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With the global economy improving and organizations cautiously preparing for the upturn, electronics and high tech (EHT) companies find themselves facing competing imperatives.
Become more efficient to fight off strengthening competitors while becoming more responsive to an increasingly complex and demanding customer base.
Indeed, with their leaner cost structures, lower-priced offers and, in some cases, government backing, many competitors from emerging markets have been able to improve their positions during the recession while more established players were focused on damage control.
To more effectively compete against such competitors at home and within high-growth emerging markets, EHT companies will need to achieve greater operational efficiency. This efficiency imperative is heightened by the price pressure inherent in an increasingly commoditized EHT market populated by recession-weary consumers.
Successfully keeping pace with this trend requires a high degree of operational sophistication. Companies must embrace frequent change, accelerate innovation processes and create winning ideas that translate into revenue. Clearly, a narrow focus on operational efficiency will not be enough.
Accenture has developed its unique Accenture Business Operations Modeling framework, an objective, systematic approach that helps companies enhance their business operations delivery model. By using the Accenture Business Operations Modeling approach as part of their overall operating model development efforts, organizations can create additional value from their business processes while reducing the risk and disruption that often can accompany large-scale process changes.
A Structured Approach for Global Operations Optimization
Regardless of where they compete, the key issue that all EHT companies must address is this: determining the most appropriate way to organize their global operations to strike the balance between efficiency and responsiveness that will enable them to outperform their competitors.
To learn how leading EHT companies are approaching these operational issues, Accenture is conducting research into how EHT companies address and execute their most pressing operating model challenges. Looking at leading practices—including those of high performance businesses in the industry—we gleaned a number of important insights.
We found a common approach among companies that excel in creating and executing an operating model that both is tightly aligned with who they are as a company and that allows them to efficiently respond to and capitalize on market opportunities.
The leaders start by having a clear idea of what their organization does well to enable them to win in the market and deliver their distinctive value proposition—what we call “competitive essence.” With their competitive essence clearly articulated, the leaders we studied are able to structure their operations around the world— prioritizing investments, choices and trade-offs—and subsequently execute those operations in the right manner which delivers that competitive essence. Creating and executing the “right” global operations for the business typically requires thoroughly answering a number of critical questions.
Four Operating Model Levers: Choices and Trade-offs
As they work to align their operating model with their competitive essence, the critical questions which companies must ask themselves can be broadly grouped around four levers of the operating model:
When developing a global operating model, one of the most important exercises is deciding how to structure and execute each major business process. Should it be performed in-house or outsourced? Should it be done off-shore, near-shore or on-shore (e.g., in each country)? Does it require reengineering or can it remain as is?
That’s why Accenture has developed its unique Accenture Business Operations Modeling framework. Accenture's approach, utilizing a powerful modeling workbench, is data-driven and objective, and provides clear guidance on each process. Among the aspects the approach considers when modeling operations are each process’s position within the operating model, the business skills involved in executing it, the volume and flexibility of transactions involved, and its strategic importance.
Success in the EHT market increasingly demands the simultaneous achievement of what can seem like opposing goals. On the one hand, a tougher competitive environment and more price-conscious consumers drive companies to make efficiency a top goal. At the same time, an increasingly complex and convergent marketplace requires greater sophistication and responsiveness to changing conditions.
This challenge certainly is not new. However, the recent recession substantially magnified the challenge and has driven EHT companies to a point at which they no longer can ignore or downplay what’s needed. Strategic and operational responses are required, and required now.
By determining how to best structure and use the four key levers of one’s operating model—organizational structure, management processes, management technology and people—in the context of an organization’s competitive essence, EHT companies can build the capabilities that will help allow them to “do it all”: win on price, deliver category-killer innovations and more deeply engage with increasingly diverse and demanding customers.
July 9, 2010
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