BY DONALD L. LAURIE, YVES L. DOZ, AND CLAUDE P. SHEER Oyster International 12-year Research |...

BY DONALD L. LAURIE, YVES L. DOZ, AND CLAUDE P. SHEER

Oyster International 12-year Research | Harvard Business Review

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Building Corporate Growth – MME 34- 12 November 2009

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Forces of ChangeForces of Change

High Growth Industry High Growth Company


Industry Growth Rate Slowed

Company Growth Performance Gap



Extending Business Model to areas where they did

not fit well

Developing business models the companies were unable to operate

Acquisition, which destroyed more value than they create

Growth DeclineGrowth Decline

Question: where does new

growth come from, real, profitable,strategic growth

that leverages the corporation’s capabilities

and know-how?

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Turn AroundTurn Around

1. Redefining profit driver2. Building better business model 3. Moving into Adjacency (contoh paling kuat

Nokia).4. Breaking Compromises (compromise =no

choice). 5. Creating New Growth Platform (NGP)







New Growth Platforms•Top Management Commitment

•Independent senior level NGP unit

New Growth Platforms•Top Management Commitment

•Independent senior level NGP unit• build families of products, services, and businesses

• extend their capabilities into multiple new domains

• Acquisition: acquiring specific capabilities, assets, and market knowledge

Significant & Lasting Growth

Significant & Lasting Growth

Question: where does new

growth come from, real, profitable,strategic growth

that leverages the corporation’s capabilities

and know-how?

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Research Project “The CEO Agenda and Growth” to 24

companies with significant organic growth

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Forces of Changes

Identifies potential NGPsIdentifies potential NGPs

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Back to slide 6

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Capabilities needed for NGP

ACQUISITION AND INTEGRATION OF CAPABILITIES

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Capabilities needed for NGP

Purchase INTEGTo apply IDNT to Inverness’ Diabetes Testing

ProductsMaintain 10 employees whose recommended skills, and focusing them on the

Project

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Identifies potential NGPsIdentifies potential NGPs

1900s: small parcel delivery Mid 1900s: industry maturing, low GDP growth

UPS growth gap $1Bio

Need for “new strategic positioning” and “new growth platforms

What UPS CEO Oz Nelson did? established an organization of direct reports = NGP Group

Consist of smart, credible people; led by Mike Eskew: sr operating executive senior people who had diverse backgrounds, credibility within the

organization, and the strength to frame and address issues that cut across business and political interests (not up-and-coming middle managers or innovative misfits

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Questions: Who are we?

We know we deliver packages, but we are also a technology company, an airline (the ninth largest airline worldwide), an insurance company, and one of the largest purchasers of railcar capacity in the world

What are our capabilities, know-how, and assets? UPS’s strengths were its unique market position of providing the

physical connection between buyer and seller, as well as operational excellence, network planning, and global infrastructure

Next: identify the trends that could shape opportunities in UPS’s various market spaces in which the company searched for customers’ unmet needs. customers needed to understand and control the flow of goods during

transport Enabler: technology that could globally integrate information,

transportation, and payment.

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How they found the customers’ unmet need One customer approached with a problem: A major PC manufacturer’s customer service representatives request of one-day

and same-day delivery Shipping location: US=4, EU=4, Asia=2 Work: overseeing central stock, field stock, transfer and returns

OPPORTUNITY: Managing Flow of Goods for Customer Action:

Met with PC company to understand computer industry value chain From customer calls to inventory and logistic management To installation at the customer location

Identified which activities the PC company wanted to manage and which it was willing to outsource

Develop solution: forming SPL(Service Parts Logistic) Prototyping & Market Test

New Growth Platform: supply chain management service Action:

creating a warehouse in action to manage inventory in supply chain

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SPL solid capabilities in supply chain management services

Finding other applications and opportunities to other industries with similar issues: Medical Research and Health Care Supplies Business Customer’s needs: quickly

transport goods needed on very short notice

Action: acquisition of Livingston

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Originally: focus on Pacemakers Change agent: CEO Bill George and CEO Art Collins New platforms:

Products assisting in the treatment of cardiovascular, neurological, spinal diseases, diabetes

Independent and embedded NGP Unit in Metronic Implantable Cardioverter Defibrillator

Established an independent business unit an led by high-potential manager To develop ICD technology No pressure on delivering short-term financial result Without oversight of traditional approaches Collaborative relationship with pacemaker unit

Leaders’ role Referee and enable functional interaction, resource allocation, and

priority setting (Griffin) Champion the organization structure and resource allocation and

making it received the same level of attention from CEO as the larger unit by

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Originally: branded consumer goods manufacturer Change agent: CEO A.G. Lafley NGP Unit: FutureWorks

stand-alone BU to build growth platforms and search for opportunities between and beyond of existing BU

Challenge of Platform 1. Put credible chief growth officers in charge

2. Believe that the team is more important than the idea

3. Have NGP units that are independent and embedded

4. Guarantee financial independence

5. Systematize the NGP creation process

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Believe that the work is important Establish business innovation as a priority Take the best people Become engrossed in the work Feel that he will learn and the answers will come

Common trap for CEO:Focus on the performance and morale of the large core businessesCommon trap for CEO:Focus on the performance and morale of the large core businesses

If a CEO didn’t comment on poor package handling, workers and supervisors might conclude everything must be all rightIf a CEO didn’t comment on poor package handling, workers and supervisors might conclude everything must be all right

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Lead in identifying the revenue gap Spend time with customers Be an active participant in the NGP unit’s discussion Spend significant time (50%) for NGP

Delegate responsibility on the core business to others

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“Now when we identify a new product opportunity, we examine it through the new platform lens. We are looking for the products, services, or businesses that can be created from this innovation that we had not yet begun to consider. By doing that we accelerate time to market and generate hundreds of millions of dollars in additional revenue.”

(Gil Cloyd – Chief Technology Officers of P&G)

“Now when we identify a new product opportunity, we examine it through the new platform lens. We are looking for the products, services, or businesses that can be created from this innovation that we had not yet begun to consider. By doing that we accelerate time to market and generate hundreds of millions of dollars in additional revenue.”

(Gil Cloyd – Chief Technology Officers of P&G)

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Finding New Growth Platforms

Finding New Growth Platforms

•Establish NGP Unit

•Top Management Commitment

•Explore NGP

•Customer Problem: WHERE

Unmet - Dissatisfaction

•Market Trend’s: WHAT

Faster or Bigger

Process (HOW)

NGP ExecutionGood

CompanyGood

Company

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Turnaround: The recovery of a company’s

economic performance following an existence threatening decline

The dynamic of Declining Performance Strategic frames becomes blinders Process harden into routine Relationships become shackle Value harden into dogmas

Pemecahan masalah: Turnaround

Cari Key performance, petakan performancenya over time.

Yg membuat penyebab penurunan kinerja tidak terlihat adalah sbb:

Pandangan yg membutakan (arogan), ct.IBM dulu believe komputer terkecil yg akan pernah ada adalah ukuran 2ton seperti yg mampu dibuat IBM krn dia believe yg paling pintar ada di IBM

Hub dg customer menjadi terbelenggu, terlalu lekat dg customer yg sama sementara consumption rate turun, ct kasus bir kirin (tentara) vs asahi (anak muda)

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The recovery of a company’s economic performance following an existence threatening decline

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The management fails to listen to warning signs and believes only its own rhetoric

The management makes a poor choices or no choice at all Management makes misrepresentation to the outside

world

(melihat dunia tidak boleh bersaing)

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The management breaks down The employees concentrate on their own agenda

Some people began to do minimum, showing up at work just to earn their end-of-year bonus

As problems mounted, people tended to either blame or avoid one another

People’s time and energy were spent on self protection instead of joint problem solving

It became rare for all the senior executives to sit down in one room together

Finally, people become passive and helplessness

Sign to turnaround

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Is a person who has the ability to convince others to follow the path he or she decides

The role is to change a company for the better The function is to save the company

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1. Who they are

The turnaround leader should be able to lead and manage all the critical ingredients that make up a good turnaround

Turnaround executive is a spectrum ranging from those:

“who specialize in crisis stabilization” to “who undertake the complete turnaround” Crisis stabilization, recovery, and return to growth

2. Who they are Crisis Stabilization Executives:

aim is to ensure that caused the crisis is in the first place Complete turnaround Executives:

aim is to deal with the underlying caused of decline and bring the conmpany return to growth

Initiate and lead refocusing company’s strategy, process improvement, and organizational change

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Recognize performance declined Asses financial condition

Stabilization Conserve cash (amankan uang kita, krn so far blm pernah ada

kredit utk turnaround process)

Safeguard assets (jaga aset)

Foster open communication Reorganization

Review business strategy Review management process Sales of business (utk dapatkan uang)

Return to growth Develop and implement new business strategy

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BY DONALD L. LAURIE, YVES L. DOZ, AND CLAUDE P. SHEER Oyster International 12-year Research |...

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Transcript of BY DONALD L. LAURIE, YVES L. DOZ, AND CLAUDE P. SHEER Oyster International 12-year Research |...