Special Report - 8 Growth Opportunities for High Tech Firms

By Armen Ovanessoff

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Global operations within electronics and high-tech firms offer a wealth of growth opportunities that can accelerate firms towards high performance. Accenture arrives at this conclusion based on new research, The Future of Electronics and High Tech, that polled COOs and other executives from companies in the enterprise, communi­cations and consumer technology industries that have operations in Asia, Europe, and North and South America.

The term “global operations” covers an expansive but critical set of capabilities that support the business strategy and value chain of a company. These include talent management, information technology, customer relationships, supply chain, organizational processes, leadership and culture. Decisions regarding the way these capabilities are deployed around the world have direct consequences on the health and vitality of a company; how they are able to deliver the current strategy; and how well prepared they are for the future.

One: Identifying competitive essence

One of the most basic tasks a firm can endeavor upon is to identify and bring to life its “competitive essence.” In determining this, a firm needs to make choices and realistic assessments about what its most important differentiating qualities and capabilities are. A company needs to objectively ask itself what it does better than others and then deliver on its distinctive value propositions.

A firm’s competitive essence should be an idea, a vision, an inspiring rallying cry that everyone -- employees, customers and collabor­ators -- can understand easily and that is difficult for competitors to imitate. A firm’s competitive essence should act as a magnetic pole that guides operational decision making, helping to evaluate choices and trade-offs in a way that remains true to the company’s strategic direction. The accumulation of these operational decisions dictates the shape of the international operating model; the guidance of its competitive essence verifies that investments are prioritized effectively.

Competitive essence may sound like a familiar and intuitive concept, but it’s surprising how few companies are able to drive this essence across the breadth and depth of their operations, let alone remain focused on competitive essence during times of serious market change. Those that do so improve their chances of achieving high-performance.

Most executives we interviewed for our survey (76 percent) believe their global operations are geared towards delivering something distinctive to customers; a competitive essence. Most (77 percent) also agree their boards are aligned with that definition but few are satisfied with how their operating model is positioned to bring their competitive essence to life in a way that leads to high performance.

As previously noted, less than one fifth (17 percent) believe they are capitalizing on their international expansion. The conversion of a clear and differentiating competitive essence into business results is getting lost in the translation.

There are, of course, exceptions to this general rule: Companies such as Apple, Cisco, and Huawei are examples of such exceptions. Each has distinct value propositions and well-defined competitive essences. Because of this, each ranks among some of the industry’s most revered and highest performing firms.

A firm’s competitive essence should drive operating model decisions, and there needs to be flexibility in how these decisions are made. As their competitive and technology environments continue to evolve, firms need to adapt their operating models more frequently to ensure they are organized for success. Yet only 21 percent of our survey respondents strongly agreed they are well positioned to respond rapidly and effectively to changes in the global market. Therefore, it’s imperative to build flexibility across the entire operating model; across management technologies and processes, organizational structures, people and leadership.

All this must be done while remaining true to competitive essence. This is not an easy feat. But stagnation is a losing proposition in this industry.

Two: Using diagnostic tools

Industry executives know that global operations offer a treasure-chest of opportunities during the next few years. But in an environment of continued uncertainty and change, they are searching for guidance on how to prioritize their investments to attain these opportunities.

One smart way to begin is by using diagnostic tools that assess the overall health of your firm’s global operations. By applying such tools to its existing operating model, a company can gain deep insights into what capabilities it needs to attain operational excellence, the shortcomings it should address, and the business benefits of doing so.

The application of diagnostic tools can reveal to a firm, for example, that they need to re-prioritize their investments in areas such as supply chain or talent management. These assessments can help firms identify where and how to align their investments with their competitive essence. Using these tools, opportunities can be identified in many parts of the organization whether in design, sales, leadership, performance management or human resources. The key to the success of such diagnostics is their ability to offer new investment choices without negatively impacting performance.

Three: Leveraging technologies

We learned that information technology is widely considered to be a weakness in the global operations of electronics and high-tech companies. The research exposed that:

Clearly, new technology solutions offer a range of opportunities to improve global operations and gear them towards growth. Cloud computing, for example, provides an on-demand Internet based technology, lowers infrastructure, maintenance and energy costs, provides access to capacity on-demand, increases network capacity, and provides capacity to customers faster.

Our survey suggests that electronics and high-tech firms are not yet gasping these opportunities.

Four: Innovating new products and services

Innovation is a key activity that the operating models of electronics and high-tech companies must support. More than 80 percent of respondents said the imperative of innovating new products and services has increased in importance since the downturn. In fact, it is now on par with growing global market share. As such, decisions that improve the ways in which innovation activities are structured and executed are critical opportunities for competitive advantage.

By focusing on their international operating models, firms can confirm they have the global capabilities necessary for rapid and interconnected innovation across the world. Successful firms realize that their global footprint can be leveraged to build globally distributed innovation networks.

These networks can bring new and varied perspectives from the most innovative talent around the world. In addition, surveyed executives said innovation was not just about new products and services but also business models. More specifically, respondents told us shifting from selling products and services to offering full solutions formed a key imperative.

Improving the speed to market of new innovations also emerged as a critical imperative driving operating model decisions. When asked about the top three strategic imperatives that drive decisions about their firm’s operating models, the highest percentage, 57 percent, identified the development of more innovative products and services to meet customers’ needs.

Our research found that leadership and culture provide important levers for improvement in global operations. Three in five companies (60 percent) rely most on leadership, people and culture to adapt to changes in the global market. But almost the same proportion (57 percent) said leadership, people and culture are the greatest obstacles preventing firms from adapting to changes in the global market.

There is a strong understanding of the importance that leadership and culture play in achieving high performance global operations, both as potential enablers and as potential obstacles. Many benefits of investments in leadership and culture accrue in the mid-long term, but in an uncertain business environment, these investments can take on new importance. There are few things more valuable than a leadership team that possesses vision beyond the current uncertainties, and a culture that can continually adapt with the evolving business environment while remaining true to its core values.

Six: Focusing on global talent management

While virtually all companies say they currently are seeking low-cost talent, 33 percent told us they are not actively recruiting highly skilled talent abroad. A similar number are not actively seeking new locations to source talent for innovation. In fact, only 10 percent of survey respondents say finding new locations to source talent for innovation is a key driver of their operating model decisions.

Yet, with more than half of companies telling us that developing and managing human capital is a highly important activity, executives clearly understand the need to do better. For example, one executive told us how his company needed to work on its current talent and innovation capabilities even before considering its worldwide footprint.

“One of the biggest problems is that you have very educated, intelligent and motivated people working on things that aren’t needed. By the time you find out about it, a lot of money has been spent.”

The best firms tend to have the best global talent generating exciting new ideas for use around the firm and participating on projects globally. This philosophy serves as the backbone for their entire operating model.

Seven: Forming more partnerships and networks with customers

Accenture’s survey results suggest that coping with rapid technology change, new competitors, and more diverse customers increasingly requires a focus on external networks and partner­ships. Ninety percent of firms said enhancing partnerships and networks with customers formed a major imperative coming out of the downturn -- an even higher percentage than those who highlighted the importance of cutting costs.

Building and improving these partnerships and networks with customers is one of the top operational imperatives that drive decisions around firms’ global operating models.

Firms such as Cisco and EMC have shown that choices around partnerships and networks are as operational as they are strategic, requiring a firm-wide focus on external collaborations to better serve customers, grasp new opportunities, and more effectively manage risk.

Eight: Capitalizing on emerging markets

Emerging markets offer outstanding opportunities for firms in the global operations arena. According to our research, 89 percent of respondents will show growth in at least one aspect of their operations within emerging markets. Respondents most often cited manufacturing, marketing and sales, and sourcing as growth activities in emerging markets. Research and development was also chosen as an activity that will show growth in emerging markets.

However, operating in emerging markets is often more difficult than many firms expect, and requires new and different ways of organizing processes, people and assets. Many activities can be adapted locally within broad frameworks set by headquarters. The challenge, though, is identifying which activities should be customized for local or regional markets, and which should be centralized or outsourced to reap efficiencies.

Winning companies make these decisions with both their competitive essence and the customer experience firmly in mind.

Final thoughts

Beginning now, firms in this industry should look hard at whether their operating models successfully support their competitive essence. Otherwise, it is only a matter of time before investments go astray, veering from the company’s true strategic course and the fulfillment of its value proposition to customers.

They specifically need to reassess the readiness of their IT and talent for meeting the imperatives of tomorrow. Too many companies are undervaluing these critical levers, which provide the mechanisms to generate and spread new ideas, and provide the connection points between the company and its ecosystem of partners, suppliers and customers. The path to high performance requires these actions now.

For a copy of the complete set of survey findings, please visit

Hans von Lewinski is a managing director with Accenture's Asia Pacific Electronics and High-Tech industry group. He can be reached at hans.von.lewinski@accenture.com.

Armen Ovanessoff is a Senior Research Fellow in Accenture’s Institute for High Performance. He can be reached at armen.ovanessoff@accenture.com .