As companies struggle to adapt business models to the global economy, Accenture advises they start with the basic task of identifying their "competitive essence."
As they dust themselves off from the recession, many tech companies find they must realign their global operations with the new realities of the global economy. Many “engine rooms” for corporate functions are unfocused, uncoordinated and underperforming. In particular, industry players in developed countries must overhaul their operations to meet the growing competitive threat from players in developing economies.
Accenture polled chief operating officers of companies that operate globally in the enterprise communications and consumer technology industries. We found that most are struggling to optimize their operating models for the global economy.
“Global operations” covers an expansive set of critical capabilities supporting the business strategy and value chain: talent management, information technology, customer relationships, supply chain, organizational processes, leadership and culture. Virtually all of our survey respondents (94 percent) believe their companies have sufficient capital to execute their international strategies. What they don’t have are the expertise, tools and insights to make smart investments and choices that strike the optimum balance between operational efficiency and customer responsiveness.
Only 31 percent of the respondents strongly believe they leverage their global scale effectively. Only 21 percent strongly believe they are well positioned to respond effectively to changes in the market. And only 17 percent believe they are capitalizing effectively on their international expansion.
The most severe problems center on managing talent and information technology. More than half of the respondents identified developing and managing human capital as the most fundamental component to delivering a distinctive value proposition. But only 10 percent identified finding new sources of talent as a key driver of their operating model decisions.
Likewise, 70 percent called IT critical to global operational succes. But only 21 percent are very confident in the capability of their current IT systems to support their global operations. Just 7 percent said building flexible and efficient IT systems had been a factor in operating model decisions made during the downturn. Fewer than 25 percent are using open-source innovation or crowdsourcing, fewer than 25 percent are harnessing virtual or mobile platforms, and only 14 percent are using cloud technologies. Yet 64 percent cited “poor global integration of systems and data” as the main reason their corporate systems need improvement.
A comprehensive strategy for turning the challenges into opportunities should start with the basic task of identifying the company’s “competitive essence.” Every company must objectively ask itself what it does better than its competitors to deliver its distinctive value proposition and win in the market. A company’s competitive essence should be as easy for stakeholders to embrace as it is difficult for competitors to imitate.
Seventy-six percent of our respondents believe their global operations are geared toward delivering on their company’s competitive essence; 77 percent agree their boards are aligned with that identified distinction. But few are satisfied with how their company’s operating model is positioned to bring the organization’s competitive essence to life in a way that leads to high performance.
Apple, Cisco, Huawei and Nokia come to mind as exceptions to the rule. Each has a distinct value proposition and a well-elucidated definition of its competitive essence. And each ranks among the industry’s most-revered and highest-performing companies.
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All companies should look hard at their competitive essence and operating model. The path to high performance requires that they do so now.
About the authors
Hans Von Lewinski is a managing director with Accenture’s Asia Pacific Electronics and High-Tech industry Group.
Armen Ovanessoff is a senior research fellow at Accenture’s Institute for High Performance