Cross-industry collaboration: Creating the enablers for disruptive models

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Information technologies, mature markets, relentless demand forinnovation, environmental concerns and the uncertain economyare combining to drive the emergence of new growth scenarios,which are spurring companies to fundamentally rethink theirgrowth strategies.

The vision of an economy as a set of independent industries –each serving its own customers, with its own suppliers and itsown innovation chain—is in many ways outmoded. Newcollaborations are emerging that stretch well beyond historicalindustrial boundaries, nurtured by mobility, payment systems,open information, energy management and infrastructuredevelopment. This new breed of cooperation is all aboutunlocking synergies and exploring fresh opportunities.

Although in recent years numerous factors have combined toencourage cross-collaboration among different industries, thistrend has yet to gain any real traction. The main question iswhich enablers are missing to spur the development of newcross-industry ecosystems?

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According to a series of convergentAccenture studies, the growth of tomorrowwill increasingly come from beyond acompany’s immediate, natural environment.In particular, our research has identified fivegrowth territories, each requiring disruptiveapproaches and collaborative models:

1 | Information technologies andincreasingly vast pools of dataoffer gateways to link previouslydistinct ecosystems and bring them closer together. The surge of information technologies hasmade them indispensable to designing andmarketing new products or services. Rapidlychanging technologies are opening upmyriad paths to innovation, while stimulatingthe development of capabilities that cannotalways be sourced internally.

What’s more, the intimate knowledge acompany has of its own customers’ needs –through analytics management, for example –might prove very useful to another company,providing an asset that can be developed inaddition to the company’s core business.

Information systems based on openplatforms facilitate collaboration betweendiscrete ecosystems or environments.

2 | Emerging markets are pivotal to future growth, but presentserious obstacles that can beovercome with forward-thinkingdisruptive approaches. If they expect to see a satisfactory return on their investment, companies have tooperate differently in emerging marketsthan in mature ones. Developing an offertargeted to emerging markets also meansreinventing the right business models,which very often requires cross-industrycooperation.

3 | Environmental concerns are nolonger viewed as a hindrance tobusiness growth, but ratherdevelopment opportunities thatcan be pursued with partnerenterprises. The new sources of growth being created by environmental issues very often need a collaborative strategy across differentindustries, such as energy, technology or construction. For example, energyperformance contracts might be based on cooperation between an insurancecompany, a bank, a construction firm and an energy equipment installer.

Growth is increasingly capturedoutside a company’s immediate,natural environment

Regulators

Key suppliers

NGO

Clients

Prospects

Financial Markets

IndustryA

Rare Interactions

Potential Interactions

Regular Interactions

Regulators

Key suppliers

NGO

Clients

Prospects

Financial Markets

IndustryB

Rare Interactions

Potential Interactions

Regular Interactions

Common Technologyor information

Extended Ecosystem

Industry A Ecosystem Industry B Ecosystem

Common or shared information systems figure among the most powerful levers to drive interaction between two ecosystems

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4 | Projects are now subject to theavailability of financial resources,spurring the emergence of newmodels. Burgeoning public debt is forcinggovernments to reposition themselves asinitiators and no longer as sole specifiers for public sector procurement. Indeed, thegrowth of public-private partnerships is duemainly to the dearth of state and municipalfunding for infrastructure projects. At the same time, the current instability infinancial markets has made access to freshcapital more complicated for many privatesector firms. Sharing costs and risks has

therefore become a necessity for bothprivate and public sector companies, whichin turn calls for creative business models,increasingly based on cooperation.

5 | The maturity of Westernmarkets is encouraging companiesto define new sources ofcompetitive differentiationAlthough innovative and disruptivepositionings are often risky and difficult to achieve, they remain the ones thatgenerate the most growth. When themarket becomes more competitive andwhen new business and consumer needs

and expectations emerge once basic or“natural” needs have largely been met, thencompanies have to identity new needs andnew solutions capable of capturing growthelsewhere. Also, globalization has vastlyexpanded both the competitive arena andthe corporate ecosystem. Consolidation isno longer enough to allow companies toretain a hold on a position or a market.Alliances between companies from differentindustries can guarantee differentiation andcreate novel, distinctive offers.

Examples of cross-industry collaboration

Banking

MobileCommerce Digital Consumer

Retail

EHT

Comms

Banking

ConsumerRetail

Comms

EHT

IntelligenceInfrastucture

Travel & Transport

Utilities

Energy

Automotive

Sustainability

PublicService

Retailisation

Retail

Consumer

Banking

Postal

Comms

Energy

EHT

Agri-business

New Energy

Energy

Automotive

Cap Markets

Commoditytraining

Energy

Utilities

x-Industry Networks• Health and Life Sciences• Aerospace and Defence• Digital Citizen and Consumer• Manufacturing

These cross-industry collaborations arestructured to meet multiple objectives:• Introduce new financing models basedon flexibility and partnership, includingpublic-private vehicles. For example, topromote initiatives to reduce its carbonfootprint, the city of Amsterdam hascreated a federated ecosystem comprisingenergy grid manager Alliander, the telcoKPN and Accenture.

• Enable technological and economicleapfrogging: the Better Place initiativeproposes an innovative electric vehiclesolution by federating a large ecosystemthat includes financial partners, utilities and automakers. • Develop new markets and opportunitiesin emerging economies: in Africa, m-payment solutions have created a wholenew financial services industry thanks topartnerships among telecom operators,

banks and insurance companies. Some 30% of financial transactions in Kenya are now managed via mobile phones. • Create greater value and differentiationin mature and extremely competitivemarkets: energy performance contracting is an area that combines the skills of aninsurance company, a bank, a constructionfirm and an energy equipment installer.

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Today, there are two main types of cross-industry collaboration, both clearly focusedon the long-term, but with differentobjectives:• Collaborations formed to secure financing. • Collaborations designed to invent new

business models.

Collaborations formed to securefinancing are becoming moreflexible and focused on partnering. Originally, this type of cooperation mainlyconcerned public-private partnerships,although this broad category in factencompassed a wide variety of differentmodels. Over half the PPPs set up in emergingcountries between 1990 and 2001 wereconcessions or privatizations wherecooperation between the government and the private sector was limited to thefounding contract . These agreementsobviously included technical and qualityobjectives, but they appear to have beensecondary to the initial issue of financing,

as somewhat of a positive byproduct of theoriginal contract. Moreover, today PPPcontracts1are considered to be too complexand inflexible. They lock participants in forextended periods (often 20 to 60 years) and are unable to integrate major shifts intechnology or environmental concerns.

PPPs in search of a second wind.In the area of municipal services, however, an entirely different approach is emerging. In the Netherlands, the city of Amsterdamhas teamed up with energy grid managerAlliander, telecom operator KPN andAccenture to create an experimentalecosystem propitious to initiatives that willreduce the city’s carbon footprint. Lookingbeyond the basic commitment to fundingdeployment or redeployment of cleaninfrastructures, Alliander and the municipalityhave created a platform where a diversearray of different sized companies can shareexpertise and jointly lead a certain number ofprojects to improve mobility and theenvironment, thereby benefiting the entirecommunity. Amsterdam is but one exampleamong the “smart city” initiatives that reflectrenewed interest in both public-private andprivate-private cooperation based on simpleand innovative collaborative businessmodels.

The motivation behind today’s cross-industrycollaborative models goes much deeper thanjust arranging financing and is shifting to theco-construction of disruptive businessmodels.

Cross-industry ecosystems drivemajor technological leaps andbusiness transformations.Electric vehicles offer a compellingillustration of how cross-industry ecosystemscan usher in major paradigm shifts. As seenin Israel, Australia and Denmark, EVs hope to

capture new growth in demand for transport,accelerating the transition to an economicallyresponsible personal mobility model. TheBetter Place battery leasing initiative isstructuring a new ecosystem, from thedevelopment of EVs with removable batteriesby automakers to the installation of anetwork of charge and swap stations. Theinnovative system is further differentiatedby a flat-rate billing system, with inclusivemileage for a given period. This allowscustomers to lease an EV equipped withhigh-performance batteries that can beconveniently charged or replaced. In thisway, Better Place wants to introduce atotally new transportation business model bypositioning itself as the provider of an end-to-end network and services solution forelectric vehicles. This includes developingand maintaining a smart grid infrastructureand deploying the underlying hardware andsoftware solutions. However, the companybehind the project does not itself have all theexpertise needed for the different components.Instead, it has structured the ecosysteminterlinking public authorities (who supportdevelopment through tax credits),automakers Renault, Nissan and Toyota (whodevelop and maintain the EV technology),battery suppliers, energy suppliers andinvestors (VantagePoint Venture Partners,HSBC, Israel Corporation). This is a largelyunprecedented approach that is very muchaligned with new sources of growth.

At the same time, Accenture’s work on thefuture of rail transport has confirmed theemergence of disruptive initiatives involvingmultiple industries that are transforming theway we travel, notably with intermodalintegration and geo-location services likejourney planners. For example, geo-locationcould play a new role in managing passengertraffic in train stations. Tools like these havealready been successfully deployed in

Cross-industry initiatives areleading markets forward

1 Marty, Frédéric; Trosa, Sylvie; and Voisin, Arnaud, Lespartenariats publics privés, Paris: Editions La Découverte,2006.

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Energy Providers

Equipment Providers

• Alstom• Bombardier• Bosch• Nissan

• Schneider Electric• Siemens• Thales

• Alliander• EDF• Enel

• GDF SUEZ• Veolia

Construction Providers

• ACS• BECHTEL• VINCI

IT Hardware Providers

• IBM• IBM• CISCO• Microsoft

IT Solutions Providers

• Accenture• IBM• CISCO

• Microsoft

Finance

• CITI

A rich and extensive ecosystem of companies to develop smart cities

Analytics/IT integrationProviders

Close-up on the Amsterdam SmartCity ecosystem

Initiators

Time

• Alliander• AIM

• Cisco• GVB• Telematica• Rabobank• Universiteit van Amsterdam• IBM

• Alliander• Far West• Favela Fabric• Accenture• JC Decaux• Philips• Nuon

• Albert• Essent• Plugwise• KPN• Google• Powermatcher• Eneco• ING

Active partners Interested

A rich and extensive ecosystem of companies to develop smart cities

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airports, as seen in “My Way Aéroport deParis”, which geo-locates a passenger in the airport and suggests itineraries. This base could be used to develop new services in collaboration with other stakeholders,such as GAP Mobile 4U, which sends Gapcustomers text messages with personaloffers for deals at the nearest store. Moregenerally, very diverse segments of thepopulation have now come to expectuninterrupted connectivity and virtualinteraction. Travel is no longer perceived as a solitary experience, and families, businesstravelers and teens all want to be accompaniedthroughout their trip. Transportationproviders, ISPs and, thanks to an open model,a vast array of different businesses cancollaborate to enhance the travel experienceand address this emerging trend.

Emerging markets offer particularlyfertile ground for developing cross-industry ecosystemsThe fast growth in mobile payment solutionsin Africa – notably Kenya, where 30% of alltransactions use mobile phones – is theresult of an alliance between telecomoperators and banks. This eloquent exampleof cross-industry convergence addresses thevery low percentage of the population withaccess to conventional banking services,coupled with the local retail banks’ lack ofgeographic coverage. M-payment solutionsleapfrog the infrastructure developmentstage, made possible in Western nations bythe industrial revolution, and simply create a market economy. M-Pesa, the mobilebanking service introduced by Safaricom inKenya in 2007, topped 13 million customersin 2011. The service lets customers depositmoney in their account, withdraw cash via a

much denser network than any bank canoffer, and transfer funds with reduced fees.M-Pesa enjoyed robust growth by leveragingthe telecom operator’s customer base and amigratory population. For telecom operators,mobile payment is an additional revenuestream due to both network use and the offer of new transaction services. For thebanking partners, mobile payment provides a low-cost channel to enter a market with a low-income population and stillgenerate a profit.

Health services is another area characterizedby an innovative development model thatintegrates information and communicationstechnologies and healthcare. Solutions forremote reading of X-ray images at regionalhospitals have been implemented in Mali. InEgypt, Orange has developed teledermatologysolutions to offset the shortage of doctors byeliminating travel and enabling them tofocus on diagnostics and advice. The Pesinetservice in Mali, Senegal and Niger providesremote access to primary healthcare forchildren by capturing data and transmittingit over the GSM mobile network2.

Cross-industry collaborations must create greater value anddifferentiation in mature andextremely competitive marketsEnergy performance contracts, for example,add value in situations where at first glancethe market seems static; e.g. when buildingsare already constructed, customers alreadyhave contracts with a utility, andconsumption levels are recurrent. With aperformance contract, however, anecosystem of partners commits to reducingan owner’s energy bill, carrying out any

necessary refurbishment or upgrades toreduce consumption and instilling behavioralchanges to reduce consumption even below the owner’s target. The company orecosystem managing the contract thenreceives a performance fee based on thedifference between the owner’s target andthe even lower level of actual consumption.

Here, value can only be created by formingan ecosystem focused on results rather thanresources, and capable of deploying expertisein construction and energy installations(provided by both large and smallcontractors), a financing solution (with theinvestment repaid by the resulting energysavings), and an insurance solution (given theuncertainty of the gains). Germany has beena pioneer in this type of contract, which isnow being adopted in other countries.

These approaches remain experimentalinsofar as the viability of the models cannotbe fully guaranteed from start-up. But thistype of ecosystem necessarily has a positiveimpact on its environment since energyefficiency is the primary, if not the only,source of compensation. This makes itessential for the service providers to developinnovative tools, techniques and expertisethat will further reduce the customer’senergy consumption. A virtuous dynamicemerges that reaches beyond the limits of anindividual project to have a positive long-term impact on the community ecosystem.

Even though cross-industry initiatives aremanifestly a viable and dynamic means ofcapturing future growth, they are not yetwidely deployed. Below, we take a closer lookat some of the factors that could encouragetheir development.

2 TIC et systèmes de santé en Afrique, Note de l’IFRI, juin 2010

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Develop greater entrepreneurialspirit and open project platformsThe entire enterprise should be infused withan entrepreneurial dynamic, tearing downwalls and desiloing the organization. Inparticular, this requires a “test & learn”philosophy, which sees trials as a learningopportunity, with an exploratory mindset, to gauge usage or technical feasibility, forexample. Exploring means accepting thatseveral possible scenarios may be pursued atonce, welcoming new ideas and innovativeconcepts, and acquiring the knowledgeneeded to implement them. The key to asuccessful disruptive strategy lies in theability to manage the different aspects ofthese explorations and to chart a course to concrete, viable results.

Accenture’s Intelligent City network is astrategic initiative to support ecosystemsaligned with the environmental and urbanplanning objectives of modern cities. It hasidentified key best practices that enableeffective day-to-day collaboration amongpartners. The Amsterdam Smart Cityplatform spans a range of urban planningand environmental projects initiated by the municipality and energy grid supplierAlliander. A pivotal clause in the partnershipagreement stipulates that the platform mustact as a vehicle to cascade best practicesamong partners, SMEs, industrial companiesand local authorities. The platform is “open”not only because it encourages informationexchange and participant involvement, butalso because it continually monitors thedegree to which engagement andinterdependencies are truly effective. Theopen platform thus becomes the host for thedifferent spaces impacted by the initiative.

Constantly focus on proactivecoordinationA significant share of project resources mustbe allocated to forging links among partners,which means much more than simplyensuring that everyone is aligned withcommon objectives or resolving conflicts. At each stage, project management needs to leverage the wealth of expertise from thestakeholders to multiply the value createdand address issues as they arise. Projectmanagement must also ensure open accessto data and find innovative ways to use thedata storehouse. A balanced collaborativeproject management model is facilitated byseveral factors. Objectives and timelinesmust be clear and shared, the remunerationof certain partners must be based entirely or partly on results, and trials and pilotinitiatives must be authorized. Also, a

systematized approach and tools areessential for key project components, such as management of the business case.

In particular, project management mustfacilitate the emergence and implementationof forward-facing business models alignedwith the interests of all stakeholders.

Build and maintain open, modular,cross-functional IT platformsBeyond project management per se,information systems play a fundamental role in deploying and operating these newecosystems. In conjunction with leadingtechnology vendors, for example, Accenturehas developed a platform comprisingstandardized information services for keyinfrastructure (housing, energy management,transportation, e-health, etc.). Developed

How to drive faster emergenceof cross-industry ecosystems

Open, interoperableplatform with

intelligentinfrastructurefunctionality

Office andResidentialBuildings

Public Administrationand Services

WasteManagement

Health andSecurity

Transportation

NaturalResource

Management

Education andCulture

An open information platform can integrateand make interoperable the criticalcomponents of an Intelligent City

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with the end user in mind, this standard suitecan be easily adapted to the specific featuresof each sector. The cross-functional infor-mation platform is hosted in the cloud andavailable as a service. This approach hasmultiple advantages: new features andservices can be deployed much faster, andthe platform’s partner companies do notneed to build their own systems. What’smore, they can all access cross-industry

data on their common end customers. As a result, the information system is nolonger simply a function, but rather acustomer-centric growth driver.

Being part of an extended, open ecosystemsupports a shift from a sense of ownership –of customers, suppliers, innovations – to acollaborative, networking mindset thatwants to develop ideas and share successes.

Alone Several

M&A

Incubator

Investment fund

Joint Venture

Network of partners Dedicated subsidiary

Network of partners

Strategic alliance

Organic investment

Integrate an appro-priate ecosystem

Impact on the organization, disruption

Number of players

Local energy sector

Energy leaders

Telecom leader

Global energy specialist

Energy leaders

Energy leaders

Captive funds of industrials

Oil Industry

Automotive equipment, diversified in services, rail, electricity networks

There are any number of possible alliancestructures, each with a more or less greaterimpact on their member organizations.Integrating an appropriate, flexibleecosystem can represent the first steptowards this new strategy, avoiding the often costly process of fully meshing with apartner that might have a fundamentallydifferent culture and operating model.

Cross-industry collaboration structures vary in the degree of integration among the member companies

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Accenture believes that cross-industrycollaboration is a fundamental, long-term trend.

This has led us to create dedicated units to address the challenges faced by thesenew ecosystems in areas such as mobility or m-payment. We have also invested in new solutions based on modular ITplatforms, which are designed to facilitatecooperation between different industriesand to support their business models.

Our DNA and culture make us a naturalvector and facilitator for the creation,deployment and joint operation of theseecosystems. Accenture boasts global andnational networks, is developing andsharing expertise across every industry and works closely with multiple stakeholders.Every day, we are exploring new ways toshare knowledge, structure cooperationamong businesses, integrate complex value propositions for our clients andmanage large-scale projects. Accenturebrings these clients the benefits ofunparalleled innovation research and

knowledge of global and local players,applying these capabilities to form multiplecollaborative models.

We are convinced that this new approach to satisfying customer needs by working in cross-industry networks offers a realalternative to more costly conventionalgrowth models. This new paradigmnevertheless requires robust changemanagement capabilities and a significantorganizational shift so that operatingmodels and corporate cultures can createand nurture these new opportunities.

Accenture’s viewpoint

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About Accenture

Accenture is a global managementconsulting, technology services andoutsourcing company, with approximately236,000 people serving clients in more than120 countries. Combining unparalleledexperience, comprehensive capabilitiesacross all industries and business functions,and extensive research on the world’s most successful companies, Accenturecollaborates with clients to help thembecome high-performance businesses andgovernments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its homepage is www.accenture.com.

About the author

Cédric Vatier is Director of Strategy and Sustainability, Accenture Management Consulting France. Cédric Vatier works on growth strategies, innovation, definition and implementation of new Business Models.

cedric.vatier@accenture.com