Transcript Innovate or Die,

Innovate or Die,
Partner or Perish
May 25, 2012
Istanbul, Turkey
innovation
Innovation Curve:
1957
1969
“OK, you invented the wheel, but
what have you done for me lately?”
“O k, you invented the wheel, but what have you done for me lately?”
1903
t
8,000 BC
2
3,500 BC
C
2008
Innovation:
What Made Long Distance Flying Possible?
Jet Engines
GPS Equipment
The Toilet
3
Wide Body Aircraft
STRATEGY
INNOVATION
COLLABORATION
“Innovate or Die”
“Partner or Perish”
EXECUTION
4
AGENDA
• Strategy
• Strategy and Innovation
• Strategy and Collaboration
• Collaboration Execution
• 5 Areas Where Innovation Will Occur
5
Strategy Positions
Growth
Client Intimacy
Shareholder
Value
ROIC
Op Margin
Average
Growth
& Margin
Rate
6
Value
Proposition
Client
Target
Operations
Service
Delivery
Ops Excellence
Low Cost
Product
Innovation
Spend Varies by Market Position
IBM
Focus
10
Client
Intimacy
0
R&D Eng PD Proc SCL Mfg QA Dist Sales Svc
Admin
Apple
Focus
10
Product
Innovation
0
R&D Eng PD Proc SCL Mfg QA Dist Sales Svc
Admin
Dell
Product
Innovation
Focus
10
0
R&D Eng PD Proc SCL Mfg QA Dist Sales Svc
Admin
Source: Break Through
Bill Davidson
7
AGENDA
• Strategy
• Strategy and Innovation
• Strategy and Collaboration
• Collaboration Execution
• 5 Areas Where Innovation Will Occur
8
Strategy Positions & Innovation:
Low Cost—BMW Story
Seven Markets
Seven Automobiles
Multiple Options
Specialization
All on 1 Platform
Customization
With “Plug & Play”
Business People
325i Sedan
Racing Enthusiasts
M3
Families with Kids
325i Sports Wagon
Urban Cowboys
Mini Cooper
Outdoor Enthusiasts
X3
Sunshine Lovers
325Ci Convertible
Dating Couples
325Ci Coupe
Leather
Vinyl
Cloth
Hub caps
Aluminum
Wheels
Chrome
Wheels
Red
Green
Blue
This approach to Specialization & Customization delivers for BMW a 20% Operating Ratio
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UTi Innovation Strategy: Innovation & Cost
Management
R&D &
Innovation
Client Requirements
Drive Lower Operating Cost
80-90%
Configuration
Expand
Configuration
Strategy Positions: Product Innovation
Microsoft Integration
Best of Breed
Products
Best of Breed
Solutions
Word Processing Leader
WordPerfect
Spreadsheet Leader
Lotus 1-2-3
Graphics Leader
Harvard Graphics
How many
of these products
are left ?
Microsoft
Office
Database Leader
Ashton Tate dBase
History shows the integrated solution wins (beats the competition), even if
the individual products of the integrated suite
are weaker than the “best of breed”
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Product Innovation:
APPLE Adjacent Industry Integration
Computing
Apps
12
Browsing
Player
Movies
Store
Client Intimacy Innovation: Innovation of a Commodity
into a Solution
Busy Exec
Out House
Designer
Throne
Cultural
Toilet
The First
Toilet
13
On-The-Go
Strategy Positions:
Client Intimacy—Spaghetti Dinner
Client Intimacy
Operations Excellence
Low Cost
Other
3PLs
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Do It
Yourself
Product
Innovation
AGENDA
• Strategy
• Strategy and Innovation
• Strategy and Collaboration
• Collaboration Execution
• 5 Areas Where Innovation Will Occur
15
Partnership:
Why Partner?
Why Partner?
• Reduce risk
• Fill a Gap
• Speed to market
• Gain expertise
• Solve a problem
• Operate at a lower cost
• Do it better
•• Easier
Share
itfunding
to get
Control
Supplier
• Borrow It
• Rent it
• Lease it
Why Not?
• Own It
•
•
•
•
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Compete in collaborative
networks already
Rival each other in an industry
Promote competing technologies
or infrastructures;
Create relationship exclusivity
that prevents partners from working
effectively with other partners.
Buyer
Control and Flexibility are Often at Odds: Can You Reach
Prime with Collaboration
100%
Flexibility
Control
Amount
Of
Flexibility
& Control
10
17
0%
luis huete
Prime Time
AGENDA
• Strategy
• Strategy and Innovation
• Strategy and Collaboration
• Collaboration Execution
• 5 Areas Where Innovation Will Occur
18
Strategy & Collaboration:
(Cost / Quality (including risk) / Speed Tradeoff)
Expertise
Optimization
• Network Design
• Network Optimization
• TM
• Inventory Optimization
• Postponement
• Order Management
Processes
Systems
Pooling
• Shared Infrastructure
• Shared Systems
• Shared Expertise / Verticals
• Economic Advantage
• Visibility & Control
Client
Carrier
Management
Postponement &
Distribution Network
Expertise
Systems
Other
3PLs
Do It
Yourself
Compliance
Relationship
Government
& Regulatory
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Fixed Asset
Operator
•
•
•
•
Service levels
Risk reduction
Experts
Continuity / Staffing
An Open Business Model (OBM) for Open Innovation (OI)
Indispensable
Dialogue
Steps
Establish
Trust
• Ensure all internal
• Create & hold a similar
•
departments are on
vision
board & not competing • Build & share IP together
with the partnership
• Determine the process
• Determine what can be
for IP sharing in advance
•
shared
• Supplier owns ingredients
• Identify legal and
& technology (solution)
anti-trust issues
• Partner owns the
•
• Assess whether the
application of the IP
relationship can work
(smart application)
• Who gets what of the new •
monetized solution
• Communication, commitment, &
transparency
• Explicit knowledge is easy to share
but the value comes from tacit
knowledge (real time Info sharing)
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Build
Goodwill
Use a methodology
• View, Aim ,
Execute
• Idea Store
Who will do what
so each party
knows their role
By sharing and
brainstorming build
goodwill (win / win)
The enemy is each
partners competitors,
not each other
Create
Value
• Has to create commercial
value for participants
• Use project management to
implement
• Need to develop a mindset of
“sharing is winning”
• Need to focus on OI (Open
Innovation by
• Leadership
• Strategy
• Partnership
• Champions
• Internal experts
• Customers
Execution & Innovation:
5 Things To Focus on in the Future
Expertise
Optimization
1
• Network Design
• Network Optimization
• TM
• Inventory
• Postponement
• Order Management
Processes
Systems
Pooling
• Economic Advantage
• Visibility & Control
Client
Carrier
Management
Postponement &
Distribution Network
Expertise
Systems
Compliance
Relationship
Customs
21
Fixed Asset
Operator
•
•
•
•
Service levels
Risk reduction
Experts
Continuity / Staffing
1) Network Design: 80-90% of Supply Chain Cost is Driven
by Supply Chain Design
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Execution & Innovation:
5 Things To Focus on in the Future
Expertise
1
• Network Design
• Network Optimization
• TM
• Inventory
• Postponement
• Order Management
Processes
Systems
Pooling
Optimization
2
Client
Carrier
Management
Postponement &
Distribution Network
Expertise
Systems
•
Compliance •
•
•
Relationship
Customs
23
Fixed Asset
Operator
Service levels
Risk reduction
Experts
Continuity / Staffing
2) Static to Dynamic Execution—How We Do This?
Key Metric:
Cost/Kg
Real Time
Data
Forecasting
Key Metric:
Purchase Price
Variance
Agility
Total Cost
Static
Historical
• RFQ
• RFI
VUCA
How do you get consistency in the cost / kg so you
avoid answering the PPV Question?
Optimization
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Dynamic
Execution
Execution & Innovation:
5 Things To Focus on in the Future
Expertise
Optimization
1
Processes
Systems
• Network Design
• Network Optimization
• TM
• Inventory
• Postponement
• Order Management
Pooling
2
• Economic Advantage
• Visibility & Control
Fixed Asset
Operator
Client
Carrier
Management
Postponement &
Distribution Network
Expertise
Systems
3
Relationship
Customs
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Compliance
•
•
•
•
Service levels
Risk reduction
Experts
Continuity / Staffing
Compliance
Why Compliance
is Important
What are the RISKS of
Non-Compliance?
•
•
•
•
•
Foreign Corrupt Practice Act (FCPA)
Anti-Bribery Laws
Entry into new markets
Emerging Markets (1st world solutions)
Increased & Changing Regulatory
Requirements
• Increased compliance focus and penalties
•
•
•
•
•
•
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•
•
•
•
•
Damage to company image
Fines and penalties
Sanctions
Interruptions or loss of privileges
Supply Chain Disruptions
What can a Supply Chain
Partner do?
Minimize Risk
Act as buffer
Knowledge and training
Communication
(Global) Processes
Controls
Execution & Innovation:
5 Things To Focus on in the Future
Expertise
Optimization
1
Processes
Systems
• Network Design
• Network Optimization
• TM
• Inventory
• Postponement
• Order Management
Pooling
2
• Economic Advantage
• Visibility & Control
4
Client
Carrier
Management
Postponement &
Distribution Network
Expertise
Systems
3
Relationship
Customs
27
Fixed Asset
Operator
•
Compliance•
•
•
Service levels
Risk reduction
Experts
Continuity / Staffing
Data to Knowledge
•
•
•
•
•
•
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Control
Optimization
Real time execution
SC Design
Predictability = Reduce PPV
SC disruptions
Convergence
& Combination
Execution & Innovation:
5 Things To Focus on in the Future
Expertise
Optimization
1
Processes
Systems
• Network Design
• Network Optimization
• TM
• Inventory
• Postponement
• Order Management
Pooling
2
• Economic Advantage
• Visibility & Control
4
Client
Carrier
Management
Postponement &
Distribution Network
Expertise
Systems
3
5
Relationship
Customs
29
Fixed Asset
Operator
•
Compliance•
•
•
Service levels
Risk reduction
Experts
Continuity / Staffing
Best Practice For ONE Industry Might Not be Innovative in
Another Industry
"If Ford had kept up with
technology like the computer
industry has,
we would all be driving $25 cars
that got 1,000 miles to the gallon."
Bill Gates
Comdex
30
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#10:
For no reason whatsoever, your car would crash.........
Twice a day.
31
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#9:
Every time they repainted & updated the lines in the
road, you would have to buy a new car.
32
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#8:
Occasionally your car would
die on the freeway for no
reason. You would have to pull
to the side of the road, close
all of the windows, shut off the
car, restart it, and reopen the
windows before you could
continue. For some reason you
would simply accept this.
33
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#7:
Occasionally, executing a maneuver such as a left turn
would cause your car to shut down and refuse to
restart, in which case you would have to reinstall the
engine.!!!!
34
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#6:
Macintosh would
make a car that
was powered by
the sun, was
reliable, five
times as fast and
twice as easy to
drive - but would
run on only five
percent of the
roads.
35
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#5:
The oil, water temperature, and alternator warning lights
would all be replaced by a single warning light . . .
“This Car Has Performed An Illegal Operation”
36
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#4:
The airbag system would ask 'Are you
sure?' before deploying.
37
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#3:
Occasionally, for no reason
whatsoever, your car would
lock you out and refuse to let
you in until you
simultaneously lifted the
door handle, turned the key
and grabbed hold of the radio
antenna.
38
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#2:
Every time a
new car was
introduced car
buyers would
have to learn
how to drive
all over again
because none
of the controls
would operate
in the same
manner as the
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old car.
If Ford had developed technology like Microsoft,
we would all be driving cars with the following
characteristics:
#1:
You'd have to press the 'Start' button to turn the
engine off.
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Ford’s Final Comment
… when all else fails,
you could call 'customer
service' in some foreign
country and be
instructed in some
foreign language how to
fix your car yourself!!!!
41
STRATEGY
INNOVATION
COLLABORATION
“Innovate or Die”
“Partner or Perish”
EXECUTION
42