Expanding the Innovation Horizon: The Global CEO 2006 IBM Corporation IBM Global Business Services...

© 2006 IBM Corporation

IBM Global Business Services

Expanding the Innovation Horizon: The Global CEO Study 2006

Electronics Industry Point of View2006



Table of Contents

1. Global CEO Study 2006 Overview

2. Emerging Themes for the Electronics Industry

3. Findings for the Electronics Industry

4. Recommendations for the Electronics Industry



§ Global CEO Study 2006 Overview

§ Emerging Themes for the Electronics Industry

§ Findings for the Electronics Industry

§ Recommendations for the Electronics Industry



The Global CEO Study 2006

§ Scope: 765 CEOs and business leaders in all major countries

§ Purpose: Understand role of innovation on CEOs agenda

§ Definition: “New ideas or current thinking applied in fundamentally different ways resulting in significant change”

§ Innovation focus:- Products, Services, and Markets

- Business Models

- Operations



Innovation – key to change - is different today

Myth: Innovation means developing new products and services

Reality: Business model innovation matters

Myth: Innovation is too critical and proprietary to involve outsiders

Reality: External collaboration is indispensable

Myth: Innovation leadership can be delegated

Reality: Innovation must be orchestrated from the top



Business model innovation plays prominently . . .

“The business model we choose will determine the success or failure of our strategy.”

“Products and services can be copied, the business model is the differentiator.”

“Our greatest focus is on business model innovation, which is where the greatest benefits lie.”

Products, Services, Markets

Operations Business Model

% p

oint

s al

loca

ted

to e

ach

inno

vatio

n pa

th

CEOs Innovation Focus50%

30%

10%

20%

40%

Source: The Global CEO Survey 2006



Innovative change starts at the corner office

“Leading, setting direction, laying the cultural groundwork that stimulates innovation – it’s essential work for a CEO.”

Division Mgrs14%

Responsibility for Innovation Leadership

No Owner27%

CEOs/Leaders35%

Functional Mgrs24%

Product, Services, Markets

Operations Business Model

% o

f CEO

s Le

adin

g by

inno

vatio

n pa

th

CEOs Leadership Drives Business Model Innovation

0%

10%

20%

30%

40%

50%




CEO Study -Innovation

Discussions

Business & Technology Integration§Combining business

insight with technology know-how§ Leveraging technology as

a catalyst for innovation

Innovation Agenda§ Building and leading a

diverse Innovation portfolio§ Providing clear

innovation leadership

Collaboration & Partnering§Optimizing for internal &

external collaboration§ Increasing use of external

collaboration

Business Model Innovation§Responding to increasing

competition pressures through business model innovation§Making business model a key

component of the “wider”innovation agenda

The Global CEO Study 2006 identifies four specific areas of discussion



Companies Operating Geography

Forty Six CEOs responded from the Electronics Industry, representing multiple Geographies and from primarily Growth and Mature Markets

44%

19%

2%

14%

12%

2%7%

US/Canada W. Europe/S. AfricaE. Europe/Russia ChinaJapan Korea/ASEAN/ANZOther

Market Conditions

2%

46%50%

2%

Relatively New Emerging MarketMature MarketGrowth MarketGenerally in Decline

Source: The Global CEO Survey 2006Sample size: 46



2004 Revenue

Over 50% of the Electronics CEO surveyed manage organizations greater than 5,000 employees and revenues in excess of $1Billion

22%

9%

27%

11%

27%

4%

<$500 $5,001-$1,000$1,001-$5,000 $5,001-$10,000$10,001-$25,000 $25,001-$50,000


Employee Size

48%

16%

36%

<5,001 Employees 5001-25,000 Employees

>25,001 Employees




§ Emerging Themes for the Electronics Industries





Three themes emerge for the Electronics Industry upon reviewing findings from the 2006 CEO Survey and examining industry trends

1. Product Innovation is important but it is not enough. Innovation that matters creates Metavalue.�

2. Business Model Innovation is driving profitability in the Electronics Industry�

3. Electronics companies are gaining competitive advantages through Collaborative Innovation�



Electronic companies will be Leaders only if they enhance capabilities that deliver MetaValue

Industry Trends§ Electronics are everywhere and face exploding

demand with consumption of semiconductor expected to continue to increase

§ Capabilities to innovate continue to be challenged by the integration complexity due to lack of standards

§ Balancing the offerings portfolio means greater focus and push for services as oppose to traditional product

§ Electronics companies avoid commoditization by selling solutions rather than products

Electronic Company CEOs:

§ “Our biggest problem is to execute on innovation”

§ “We lack efficient innovation processes and funnels that select best opportunities and bring products to market faster than competition”

§ “It (Business Models) could be no more powerful than technology breakthrough or product innovation”

Source: The Global CEO Survey 2006Source: ““Industry lacks innovation, says Philips CEO” EETimes, 09/27/2005

Theme 1

“Fewer companies are engaging in true innovation…R&D budget have remained fairly flat, but people are focused more on small modifications rather than radical breakthroughs.”Gerard Kleisterlee, President and CEO of Royal Philips Electronics NV



Electronic companies will be leaders only if they can identify New Business Models

Industry Trends§ Traditional business models are not adequate.

Success will require a new set of strategies that will only be enabled if supporting capabilities are in place

§ Industry-wide focus on core capabilities is creating specialized enterprises

§ Solutions businesses are creating alternative revenue sources and forcing radical changes to operating models

§ Electronics everywhere are creating new opportunities to open markets (Telehealthcare, automotive, etc)


…on Change:§ “Evolution rather than

revolution”§ “People fearful of change, we

need free up capacity for focus on change initiatives”

…on Capability: § “Pockets of creativity. No

structure or process in place to generate or harvest ideas, no incentives”

§ “Incubation will change our core business dramatically”


Theme 2



Collaborative Innovation through partnership can greatly benefitthe Electronics Industry

Industry Trends§ Electronics Industry continues to be a fragmented

industry, with many small/entrepreneurial businesses constituting the value chain

§ Lots of collaboration across value chain in an effort to rethink core versus non-core

§ Technology turf wars and proprietary systems limit collaboration across the Ecosystem

§ While evidence of benefits from collaboration exist in the Industry, Collaboration across the Ecosystem is still a gap

§ Engineering culture continues to prevails, resulting to little sharing and teaming

§ Internally, level of collaboration varies with weak collaboration between R&D and MI


§ “Customers, vendors and competitors are 3 key areas for collaboration”

§ “We will prepare collaboration and partnering 3 or 4 years later”

§ “Partners help develop and innovate on top of our platform”

Theme 3



2. Business Model Innovation is driving profitability in the Electronics Industry

1. Product Innovation is important but it is not enough. Innovation that matters creates Metavalue.

3. Electronics companies are gaining competitive advantages through Collaborative Innovation



Products, Services & Market Innovation continues to be of highest importance

§ “New products, services, markets, create opportunities for new business models and attraction for hiring and retaining highly qualified employees.”

§ “Innovation in Products, Services and Markets is most important in the short-term aspect. Also, according to our experience, it was difficult to make a transition in Products and Services.”

§ “Innovation in products, especially adding information to aid in diagnosis, is key to driving value for our customers - and thus their market leadership.”

43%

31%

26%

0% 10% 20% 30% 40% 50%

Products,Services and

Markets

Business andEnterprise

Models

Operations

Source: The Global CEO Survey 2006Sample size: 46Respondents

Innovation Area of Most Importance

Theme 1



Majority of CEOs feel that their organization is an Innovation Leader in the area of Product & Services

“We have earned the reputation but here’s the challenge:

§ Will customers still view us as a leader in 5 years? In 10 years? That’s the challenge we see

§ We are in Continuous alignment with:

- Customers- Collaboration with suppliers- Reinvention across the

waterfront to remain relevant to retain a leadership position.”

11%

11%

11%

68%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Follows Peers

Moves withPeers

Fast Follower

Clear InnovationLeader

RespondentsSample size: 28 Source: The Global CEO Survey 2006

Industry Position for Innovation in Products and Services

Theme 1



Electronics companies that are committed to Innovation are driving superior returns

0%5%

10%15%

20%25%30%

35%40%

45%50%

Intel

Cisco

Medtro

nic

Lucent

Nokia

Motorola

Philips

Sony

Panas

onicKodak

0%

5%

10%

15%

20%

25%

30%

35%

40%

Investment for the Future, average 2003-2005 EBITDA 2005

Theme 1



The Success StoryThe Prognosis

Case Study: Business Model Innovation evolved Apple Corporation, infusing the company with fresh product and service offerings for the Digital Music Market

§ Forrester Research, January 25, 1996: "Whether they stand alone or are acquired, Apple as we know it is cooked. It's so classic. It's so sad.“,

§ Fortune, February 19, 1996: "Apple's erratic performance has given it the reputation on Wall Street of a stock a long-term investor would probably avoid."

§ Wired, June 1997 (from the article "101 Ways to Save Apple"): "1. Admit it. You're out of the hardware game.“

§ The Economist, February 23, 1995: "Apple could hang on for years, gamely trying to slow the decline, but few expect it to make such a mistake. Instead it seems to have two options. The first is to break itself up, selling the hardware side. The second is to sell the company outright."

§ iPod dominates the mobile-music-player market with a 75% market share, with

§ The iTunes online music store accounts for 84% of all legal sales of downloaded digital music

§ February 2006, iTunes sold its billionth download (since store's launch in April 2003)

Apple CEO Steve Jobs:

"iPod has become a cultural phenomenon."

"Apple is a company that takes complex technology and makes it easier and simpler to use…Our goal is to stand at the intersection of technology and the humanities."

Theme 1



Clearly, Electronic Companies need to strengthen internal capabilities in order to enable Innovation and maintain Leadership

Source: (1) The Global CEO Survey 2006Sample size: 42

52%48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Limited toSome

Significantto Strong

Climate for Creativity

57%

43%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Limited toSome


Idea Generation

57%

43%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Limited toSome


Incubation Structures

62%

38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Limited toSome


Metrics and Incentives

Organization Capability

Theme 1




1. Product Innovation is important but it is not enough. Innovation the matters creates Metavalue.




Business Model innovation is gaining momentum

43%

31%

26%

0% 10% 20% 30% 40% 50%

Products,Services and

Markets

Business andEnterprise

Models

Operations

§ “Previously, product-based innovation was of greatest importance. However, market pressures are driving the importance of business and operational model innovation.”

§ “Focus on Business Models as this will drive needed change and future success”


Respondents

Innovation Area of Most Importance

Theme 2



Business Model is becoming one of the most abused terms in modern business language

Metrics

Service Value

Proposition

OperationalModel Metrics

Value Proposition

OperationalModel Financials and

Metrics

Value Proposition

OperationalModel

Source: IBM Strategy and Change

The three components of the business model



Market and Technology Factors are shaping innovation in the Electronics business model

74%

70%

46%

41%

15%

13%

11%

11%

11%

4%

0% 20% 40% 60% 80%

Market Factors

Technology Factors

Globalization

People Skills

Regulatory Concerns

Environmental Issues

Macroeconomic Factors

Socioeconomic factors

Others

Geo Political Factors

Respondents

§ CEOs comment that India and China will have a huge market impact and are large markets themselves

§ These responses continue to validate IBM’s findings reported in “Irresistible” :

- Opportunities are being fueled by new geographic markets, like Brazil, Russia, India and China..

Source: (1) The Global CEO Survey 2006, (2) IrresistibleSample size: 46

Most Important External Forces

Bailey, George and Hagen Wenzek. “Irresistible! Markets, Models, and Meta-Value in Consumer Electronics.” Prentice Hall: 2006.

Theme 2



Integration of business and technology is enabling CEO’s to gain competitive advantages through business model innovation

48%

46%

46%

41%

39%

37%

37%

37%

17%

13%

7%

7%

0% 10% 20% 30% 40% 50% 60%

Faster Time to Market

Access to Markets/Customers

Higher Quality or Cust. Sat.

Increased Revenue

Overall Spead, Startegic Flexibility

Focus on Specialization

Access to Skills/Products

Reduced Cost

Move from Fixxed to Variable Cost

Shared/Reduced Risk and Cap. Invest.

None

Other § “Technology for the sake of technology is a disaster”

§ “Technology plays a profound role in all areas of business”

§ “In the area of Operations, it is important to “focus on cost reduction while maintaining customer satisfaction”

Respondents


Benefits Realized through Integration of Business and Technology

Theme 2



While CEOs clearly agree on the importance, comprehensive Integration of Business and Technology is a challenge

39%

17%

28%

21%

21%

59%

0% 10% 20% 30% 40% 50% 60% 70%

Some

Significant

Large Extent/Critical

Products, Services & Markets.:§ “Ways to go - we have to be

much better”§ “Historically engineers-driven

company. More business experience needed”

§ “Company has a lot of work left to do”

Business & Enterprise Model:§ “Will need to break existing

processes - make more flexible”

RespondentsSample size: Importance: 29, Extent:: 46 Source: The Global CEO Survey 2006

Importance and Extent of Business and Technology Integration

Importance Extent of Integration

Theme 2



Case Study: Intel’s new Platform Strategy is a testament to Business Model Innovation that the 5th best known brand is undertaking

“It's a race for Intel and other companies to figure out how fast is revenue going to come from emerging areas before PC margins begin to come down sharply,"Ragu Gurumurthy, head of technology practice for Boston tech consultancy Adventis Corp.

Source: “Intel Inside,” BusinessWeek, January 9, 2006

Case for Change: § With the PC growth slowing, Intel must reinvent itself or face a future of rusty maturity§ Analysts expect 2006 revenue growth to be half (7%) of what Intel has averaged over

the last 3 years (13%). Revenue for 2006 expected to be $42.2 billion. § Profit expectations to rise only 5% to $9.5 billion, compared to an average 40%

annually over the past three years The Strategy:§ Redefine and revitalize the fifth-best-known brand in the world§ CEO Otellini is throwing out the old model with a shift in focus from PCs to a Technology/Platform play in

consumer electronics, wireless communications, and health care, to name a few § His vision of Intel is that they would be creating all kinds of chips and software to come together into what

he calls "platforms." The thinking is to power innovation across multiple fronts be that the living room or the emergency room.

Implication§ This means that Intel will have to extend its capabilities beyond just microprocessors, into other kinds of

chips and software

Theme 2




1. Product Innovation is important but it is not enough. Innovation the matters creates Metavalue.




Access to Markets and Customer are the top benefit identified byElectronics companies as a result of Collaboration and Partnering

§ “Customers, vendors and competitors are 3 key areas for collaboration”

§ “Collaboration leads to:- “Access to technology

and ability to develop great products”

- Ability to derive “value from channel delivery”

§ “Partners are helping absorb development costs”

§ “Win via consortias”

Respondents


Benefits Realized through Collaboration and Partnering

59%

48%

48%

44%

44%

39%

37%

33%

26%

26%

7%

9%

0% 10% 20% 30% 40% 50% 60% 70%

Access to Markets/Customers

Higher Quality or Cust. Sat.

Access to Skills/Products

Reduced Cost

Increased Revenue

Focus on Specialization

Faster Time to Market

Overall Spead, Startegic Flexibility

Move from Fixxed to Variable Cost

Shared/Reduced Risk and Cap. Invest.

None

Other

Theme 3



Opportunity:§ Growing cell phone market in India with ownership rate

of 4 in 100

§ A number of unmet key local needs:§ Growing trend of color camera phones, expecting to reach

30% of the market§ Multi-language display

Results§ Introduced four new phones at once, one of which was

the only phone with multi-language display and input in Hindi,Tamil, and Marathi

§ By the end of 2004, Samsung was selling 100,000 units a month. Analysts predicted 16.6% revenue growth

§ Recently Samsung launched the “India Speaks”program with additional languages and functionality

Source: “Samsung’s Lessons in Design,” Corporate Design Foundation, 2004; “Samsung, LG Dig Deep in India's Mobile Gold Rush,” www.latelinenews.com, Nov 25, 2004 , http://msmobiles.com/news.php/4970.html, http://ibef.org/attachdisplay.aspx?cat_id=466&art_id=6828, http://www.samsung.com/in/pressCenter/pressrelease/productnews_20050125_0000096408.asp?category=All

How Samsung Collaborated…

§ Usability Lab: To better understand Indian consumers needs, Samsung partnered with the Indian Institute of Technology in New Delhi. This industry-institute partnership is to help Samsung customize products to meet the specific needs of Indian consumers by analyzing consumer response in aspects of product design -aesthetics, ergonomics and interface.

§ Browser Technology: “We consider this collaboration with Samsung to be a tremendous milestone for our technology and a win that will be shared by customers and operators” Mr. M.Jain, Managing Director, Jataayu Software

§ Downloads: Samsung partnered with a noted Indian painter Satish Gujral for his paintings to be available as downloads on Samsung mobile phones

Case Study: Through local partnering, Samsung was able to access new market with a predicted revenue growth of over 16% Theme 3



While Electronics Companies acknowledge the importance of Collaboration & Partnership, adoption is challenging

9%

2%

22%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Limited Importance

Some Importance

SignificantImportnace

Critical Importance

Source: (1) The Global CEO Survey 2006, (2) Irresistible

RespondentsSample size: 45

7%

24%

11%

22%

36%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Not at All

Limited Extent

Some Extent

Significant Extent

Very Large Extent

Importance of Collaboration & Partnering to Drive Innovation

Extent Organization Adopted Collaboration & Partnership to Drive Innovation

Respondents

89% 58%

Theme 3



Electronic companies say customers and business partners are their top sources of new ideas, but still rely heavily on internal sources

66%

31%

0%

14%

28%

41%

55%

69%

Internally Externally


35%

(1) Internal & External Sources for New Idea Generation

57%

43%

36%

36%

29%

21%

14%

14%

14%

7%

7%

7%

0% 10% 20% 30% 40% 50% 60%

Customers

Business Partners

Competitors

R&D

Academia

Sales

Trade Groups

Consultants

Employees

Internet

Labs

Think-tanks

(2) New Idea Generation

Theme 3



Strategic Development Alliances CAPEX Landscape

Source: Gartner DQ (January 2005), Chartered

28.0%

10.9% 10.4% 9.9%

4.4% 2.8%

0%

10%

20%

30%

Chrt-IBM Crolles Alliance ASPLA Intel UMC TI

$21.2B

$8.3B $7.9B $7.5B$3.3B $2.1B

2003-2004 Semiconductor CAPEX(Worldwide Total: $75.8B)

Theme 3



Collaboration Driving Business Model Innovation:Sony, IBM and Toshiba collaborate on Cell Processor

§Sony, IBM and Toshiba collaborated to create a flexible multi-processor architecture

§Optimized for digital graphics

§PS3 will be first mainstream cell application

§Digital TV platform of the future

Theme 3



Innovation that Matters…Recommendations for Companies in the Electronics Industry

1. Electronic companies will need to enhance existing capabilities in order to create Meta-Value in the solutions business- Portfolio Management: Take a total portfolio view, enabling Product

focused companies reprioritize strategy and offerings they take to market, favoring higher margin Services offerings

- Capabilities: Electronic Companies should isolate and focus on priority capabilities required to stimulate innovation in their environment. This will require them to evolve existing culture that prevails

- Innovation Maturity: Assess your ability to create meta-value with your Innovation capabilities




2. Developing new business models that integrate business and technology is imperative for the Electronics Industry. - Componentization: Look at the company in discrete components. This

will enable Electronics Company to distinguish between core and non-core activities, allowing for prioritize for innovation

- Flexibility: Flexible organization structures and operations will enable Electronic companies select and take advantage of disruptive technologies whereby enabling innovation to occur




3. Collaborative Innovation will enable Electronic companies to differentiate themselves and grow by accessing new markets and customers. - Partnering: Expand partnering beyond the company, across the value

chain and ecosystem. External will enable access new markets for continued growth, delivering greater value and better profitability.

- MI & R&D: Encourage synergistic relationship between Market Intelligence and R&D to take advantage of consumerization of Electronics. This relationship will influence the involvement of non-traditional members of the Ecosystem



Three key messages for Electronics companies:

Myth: Innovation means developing new products and services

Reality: Innovation that matters creates Meta-Value

Myth: Innovation is too critical and proprietary to involve outsiders

Reality: External collaboration provides strategic advantages

Myth: Industry leadership is driven by operational efficiency

Reality: Business Model Innovation drives profitability






§ Implications and Recommendations for the Electronics Industry

§ Supporting Findings from Other Studies

§ Appendix



The Need for New Innovative Business Models – add slides

§ The Consumer Electronics industry is at a crossroads:- Continue to sell technology centric products

and be doomed to fail in the trap of low margins and low cost producers

- Move to different business models and value propositions

§ Companies need to find ways to:- deliver services building a solution- be perceived to be part of a higher margin

market (e.g. fashion – Apple)- deliver meta-value: serving a real need with

combinations from different industries (e.g. “light-heartedness” – converge healthcare & CE)

§ Companies need to change to find and deliver these new strategies:- This book gives practical guidance to many

different aspects of those changes- It only talks about what IBM can actually

deliver

The overview – Markets, Models and Meta-Value

About the Authors: George Bailey is the BCS Global Lead Partner for the Electronics Industry in BCS and Hagen Wenzek the Global Electronics Industry Leader of the IBV.




§ Emerging Themes for Electronics Industry


§ Implications and Recommendations for the Electronics Industry

§ Supporting Findings from Other Studies

§ Appendix



Products & Services Trends§ Product to Services

- Everyone is getting into this play. Eg. 40% of everything that Zerox sells is services, however this is also an area where they have a capability gap

§ Electronics are Everywhere - Electronics are really pervasive. Consumption of Semicon is expected to continue to increase. - In the future, we will not see much that does not have electronics imbedded in it

§ Rapid Product Development Cycles- Greater demand for product enhancements…Greater need to differentiate oneself- Profit erosions as a result of competitors requires need for greater margins

§ Complexity and Integration Challenges- While general revenue is up, barely anyone is making profit in CE- When you look at things like Smart Homes, implementation and integration of different technologies is far to complex.

The industry needs to overcome this deadlock. - The industry needs to make it less inventive and more Innovative - The challenge here is product and driven by the culture of innovation – that is driven by engineers

§ Lack of Standards- More concern about individual turf than that of developing Standards - There is a concern of getting locked into a proprietary system

§ Greater push for Services in the portfolio- Solutions/Services represent better margins and allows companies to differentiate themselves- From a consumer standpoint, large part of the world is not ready to pay for services, esp. when it comes to consumer

electronics - Form an enterprise standpoint, this is challenging. While discussions are underway, companies are finding it hard to

make this a reality. While Intel states that they have moved to a platform strategy, they are not a services led company. IBM on the other hand is. E&TS is a great example of this.



Business Model Trends

§ Many Faces: - There are many ingredients to the business models, ranging from integration or disassociation from the value chain to implication of

different financial models§ Collaboration across the value chain

- Lots of collaboration going on in the industry resulting to companies re-thinking Core vs. Non-Core Businesses. Traditional CE companies are collaborating against Tech companies.

- Look at companies such as Samsung and Sony – who would have thought that these two companies would be collaborating…in March of 2004, they announced (CNET):

- Consumer electronics giants Samsung and Sony have established a 50-50 joint venture in South Korea for the production of liquid crystal displays for flat-panel televisions.

- The two companies said in a statement that they will invest $1.8 billion (2.1 trillion won) in a new entity called S-LCD. The venture is located south of Seoul and will focus on making LCD displays for large televisions using the "seventh generation" manufacturing process. This production method increases production efficiency by allowing more subpanels to be cut from a single 1870-by-2200-millimeter glass plate.

§ Rethinking Core vs. Non Core- Companies that use to Manufacture are now contracting manufacturing out as it is non core to their business- CBM: Companies are componentizing and disaggregating their businesses

§ Globalization - Focus on Product Lifecycle and Effective Market Segmentation - Companies are missing a lot of the developing markets- Companies need to think in terms of product lifecycle and application to different development levels of the world.

Example is Ray Tube . Brazilians prefer small TVs – as they find them more robust. Instead of shutting down plants that sell TV tubes, sell them to Brazil and Africa. These are the types of solutions we are providing a Turkish television manufacturer

- There is little room for new brands in the world, as we are really saturated. With the exception Samsung and Google, no one has entered the top 100 list. Its unbelievably expensive to introduce global brands. Chinese Brands are trying hard to enter the global markets – however they need to realize that this its okay to become an industrial brand in the supplier chain as oppose to in the minds of the end consumer.



Operations Trends

§ Focus on cost reduction- Specifically in the areas of Back Office and Supply Chain. Sony is a great

example. They never use to outsource- Companies that have not restructured and componentized themselves, will

start to – its just going to be a requirement for survival - The industry has seen a lot of price erosion- Electronics industry is more fragmented than others, value chain members

are more entrepreneurial – Unlike Auto, where a component suppliers are much more tightly aligned and managed by the manufacturer- if they say you will do EDI, then the supplier has to.

- Companies that have been focused on cost reductions over the past years, are the very companies that will have the flexibility to innovate. Management will be able to redirect focus from cost efficiency to innovation for new concepts, process innovation, etc.

Expanding the Innovation Horizon: The Global CEO 2006 IBM Corporation IBM Global Business Services...

Documents

Transcript of Expanding the Innovation Horizon: The Global CEO 2006 IBM Corporation IBM Global Business Services...