ISM Group Presentation June 15

8/9/2019 ISM Group Presentation June 15

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ISM Group 3:Francis, Jitu,Ridge & Tina

June 15, 2010


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Strategy is the art of creatingvalue.

It is the way a company links together

Knowledge & relationshipsCompetencies & customers

... to bring value to customers at a profit


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Value Chain:The traditional model

InboundLogistics

Marketing

Distribution

Productor

Service

Marketing

Marketin

g

Marketing

Marketing

Marketing

Marketing

Marketing

Marketing

Sales &

Marketing

Production

Value Value Value

Va

lu

e

Value

Customer


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InboundLogistics

Service

Distribution

Production

Marketing

Company

Supplie

r

Custome

r

Value

Value

The right business, the right products and market segments,

the right value-adding activities

traditionalthinking


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Strategy is the art of creatingvalue.Today...

Strategy is no longer a matter of positioning afixed set of activities along a value chain

Successful companies dont just addvalue, theyreinventit

Focus is on the value-creating system itself

Different economic actors (suppliers, bupartners, allies, customers) work together to co-produce value

Key strategic task: reconfiguration of roles &relationships among these constellation of actors

mobilize the creation of value in new forms andby new players

goal: create an improved fitbetweencompetencies & customers


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reinvent value through ValueConstellations

http://www.google.com/imgres?imgurl=https://reader010.{domain}/reader010/html5/0531/5b0f0ea9b7c4d/5b0f0ead20419.j

Constellations:Services

Goods

Design

Management

Support

Entertainment
http://www.google.com/imgres?imgurl=http://jeremyfain.files.wordpress.com/2007/07/value-chain.jpg&imgrefhttp://www.google.com/imgres?imgurl=http://jeremyfain.files.wordpress.com/2007/07/value-chain.jpg&imgref


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more s mp eperspective

http://www.talentfirstnetwork.org/wiki/images/8/8f/Tanev1.png

From: To:Trends


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From a small Swedish mail order furniture operation intothe worlds largest retailer of home furnishings

(2009) Revenue Euro 22.71 B; (2008) Employees 127,800

(Aug 2009) 301 stores in 37 countries, 12,000

(Sept 2007-2008) 470 million website visitors

Winning business formula: Simple, high quality Scandinavian design

Global sourcing of components

Knock-down furniture kits (customers transport/assemble themselves)

Huge suburban stores with plenty parking space

Amenities: coffee shops, restaurants, day-care facilities


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Welcome to IKEA!!


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Lower prices 25%-50% below , passed on to customers:Low-cost components

Efficient warehousing

Customer self-service

But MORE THAN THE LOW PRICESIKEA redefined roles, relationships and organizational

practices of the furniture business

Result: INTEGRATED business systemMatches competencies of participants efficiently & effectively

Value reinvented (Family outing destination!)


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Customers: customers not only consume value but they alsocreate value

More than co-produced furniture, co-produced improvements infamily living

Mobilize them to easily do certain things never done before

Suppliers: IKEA gets low cost but good quality suppliesworldwide, disperse sourcing (specialization), purchase them inhigh volumes, providing technical assistance, leased equipment

towards world quality standards


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Internal: Network of strategically-located huge warehouses (aslogistical control points, consolidation centers, and transit hubs),efficient product planning & forecasting

Result: work-sharing, co-producing in creating MORE VALUE perperson

Customers as suppliers (time, labor, info, transport)

Suppliers as customers (of IKEAs business and tech services)

IKEA no longer a retailer but the central star in a CONSTELLATION ofservices, goods, design, management, support, entertainment

LOGIC OF VALUE as guiding principle: more than products &

services, companies compete based on offerings (e.g. not justshopping but entertainment)


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French Concessions:

Strategy as the way a company linkstogether

Knowledge & relationshipsCompetencies & customers

... Use assets and relationships to deliver valueusing core competencies

... Keep fit current (enlarge knowledge basecontinuously)

... If so large, new knowledge propelcompanies into new businesses

... New relationships with new customersblossom


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French Concessions:

Compagnie Generale des Eaux(Generale)

(1992) $27B revenue

6th largest French companyLyonnaise des Eaux Dumez (Lyonnaise)

(1992) $18B revenue

11th largest; the biggest private watercompany in the world serving 40Mcustomers in 6 continents

Technologically dynamic and successfulglobal players

In the water business servin 37M French


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French Concessions:

Both have subsidiaries providing cities andtowns with EVERYTHING: heating systems,sewers, utilities to hazardous waste

treatment, municipal construction, nursinghomes, golf courses, AND funeral services

Generale: local recreation center (Aqualand)and cable TV

Lyonnaise: manages the citys monuments,art museums, gardens and parks

All these grew organically, but how?

French understanding of the business


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French Concessions:

Unique public service set-up (rooted to 19th centuryhistory)

Production of public infrastructure is privatesector responsibility while the government has

the political responsibility (governance)Private companies act as concessionaires (e.g. 30

years renewable): Project design & specifications

Capital

Build the infrastructure

Manage the assets

Bear the risks (spare the govt from spiraling debt and

operational waste)


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French Concessions:

Effect: Both successfully developed how theyview their COMPETENCIES and their businessstrategies

Elevated to: Urban-systems designer &outfitter

Core competency: More than water orutilities, its financial, social, legal,

managerial and technical engineeringconstellations that ensure SMOOTHOPERATION of PUBLIC SERVICEINFRASTRUCTURES.

Their formula:


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French Concessions:

Result: customers continuously evolvingVALUE CREATIONGenerales 2,000 subsidiaries and Lyonnaises

720, grouped according to specialization or

metier, richly connected to: help services build on each other

open the door to new services (ad hoc flowering of co-productive relationships among & betweensubsidiaries)

Now investing on a broader range oftechnologies and expertise (going green, goingglobal, p.214-215)

LOGIC of PUBLIC RESPONSIBILITY asguiding principle: continue providing cities &


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Privatization of a State-

Owned Enterprise in thePhilippines

Feb 1997: (Water crisis) MWSS awarded concession contract to

Manila Water Company (along with Maynilad Water Services, Inc.)Manila Water provides water services to more than 1 million

households in the East Concession area through more than 680,000

water service connections and 51,000 sewer service connections.

More significantly, of the more than five million people connected to the

water network, 1.5 million people or about 230,000 households belongto the low-income communities.

With its solid track record of efficiency and financial viability, it is

recognized as one of the most successful public-private partnerships in

the world.

A listed company in the Philippine Stock Exchange


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Privatization of a State-

Owned Enterprise in thePhilippines

Privatization of public services = complex changes

in the social, economic, social, regulatory and evenpolitical structures

Internally: transformation in ownership &organizational structure, and operations

managementKey to Manila Waters success: how transformations

were managed


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Key ChallengesRegulatory Framework:

Boracay Island Water: Joint venture with Phil Tourism

Authority (20%); Laguna Water: partnered with LagunaLGU

conflict of interest for local politicians, political sensitivities

Over time, it built its legitimacy through its water forthe community program (went beyond the 1997

concession contract)Managing shareholder/stakeholder expectations

Greater good vs. selective good

Quick vs. long-term return

Future vs. present generation

-


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Lessons LearnedLesson #1: Its not the People (its the Process)

Retained 90% of MWSS employees; dispellednotion that public sector EEs are slow inresponse to customer demands

Invested on training & motivation

Corporate Transformation: Empowered &

decentralizedIntroduced territory management

Integrity & Performance-based culture

Execution-Oriented (People, Process and

Structure) Customer Service


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Lessons LearnedLesson #2 Customer-FocusGreater understanding of consumer

behaviour & consumption patterns

Addressed Health and Safety needs (schools,orphanages, hospitals, city jails, markets)

Customer Complaints acknowledged 24hours, resolved in 2 days

Number of Households Served (in thousands)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

382 418 457 543 634 717 809 909 986 1,032 1,086


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Lessons Learned

Lesson #3: Process

Use of Business Systems like SAP (businessmanagement software), CRM, Computer &Internet Business Systems (CIBS), BusinessProcess Management (BPM) for processengineering

Efficiency & ease of use


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Lessons Learned

Lesson #4: Reducing Non-Revenue Water

Not just an engineering solution, but also hasits socio-political dimension

Non-Revenue Water (%)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

53.0% 51.0% 52.0% 54.0% 50.7% 43.4% 35.5% 30.3% 23.9% 19.6% 15.8%

http://www.manilawater.com/section.php?section_id=2&category_id=9&article_id=47


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Why is Manila Water as avalue constellation story?

The companys core competence is not water or

even utilities but rather the financial, social, legal,managerial, and technical engineering that ensures

the smooth operation of public infrastructures.

The secret of value creation is building a better andbetter fit between relationships and knowledge. In

other words, an ever-improving fit between

competency and consumers.


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ISM Group 3:Francis, Jitu,Ridge & Tina

June 15, 2010

Thank you!

ISM Group Presentation June 15

Documents

Transcript of ISM Group Presentation June 15