadmaps
Digital as a Priority
Core focus on international markets
To counter these challenges, there is a need for the organizations to revise their strategic vision and build “Organizations of Tomorrow”
13
“It is not the strongest or the most intelligent who will survive but those who can best manage change.”
- Charles Darwin, Origin of the Species
14
“Organizations of Tomorrow” should be built on three foundational pillars – Digital, Agile and Global which shall be enabled through 5 key levers
Three Foundational Pillars
5 Key Levers
Agile
“Organizations Of Tomorrow”
Global
Markets Talent
Innovation
Digital
Customer Engagement
Operational Excellence
Supply Chain Optimization
Digital Products and Services
1 2 3 4 5
Operations Hierarchy
WorkforceProduct Dev.
15
Encode Digital in DNA
Increased investment in future technologies
Optimize costs in legacy products and redirect savings new products
Go Local for Global Markets
5 Key Levers
5 Key Levers
Explore outwards for rich talent
5 Key Levers to unlock “Organizations of Tomorrow”
Demand
Supply
The scarcity and the competition for talent is bound to increase for the G500 companies
16
302421
336000
Digitally Native
G500 Spenders
D500 Organizations
Digitally Native
G500 Spenders
D500 Organizations
2013 2018
STEM talent
Demand and
Supply forecast
STEM talent
absorption Pyramid
33579Deficit
412401
368071
44330
Surplus Demand
Supply
The talent supply in the US will be inadequate and expensive to meet the future demand for emerging skillsets. The scarcity of STEM talent is expected to become acute by 2018. There will be a forecasted shortage of ~44000 STEM graduates
Going forward, the G500 spenders will face higher talent competition from the digitally native and the D500 organizations. The availability of STEM talent for G500 companies will be further restricted
17
Organizations need to explore newer talent hotbeds to satiate their talent needs
India
178234
China
394535
Mexico
137
218
Finland
1418
Spain
75111
Australia
5680
Poland
112140
Czech
22
36
Annual STEM Graduates( in Thousands)
2013 2018
Russia
196
201
18
Case Study – Google’s globalization strategy is focused on operational optimization and leveraging local talent to drive global innovations
HQ ; 67%
Global
Lo-cations; 33%
R&D Spend Share
Consolidates R&D leadership in the US to allow for quicker decision-making Creates Global CoEs based on Talent availability and access to local markets Optimizes the cost of product support operations by delivering support from
locations with abundant low cost talent Acquires start-ups for deep technology expertise and creates global technology
CoEs
BAY AREA
NEW YORK
KIRKLAND
ZURICH
BANGALORE
SHANGHAI
AND BEIJING LONDO
N
PARIS
TEL AVIV AND
HAIFAe.
LOS ANGEL
ES
BOULDER
Headquarters / Engineering HubSatelliteOutpost
Google’s follows a model of semi-autonomous engineering hubs to leverage global engineering talent
Bangalore / Hyderabad
Map Maker
Search Products
Hangouts for Google +
Google Talk
Video optimization technologies for YouTube
Kirkland
IsraelLive Results
Google Suggest
In-Page Analytics
Sydney Birthplace of Maps
19
Encode Digital in DNA
Increased investment in future technologies
Optimize costs in legacy products and redirect savings new products
Go Local for Global Markets
5 Key Levers
5 Key Levers
Explore outwards for rich talent
5 Key Levers to unlock “Organizations of Tomorrow”
20
Innovation Leaders are looking ahead of disruption curve by making bolder bets on future technologies
Market leaders are increasingly focussing on horizon 3 innovations which are keeping them abreast with the technology curve and ahead of the competition. Even traditional industry players such as automotive, Industrial products, medical devices are investing in technologies of tomorrow which may become core to their operations in the future
Mobile Auto HomeAutomation
Broadband
Horizon 1
Horizon 2
Horizon 3
Process Improvements, upgrades, variants and cost reduction
Google has grown and penetrated newer verticals by investing i`n the upcoming technology areas much
ahead of everyone
Consumer Devices
Building Automati
on
Cloud Services
Virtual Reality
Big Data &
Analytics
Haptic Touch
Ford is focussing on research in areas of Virtual Reality, Haptic touch etc. to
incorporate these technologies in its future programs
New Products serving existing or adjacent markets
Breakthrough Innovations, New Technologies, New Industries
Amazon through its “Lab 126” has focussed on coming up with
innovations in its non core fields
21
Intrapreneurship
Hyper Collaboration
Global Startup Connect
Achieving Horizon 3 Innovations
To catch up with the innovation leaders, organizations need to build an entrepreneurial culture as well as partner externally
• Connect with startups across all your markets
• Create accelerator/incubation programs to identify future disruptors early
• Engage early and engage often• Focus on synergies while making
acquisitions
• Partner with external organizations for joint products
• Partner with academia, start ups and local R&D ecosystem
• Explore Crowdsourcing for innovative solutions
• Build an innovation culture• Build a structured intrapreneurship
program• Reward intraprenuers • Be bold in taking ideas to market
GE Flight QuestGE, used Kaggle, an analytics crowdsourcing platform, to build flight path optimization solution
Post It Notes was result of the 3M’s“Bootlegging Intrapreneurship Program” which allows the employee intrapreneur to spend up to 15 percent of their time at work developing their own creative ideas
Microsoft runs Microsoft accelerators in 7 global locations and has built partnerships with 200 startup-focused organizations around the world
22
Encode Digital in DNA
Increased investment in future technologies
Optimize costs in legacy products and redirect savings new products
Build Products for Global Markets
5 Key Levers
5 Key Levers
Explore outwards for rich talent
5 Key Levers to unlock “Organizations of Tomorrow”
23
Companies across industries are racing to migrate from "analog“ organizations to “digital” organizations
Customer Targeting
& Engageme
ntWorkforce & Partner Enableme
nt
Operational Excellence
Data Driven Product
Engineering
Assisting enterprises increase customer base, engagement, loyalty and advocacy
through targeted promotions and marketing, personalized in-store and online experience
Digital Transformati
on
Enhancing existing products/services or
creating new products/services through
digitization
Helping organizations in not only real-time fraud
& theft detection but also prevention
Building new products based on customer usage patterns and product performance
measurement
Digital Products &
Services
Risk Managemen
t
Enhancing workforce & partner productivity through ecosystem
integration and collaboration
Enabling enterprises optimize their business processes real-time within the organization (incl. support functions, supply chains etc.)
Digital Leaders are enhancing their digital maturity through focus on 6 key digitization areas spread across various business functions including product development, Operations and Marketing
24
Traditional Enterprises need to adopt an incremental and iterative approach in helping enterprises in their digital journey
•Benchmark industry best practices •Determine key enabling technology•Understand internal and external data sources•Strategies, initiatives and activities of digitally native enterprises & start-ups
STEP 1
•Evaluate current state & desired state of business initiatives and prioritize them in terms of:• Business Impact: Benefits and Risk• Ease of Implementation: People, Structure & Technology
STEP 2
•Determine a step-by-step map for digital transformation with respect to:• People (Skills, Talent Acquisition & New Roles)• Processes (Change Management)• Infrastructure
• Part by part implementation of digital solutions incrementally and iteratively along with the required IT infrastructure for those solutions
STEP 4
Think Vision:
Build to a Roadmap
Digital Priority : Assess
business & digital
prioritiesOrganize Digital Team and leverage
Disruptive Technology
Incremental &
Iterative Developme
nt
1 2
34
STEP 3
Partnered with technology vendor Analytic Partners to track how Acuvue Lens campaigns performed across all media by using dashboards that include features like digital sales
odometers, ad-spend waterfall charts & predictive revenue forecasts
Offers a mobile program to expectant mothers in
emerging countries that gives them information about
pregnancy
Created awareness on AIDS by creating a campaign whereby every time someone shared, tweeted or pinned a particular infographic, J&J would donate $1 to the
Global Fund to fight AIDS, up to $100,000
Channel Optimization Analytics
Customer Engagement Real-Time Data Monitoring & Customer Engagement
Challenge: Reinforce the brand image and value proposition of Acuvue Moist, which gives the user “All Day Comfort” due to rich moisture contentSolution: Interactive “Personalized Hydration Expert” mobile app that tracks moisture balance of the user
Real-Time Data Monitoring & Customer Engagement
Case Study: Johnson & Johnson has leveraged digitisation to create high business value
26
Encode Digital in DNA
Increased investment in future technologies
Optimize costs in legacy products and redirect savings to new product innovations
Go Local for Global Markets
5 Key Levers
5 Key Levers
Explore outwards for rich talent
5 Key Levers to unlock “Organizations of Tomorrow”
27
Frequent technological disruptions
Dynamic Customer Expectations
Accelerated Product development Lifecycles
New and Nimble competition
Due the dynamically changing market landscape, organizations are being forced to innovate faster and focus on newer products for growth
>30%Revenue from New
products for Industry Leaders across ISV,
automotive, semiconductor and
Consumer Electronics Verticals
Organizations are building products faster and more
often . The focus is on increasing revenues
through newer products and innovations rather than
growth of legacy product market share
Drivers
New Products were launched
in 2013
300,000+Increasing Focus on
new products
28
To accommodate increased R&D spend on new products development organization need to optimize R&D cost by engaging with external partners
Str
ate
gic
Im
port
ance
Product Complexity
Compet
ency
read
ines
s
Organizations need to analyse their product portfolios based on 3 key parameter to identify
the outsourcing readiness for each product
External R&D
Partners
Offshore Service
Providers
Onshore Service
Providers
Global R&D Centres
Academia
29
Encode Digital in DNA
Increased investment in future technologies
Optimize costs in legacy products and redirect savings new products
Go Local for Global Markets
5 Key Levers
5 Key Levers
Explore outwards for rich talent
5 Key Levers to unlock “Organizations of Tomorrow”
30
Organizations are witnessing growth driven, primarily, from the emerging markets
302005 2007 2009 2011 2013 2015 2017 2019
S&P 500 Cos. Revenue growth by markets
Home Emerging
Primary growth markets
SluggishGrowth
Changing Growth
Paradigm
• The growth in home markets for US companies has been nearly static. On the other hand, the growth in emerging markets has been steadily increasing.
• Emerging markets are expected to drive growth in the near and the far future because of an increasing consumption class size
• A globally diverse consumer market is being created as middle class consumption in India and China is poised to overtake US.
• Asia will become a key market for enterprise software as 1/3rd of all large companies will be based there.
31
To succeed in global markets, organization need to think local, and plan strategies and products locally for each market
1
Localise-> Adapt ->
Relocalise
2
Long term Commitment
3
Build Local channel
partnerships
4Embrace local and
newer business models
5
Empower local
leadership
Winning strategies for Global markets
Case Study: EMC generates ~50% of revenue from outside U.S.A and has set up local R&D centres to meet the local as well as global demands
32
USA; 53%Europe, middle east,
& Africa; 27%
Asia Pacific; 14%
Latin America, Mexico, &
Cannada; 6%
Information Infrastructure
RSA Security
Ownership of Local and APAC products
India
Develop Platform and Layered Applications
Quality Assurance
Support
China
Oil and gas industry innovation hub worldwide.
It has 80 researchers, an Applied Research Center, Solution Development Laboratories
Brazil
EMC Israel Center of Excellence joins design partners (such as startups, mature companies in Israel and globally, and the IDF) to discover ‘the next best thing’ in IT
Israel
• EMC has ~47% revenues from foreign markets• ~45% of the R&D investment is directed towards foreign R&D
centers• Each R&D center has either focus on local markets or is the CoE for
certain technology areas• R&D centers are located in India, China, Russia, Brazil & Israel
outside USA
EMC Revenue Split by Geography
Cloud & Big Data
Information infrastructures
Virtual infrastructures
Russia
Region No Of R&D CentersPercentage contributio
n
USA 11 50-55%
EMEA 10 10-15%
APAC 10 20-25%
Rest of Americas
1 2-5%
33
Texas21, Waterway AveSuite 300 The WoodlandsTX-77380 USAPhone:+1-281-362-2773
Gurgaon Office:First Floor,Plot no. 131, Sector 44, Gurgaon-122002,Phone: +91 124 4420100
SingaporeLevel 42, Suntec Tower Three8 Temasek BoulevardSingapore 038988Phone:+65 6829 2123
California Office3080 Olcott Street Suite A125, Santa Clara, CA 95054 Phone: +408-716-8432
Bangalore 69 "Prathiba Complex", 4th 'A' Cross, Koramangala 5th Block,Bangalore-560 095. Phone: +91-80-41127925/6
BeijingMeilifang Tower 4, Entrance 4, 10/F #1003,11 Beiyuan Shuangying Road,Chaoyang District, BeijingChina 100012
Thank You