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Editor’s Note:  If you are interested in becoming an expert on Innovation Management, take a look at Flevy’s Innovation Management Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

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Humans inherently connect to each other in an indigenous context, generate knowledge, and develop a product to be disseminated by way of commerce.  Traditionally, Global Innovation practice has seen assembling of people with vital capabilities and essential knowledge via co-location. 

Co-location is the gathering of Innovation specialists into a handful of Innovation centers, domestically and in prime markets.  The innovative products and/or services created by them are then dispersed to markets throughout the globe.

However, as the array of knowledge required for Global Innovation becomes extensive and diverse, co-location has become inadequate.  Today’s dynamic and shrinking world necessitates taking an expanded approach to Innovation Management.

Most of the organizations have not been able to sufficiently internationalize their Innovation Strategies to make use of the multifaceted knowledge scattered world-wide; knowledge necessary for present-day products and services.

Cause of failure is the generally accepted but perceived trade-offs listed below.  The challenge is to surmount these trade-offs, which research has shown is possible. 

  1. Approval vs. Disapproval
  2. Autonomy vs. Control
  3. Capability vs. Motivation
  4. Attraction vs. Interest
  5. Achievement vs. Potential 

 

Most companies leverage their international networks just to engage in mundane tasks, and are unable to make use of opportunities for Global Innovation to gain Competitive Advantage.

Let us go into some detail of these tradeoffs. 

Approval vs. Disapproval

When pitched generally, the idea of taking Innovation to the global level is agreed to by everyone across the organization.  When the task is directed towards a specific entity or specifics of it are assigned, Disapproval ensues.

Autonomy vs. Control

This is the trade-off between granting local autonomy vs. losing centralized control over the Innovation process.  Reason for such interpretation is the inability to consider knowledge and power separately. 

Capability vs. Motivation

A singularity exists where companies with elevated Innovation Capability exhaust their enthusiasm for Global Innovation.

Attraction vs. Interest

Taking Innovation to the global scale often necessitates partnerships.  Such partnerships typically present the predicament that the more desirable the probable partner appears, the less those feelings are reciprocated. 

Achievement vs. Potential

There is a trade-off between the over-emphasis on historical achievements vs. the potential for future achievements, as over-reliance on what has worked in the past will hinder Creativity required for a new environment.

Effective Global Innovation of products and services has the hallmark of unrestricted reciprocity of unstated knowledge between people scattered around the world.  Such an evolution can be achieved by optimizing 3 diverse aspects of Innovation, generally simultaneously.

The 3-prong approach to Global Innovation Strategy that overcomes the Global Innovation trade-off of Knowledge Complexity vs. Global Dispersion comprises of:

  1. Compact & Agile Innovation Footprint
  2. Capabilities & Structures for Communication
  3. Internal & External Collaboration

Universal principles of Global Innovation Strategy keep evolving for making each of these attributes work, based on the experience of numerous entities.

Let us delve a little deeper into the 3 principles.

Compact & Agile Innovation Footprint

This relates to the quantity of tangible sites in an Innovation network.  Only that number of physical sites should be included in an Innovation network which are able to add exclusive and discerned knowledge. 

Capabilities & Structures for Communication

This aspect has to do with overcoming the challenge of distance, time, and culture when taking Innovation to the global level.

Communication is a momentous challenge when there is distance, time, and culture difference.   Developing a culture of open knowledge-sharing is vital for taking Innovation to a global scale.

Internal & External Collaboration

This aspect looks at collaboration protocols for co-located sites versus globally dispersed collaboration.

Interested in learning more about Global Innovation Strategy?  You can download an editable PowerPoint on Global Innovation Strategy here on the Flevy documents marketplace.

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To be competitive and sustain growth, we need to constantly develop new products, services, processes, technologies, and business models.  In other words, we need to constantly innovate.

Ironically, the more we grow, the harder it becomes to innovate.  Large organizations tend to be far better executors than they are innovators.  To effectively manage the Innovation process, we need to master both the art and science of Innovation.  Only then can we leverage Innovation as a Competitive Advantage, instead of viewing Innovation as a potential disruptive threat.

Learn about our Innovation Management Best Practice Frameworks here.

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– Roderick Cameron, Founding Partner at SGFE Ltd

OM1Most people believe that the value and impact of the C-level leadership originates from the number of meetings conducted, having the ability to plan for long term, and make key strategic decisions collectively.  However, in reality, the C-level seldom works in unanimity to make collective decisions.  They often have animosities with each other and lack collaboration and mutual trust.

The real impact and success of the top team emanates from the informal and social networks of its members, their resolve to capitalize on those connections for strategic decision making, and their competency to perform well in subgroups created to solve pressing concerns.

Effective C-level leadership is conscious of the value of their informal / social networks and their ability to deal with serious issues.  They organize themselves in a way to work as the nucleus of the organization, which gives them the leverage to promptly act on adversities or opportunities.

Leadership’s Social Network Analysis

C-level’s informal social network enables an organization to draw combined capabilities—in-house as well as the extended network.  Top leadership needs to evaluate the strengths of their social network by mapping their informal associations.  This can be done by conducting surveys, analyzing meetings, phone calls, and emails.

The social network analysis reveals that 90% actionable information comes from this informal leadership network rather than through internal reports and datasets.  These linkages aren’t distributed evenly; some members may be highly networked commanding a major chunk of two-way interactions across the organization whereas others may have a smaller network and lesser influence accordingly.  The analysis also suggests that poor leadership connections lead to failed decisions—whereas enriched networks cause advancement in Innovation and Organizational Efficiency.

To design—or redesign—an effective Leadership Operating Model, organizations need to incorporate 3 key principles in their operations:

  1. Leverage Focused Subgroups
  2. Improve Networking Effectiveness
  3. Manage Conflicts at the Constituent Level

These 3 principles aren’t simple to implement.  It warrants evolving the very nature of how the senior leadership team functions and design a more poised and assimilated Operating Model.

Let’s discuss these principles in detail.

Leverage Focused Subgroups

Senior leadership’s performance cannot be judged solely by its ability to revamp the enterprise’s organogram.  Effective top leadership demands from the team a capability to form peer-to-peer, top-down, and bottom-up relationships; and work in discrete yet linked groups, each of which is focused on solving a unique problem or tapping an opportunity.

Depending upon the circumstances, leaders should adopt any of these modes when dealing with networks.  Focused subgroups work best in 3 discrete modes:

  • Discussion Groups – These groups focus on information flow, comparing notes, and updating each other on progress. The mode does not cater strategic decisions or active leadership.
  • Single Leader Units – In this mode, every executive of the group has clear responsibilities and is accountable to one boss who has the authority over the others to enable speed and efficiency.
  • Real Teams – This subgroup includes executives possessing similar capabilities, who are committed under an accommodating leader to achieve shared objectives.

Networking Effectiveness

It is culturally acceptable at many organizations to utilize time on trivial matters—e.g. unnecessary e-mailing, lengthy approval cycles, long-drawn-out meetings, or to schedule events.  These matters cannot be eliminated altogether however, meticulously planned informal networking between the top team enhances efficiency of leaders to a great extent.

Each member of the C-level should connect the right people together, lead and support subgroups, and maintain associations.  Gaps in informal communication between leaders damage the implementation of organizational strategic plans.  Interaction between top executives is often limited to participation in senior level meetings for information sharing purposes only, lacking collaboration to pursue shared objectives.  To make matters worse, they spend too little a time with their direct reports, employees, or customers.  This detachment creates widespread unease and skepticism.

Interested in learning more about the 3 key principles necessary to design a Leadership Operating Model?  You can download an editable PowerPoint on 3 principles key to design a Leadership Operating Model here on the Flevy documents marketplace.

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– Roderick Cameron, Founding Partner at SGFE Ltd

SCMMajority of pharmaceutical companies are persisting with decade old processes and routines.  They have transactional relationships with suppliers, lack of concerted efforts to progress ahead, and no vision to reap productivity rewards.  The reasons for continuing with these traditional practices include tax regimes, regulatory hurdles, and stable revenues from customers dependent on existing industry offerings.

Disruption—spurred by technological Innovation, fluctuating customer demand patterns, and more agile and creative competitors—has forced the pharmaceutical sector to think of ways to face these challenges, survive, and thrive.  One of the strategic response to this competitive disruption—by leading manufacturers—is to reexamine their manufacturing operations, embracing agile principles, reducing costs, revolutionizing procurement and distribution functions, and striving to achieve Operational Excellence.  Above all, they view their supply chain not as a cost center, but as a source of Competitive Advantage.

The increasing influence of generic drugs is another challenge for large multinational pharmaceuticals.  In the past, multinational companies (MNCs) dominated the market owing to possessing a number of high-market drugs protected under patents.  Patent protection afforded them the leverage to set high prices on each product.  The scenario is fast changing.  Expiry of high-market drugs patents is creating a huge opening for generic competitors and the space is widening compared to the past.

In the past, pharma manufacturers were able to counter the threat to generic competitors by developing new drugs.  However, this is becoming difficult and the new drugs pipeline is shrinking with time.  R&D expenditure has continuously gone up, however, drug approval from the authorities has not kept paced with it.  It has rather declined, straining the MNCs further.

Other disruptive factors include newer distribution methods, public health plans favoring generic drugs over proprietary ones due to cost effectiveness, the newer internet / mail delivery options displacing traditional pharmacy dispensing options.  Pharmacy chains—e.g. Walgreens—have given a leverage to the retailers to negotiate reduction in medicine prices where again generics have an edge over MNCs.

Moreover, the trend of drugs purchased through a formal tender process is increasingly gaining acceptance, adding to the difficulties of large pharma manufacturers.  Additionally, strict regulations are minimizing the cost benefits that MNCs traditionally enjoyed in the past.

All these factors have forced the pharma companies to reorganize their Supply Chains in a more flexible manner to manage complexities, bring in efficiency, and contain costs to compete in off-patent segment with generics.

Reorganization of a conventional pharmaceutical Supply Chain into an Agile, flexible, and inexpensive Supply Chain warrants developing Operational Excellence and Cost Reduction competencies.  This necessitates 5 strategic steps (phases):

  1. Avoid a one-size-fits-all approach to SCM
  2. Develop Agile product design and packaging capabilities
  3. Restructure the Supply Chain footprint
  4. Establish partnerships with 3rd party suppliers
  5. Enhance planning capabilities

Let’s discuss these steps in detail.

Step 1 – Avoid a One-size-fits-all Approach to SCM

Large pharma MNCs typically maintain the Supply Chain of all of their drugs with a single strategy of retaining high inventory and service levels.  Such a strategy can only work for products having a high profit margin, in a static environment.  It is not suitable for low-margin products, contrasting environments, and does not take into account fluctuations in demand patterns.  An appropriate approach is to implement a multiple Supply Chains model based on individual products and markets.

Step 2 – Develop Agile Product Design and Packaging Capabilities

The 2nd step in Pharma Supply Chain Reinvention involves quick distribution of different versions of products to markets based on demand. For low-margin products with high demand volatility, the Supply Chain Management Strategy should be to employ Pack-to-Order system.  The Pack-to-Order approach involves developing a version of a product that could be timely dispatched to several markets of varying demand across the globe.  This approach coupled with Postponement Strategy—where products are packed to order during later stages of production based on regional demand—assists in trimming down the inventory, reducing complicatedness, and enhancing Supply Chain nimbleness to demand volatility.

Interested in learning more about how to reinvent your Pharmaceutical Supply Chain?  You can download an editable PowerPoint on Pharmaceutical Supply Chain Reinvention here on the Flevy documents marketplace.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

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“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

opportunity 2Potential opportunities always surround leaders.  It is up to them to pounce on those or regret overlooking them, when someone else takes advantage of them.

Leaders’ personal beliefs and assumptions often clash reality.  The trait is categorized as “confirmation bias” in Psychology, where individuals pick the data that supports their existing opinions and approaches and doubt information which defies their mindsets.  Leadership needs to develop themselves to the level to consider the slight hints of the opportunities surrounding them.

There are 10 hidden strategic opportunities that—exist in all businesses and geographies but—are often overlooked by the leadership due to personal biases.  These opportunities go unnoticed because they are often disguised in the form of anomalies and contradictions to leaders’ existing beliefs and assumptions.  It’s up to the leaders to control personal bias; explore anomalies; and develop capabilities to uncover and seize these 10 Hidden Strategic Opportunities before rivals do.

In this article, we will discuss the first 3 strategic opportunities.

Opportunity 1: Assuming a product already exists, but actually it doesn’t.

Most people assume that a certain product already exists.  Its only when an organization ventures into that segment—with a new value proposition—that people realize that there was a void there.  Such gaps are there in almost all industries, but only visionaries are able to recognize and capitalize on them—through innovation and creative product development.  A number of well-known inventions—e.g., tablet computers—were thought to have already existed, but actually didn’t.

For instance, Kate Brosnahan, accessories editor for Mademoiselle magazine, realized in the 1990s that the handbag market lacked stylish yet economical functional bags.  The market at the time was replete with expensive but impractical bags from top designers and functional bags deficient in style.  Kate left her job and founded Kate Spade LLC, with her partner Andy Spade.  Together they began creating fabric handbags which were practical as well as trendy.  Soon, their products started getting appreciation from customers, including media icons.

Opportunity 2: Customer Experience should be anything but strenuous, costly, or irritating (but most of the time it is).

Fragmented and delayed customer experience results in customer churn.  Annoyance caused by poor Customer Experience presents potential strategic opportunity to win customers by fixing it.  They are able to see the bigger picture and strive hard to relieve customers’ aggravation and offer exemplary Customer Experience.

For instance, creation of Netflix Inc. was the result of Reed Hastings having to pay a fine of $40 as late fee for a rented video cassette he had lost.  Leading organizations, such as Netflix, offer quality offerings and provide their customers seamless, quick, and pleasing experiences.

Opportunity 3. An item is often priced low only because not many people know about it.

Hidden merits of a location offers an opportunity for sharp people to invest in for future appreciation.  One of the reasons for inexpensive resources or items is the lack of their awareness and cognizance of their true potential among people.  When people recognize the potential of a property or resource, its price rises steeply.

Interested in learning more about the other hidden strategic opportunities?  You can download an editable PowerPoint on 10 Hidden Strategic Opportunities here on the Flevy documents marketplace.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

9920145277?profile=RESIZE_400xEarly 2000s saw a change of mind regarding the Globalization of commerce by members of the political and economic arenas.  This change of mind was instigated by myths perpetuated against commerce Globalization because of the dichotomy that appeared between existing Operating Models of companies and needs of the emerging markets.

These perceived trade-offs that were myths included ideas like choosing between centrally-controlled Operating Model and local responsiveness model.

Proponents of the central model had the view that intellectual power and Innovation capability had to be centralized, all products and services brought in line everywhere, foregoing catering to diverse needs and demands of customers in every emerging market.

The converse view was that in order to have locally applicable distribution systems, proactive Supply Chains, and reduced costs of emerging-market management, it was necessary to devolve the company and operation as a loose federation.

This trade-off incompatibility was addressed by the Hub Strategy where, in place of a single center, companies set up principal office “hubs” in as many of the 20 gateway countries of the world as required—a global corporate structure with no headquarters.

These 20 gateway countries represent 70% of the world population and generate 80% of the world income.  The gateway countries include Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom, and the United States from the developed economies.  Rest of the 10 are emerging markets of Brazil, China, India, Indonesia, Mexico, Russia, South Africa, South Korea, Thailand, and Turkey.

This new Business Model covers both the recognized advantages of developed markets and the possibilities of emerging economies.  A model that handles decentralization, centralization, existing practices, and possible disruptions not as trade-offs, but as complements.

It is, however, important to understand that for the model to have its full impact, 3 core pillars have to be integrated and pursued simultaneously.  The 3 Pillars of Globalization are:

  1. Customization
  2. Unity
  3. Arbitrage

Only business leadership that has taught itself and its teams to be very careful about where to customize, how to develop capabilities, and what to arbitrage are the ones reaping benefits from this model.

Let us delve a little deeper into the details of the 3-pillar Business Model.

Customization

Variation in needs, wants, and cultures of consumers makes it impossible to customize centrally.  Providing products and services in a locally competitive manner is therefore central to become a global enterprise.

Customization entails fulfilling the requirements and wants of varied consumers, in areas such as product or service features, affordability, and cultural alignment.  Hub Strategy provides the leverage to fulfill this demand by enabling companies to customize only in the 20 gateway countries.

Unity

Unity entails worldwide alignment of the company with, a unified central purpose, a body of exclusive first-rate knowledge, and capabilities that differentiate the company from all others.

Core purpose must be understood in the same manner by all functions of the company, in every geographical location.

Arbitrage

Arbitrage is a methodical initiative that consists of increasing effectiveness and Cost Reduction by discovering materials, manufacturing methods, logistics practices, funds sourcing, or infrastructure that are less expensive.

Interested in learning more about the 3 Pillars of Globalization and its Case examples?  You can download an editable PowerPoint on 3 Pillars of Globalization here on the Flevy documents marketplace.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Obstacle 1Agile is a robust approach to value creation.  More and more organizations are adopting Agile Software Development approach.

Becoming Agile is imperative to meet and exceed customer expectations and emerging business trends.  Implementing the Agile approach to Software Development leverages significant benefits, including:

  • Rapid design and development of new product and service offerings
  • Revolutionizing processes
  • Managing talent
  • Reforming organizations

However, Agile alone is not enough.  Agile Transformation can slip-up as Agile teams can stagger while working together and depending on others.  In order to become an effective Digital organization, companies have to steer clear of the obstacles that bog down the rapid progress of Agile software development.  These organizational obstacles to Agile include:

  1. Rigid Technology Architecture
  2. Poor Talent Management
  3. Lack of Product Mindset

Overcoming these barriers necessitates sincere harmonization, persistent effort, and commitment from the business and technology leadership.  Anticipating and addressing these major organizational obstacles is integral to becoming Agile.

Let’s discuss these obstacles in detail.

Rigid Technology Architecture

Using and expanding the same old codes and plugging gaps with software patches renders the IT Architecture cumbersome and unyielding, at most organizations.  Many organizations have outdated systems to manage operations and facilitate their customers.  The integration of these outdated systems with modern applications and IT architecture isn’t easy, making them inflexible.  Most of these systems and aps are inter-reliant and connected.  A small change in a code has serious implications on other connected applications.

IT executives have to consider a number of factors before modernizing their IT architecture.  These factors include potential value envisaged from the new architecture, requirement for new functionalities, risk of disruption, complications involved in the process, extent of fragmented data, and costs.  Based on thorough evaluation of these factors, executives select one of these 4 common approaches to revolutionize their IT architecture:

  • InactionThe investment in overhauling certain applications is thought to be nonviable as their impact is considered insignificant in the overall architecture.
  • IntegrateUncover the old system’s essential function / elements and connect them with modern systems using interfaces (APIs).
  • OverhaulModify the design of applications—e.g. dissecting the code into distinct, autonomous sections and eliminating any hard-coded values.
  • ReplaceDesign innovative applications and deploy latest architecture (e.g. micro-services).

Poor Talent Management

Most leaders understand the importance of finding and staffing top talent in becoming Agile.  However, outdated HR Management practices at some organizations become a major hurdle in attracting and retaining talented individuals.  The issue with IT management at most technology firms in the recent past was their shortcoming in visualizing the problems through a business perspective.  This led to the depletion of technical capabilities due to hiring of more and more people with strong business sense, but inadequate technological prowess.

Another factor compounding the talent deficit is entrusting the hiring function to external contractors by scores of IT organizations.  This practice, although, assists in staffing talent and gaining new capabilities promptly, but diverts much of the executives’ time in supervising the external contractors.  This leaves little time for them to acquire new technical skills and gives the contractors too much control over innovation.  Outsourcing the software maintenance to 3rd parties is another factor that leads to poor accountability and Talent Management.

To mitigate these issues, technology companies need to transform, strengthen their technical capabilities, eliminate dependencies on 3rd parties, and clearly define responsibilities.

Interested in learning more about the obstacles to becoming Agile?  You can download an editable PowerPoint on 3 Organizational Obstacles to Agile here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

DT2Accelerated pace of technological disruption has forced organizations to change.  It has triggered leaders to think of the ways they must adopt to survive in these challenging times.

Organizations are confronting this scenario by embracing digital technologies.  Traditionally, the focus of the organizations in these Transformation initiatives has remained on speed of change.  To get the most out of their initiatives, they are making drastic changes, to include:

  • Creating Agile Teams
  • Introducing Mobile Apps
  • Building Big Data and Analytics capabilities
  • Experimenting with creative Digital Business Models.

Digital Transformation programs are launched with huge fanfare, see success early on, but fail to keep the momentum going.  The issues that plague the sustainability of these initiatives are typically:

  • Aging Technology Infrastructure
  • Incompatible Operating Models
  • Archaic ways of doing business
  • Change-agnostic culture.

Drivers of change for the Digital Leadership have changed significantly over the years.  There is an increased focus on building scale when executing Digital Transformation.  Leaders have realized that quick Decision Making is not the only element required for successful Transformation.  To achieve its full potential, they need to create differentiated offerings and scale the most viable initiatives across the organization to create value.

Traditional organizations have started following the footsteps of digital disrupters like Amazon and Tesla.  They are implementing new digital services and adjusting their operations.  However, typical hurdles—e.g., old enterprise systems, bureaucratic red tape, delayed decision making, and segregation between IT and business units—make them slip back into the outdated ways of doing things.

Sustainable Digital Transformation involves building not only the technology infrastructure but also revisiting the operating model.  Successful Digital Transformations essentially involve embracing 4 key strategies to enable an ecosystem that encourages change to stick as well as scale:

  1. Create a strong Digital Foundation
  2. Integrate and consolidate the Digital Ecosystem
  3. Front-end to back-end approach
  4. Create a new Business Model

Let’s delve deeper into these strategies.

Create a Strong Digital Foundation

Manufacturing and pharmaceutical industries are the major sectors that employ this strategy.  The typical state of affairs in organizations implementing this strategy is such that they are in need of developing new digital capabilities from scratch to tackle nimble rivals who are churning out novel value propositions using digital tech.  These companies are burdened by dated tech infrastructure, sluggish decision making, and dated business models.  The risk of disruption to these businesses is growing but it hasn’t challenged them to transform drastically.

To them, building a digital foundation warrants acquiring novel foundational capabilities.  Their approach should be to start implementing and managing small changes one step at a time.  For instance, building a smart technology architecture with advanced Big Data, Analytics, and predictive modeling capabilities.  This should be followed by testing prototypes of the new model to prove their worth before implementing a full-blown execution.

Integrate and Consolidate the Digital Ecosystem

This strategy has gained traction most in organizations from the Consumer Products industry.  These organizations are typically marred by scores of fragmented IT systems running in different parts of the organization.  There is a general inability to prioritize the most viable projects and scale them.  The need to reform and rapid deployment of Digital Infrastructure is critical for survival.

The approach to Digital Transformation in these organization should be to establish a central management position to manage the initiative and streamline dispersed technology landscape.  This entails revising the technology infrastructure and operating model, deploying a unified IT platform for gathering and storing customer data, establishing a common data repository accessible to all units to recognize customers’ needs, and creating a culture that encourages innovation, acts on creative ideas, and refines them through experimentation and advanced tools.

Interested in learning more about the other strategies to enable Digital Transformation?  You can download an editable PowerPoint on Sustainable Digital Transformation here on the Flevy documents marketplace.

Did You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

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– David Coloma, Consulting Area Manager at Cynertia Consulting

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– Roderick Cameron, Founding Partner at SGFE Ltd

Lean ManufacturingTop products are the creation of top designers and developers. Lean Product Development helps in developing expert designers and developers, who are excellent problem solvers and are adept at creating innovative solutions.  Developing Key Talent for Product Management accelerates Innovation and time to market while lowering costs.

Managers responsible for developing creative products and solutions need to take 5 key steps, in order to facilitate Learning and Development of Key Talent in the manufacturing sector:

  1. Incorporate Technical Excellence into the Organization DNA
  2. Create and Implement Design Standards
  3. Hold Regular Technical Design Reviews
  4. Evaluate Organization’s Product Development Process
  5. Revisit Organizational Leadership Culture to Focus on Learning

Let’s dive deeper into the steps to effective Talent Management.

STEP-1 Incorporate Technical Excellence into the Organizational DNA

Technical mastery needs to be at the heart of everyday work practices and the guiding principle for manufacturing concerns.  Incentives, recognition, and rewards should be created based on technical competence, and it should be incorporated into routine business practices.  Likewise, training programs need to be geared towards enhancing the engineers’ technical capabilities.

For instance, technical competence is an integral element of training new engineers at Toyota.  One of the main requirements for qualifying for an engineering leadership position at the company is mentoring of young engineers.  Similarly, Ford Motor Co. has a technical maturity model in place for each department in the engineering function.  The giant automaker reinforces this when creating roles and responsibilities, conducting design reviews, and remunerating its engineers.  These measures help curb attrition and motivate people to stay longer.

STEP-2 Create and Implement Design Standards

The next step is to develop design standards and execute them.  Design standards should be set in place and implemented by using the existing organizational knowledge.  Design leaders should hold regular sessions with developers on a smart board and solicit their views on the layout of a certain system and training an apprentice in design principles.  These design guiding principles should be compiled into user-friendly handbooks for future design and development programs.  Lessons learnt from each project should be incorporated into the design standards with regular updates to the handbooks.

Toyota reserves 10-15 days out of the development project time period for the development team to ponder over the lessons learned from an ongoing project.  The development team incorporates these lessons into the design standards and updates the design manuals with these newer experiences.

STEP-3 Hold Regular Technical Design Reviews

The 3rd step involves holding frequent technical design reviews to nurture people via action learning and collaboration. The product design and development units should organize weekly technical design assessments.  The assessments need to be conducted at the design and development facilities—factory premises, test lab, or prototype shop—instead of a conference room.  This helps in gaining practical knowledge and skills.  Regular assessments assist in developing design and engineering teams through on-the-job experiences and cross-unit cooperation.

Interested in learning more about the other steps to facilitate Learning and Development of Key Talent in the manufacturing sector?  You can download an editable PowerPoint on Lean Product Development: Talent Development here on the Flevy documents marketplace.

Did You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Lean1Improving Product Development competencies in designers and developers is a concern for senior leaders in the manufacturing sector.

The approach most organizations take in developing Human Resources does not go beyond staffing the cream of the crop from leading global educational institutes.  Talent Development to them is, typically, sending their people to attend workshops and keeping up with employee annual training hours’ goals, and that’s it.  Companies usually spend more on acquiring latest manufacturing equipment or modern collaboration tools than they do to develop their greatest asset—their people.

Research on manufacturing practices unequivocally suggests that it’s primarily the inspiration to adopt a culture of Continuous Improvement in people that results in operational excellence.  This Continuous Improvement Culture has more significance than implementing Lean practices across all processes.

The “Lean Product Development” concept isn’t a new notion.  The practice has been around since the 1980s.  An MIT study in the 1980s revealed that manufacturing practices in Japanese automakers were totally opposed to those of auto manufacturers in the rest of the world.  These approaches were referred to as “Lean” practices.  Research into manufacturing practices of Toyota has spread the knowledge about Lean Product Development globally.

Lean concept is strikingly opposing to the philosophy that emphasizes on delegating the responsibility of developing the designers’ / developers’ capabilities to the Human Resources Department.  In order to develop and deliver superior products, Lean Product Development focuses on enabling the developers build “personal dexterity” as the key element of success.  The concept necessitates technical training and collaboration between developers.

Before embarking on the Lean Product Development and Innovation journey, organizational leadership should work on finding answers to these 3 fundamental questions:

  1. In order to design better products, which critical insights do we need to develop regarding customers, products, and processes?
  2. Which mediums, organizational knowledge, and tools are required to develop these insights?
  3. Which organizational structures and ways of doing businesses are ideally suited to develop these valuable insights and improving the expertise of developers?

Pondering over these critical questions and answering them facilitates in creating a pool of skilled Product Designers and developers.

Let’s dive deeper into these questions.

Question 1

Lean Product Development emphasizes on developing a steady stream of products at an even pace—referred to as “Takt.”   iPhone 1 and iPhone 2 are examples of a steady stream of products released at regular intervals in Apple’s iPhone value stream.

Takt has evolved the way products are designed.  An initial product is developed as a means to validate an idea.  Products are progressed from the initial product based on stakeholders’ feedback.  The purpose of a value stream of products is to improve the current product offerings, inspire the existing customers to upgrade, and tempt potential customers to try the product.  In these evolving value streams, every product release serves as an opportunity to gain insights into the market.

The value enhancement through Takt has 2 broad objectives:

  • Fixing problems in existing products and creating offerings meeting the customer needs.
  • Lowering manufacturing costs and improving quality.

Question 2 

Lean Product Development underscores the significance of the medium through which developers should learn in order to create superior products.  Developers’ capabilities in technical Problem Solving and learning what the others are doing helps enhance the quality of each new release.  Development teams should have quick access to accumulating a thorough knowledge of the entire supply chain and the effect of their decisions on manufacturing.  This assists in improving the efficiency of the developers.

Instead of learning and gaining knowledge through traditional ways, Lean Product Development encourages the developers to learn through Action Learning—the process where teams are continuously mentored and encouraged to learn collectively on the job, solve problems creatively, and test models to cope with real-life issues.

Interested in learning more about the key elements to consider before enabling Lean Product Development & Innovation, and the phases of the Lean process?  You can download an editable PowerPoint on Lean Product Development & Innovation here on the Flevy documents marketplace.

Did You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Value ChainA traditional Value Chain involves a linear sequence of activities—from conversion of raw materials into components which are assembled into products.  The products are then distributed, marketed, sold, and serviced.  Management plans and execute strategies and operations based on this sequence.

This set of activities worked well for organizations in the past.  However, this linear progression does not encourage Innovation and provides little protection from the risk of being outperformed by rivals in today’s disruptive markets.  Such a competitive environment calls for implementing more robust ways of managing Customer Demand and Value Creation.

An effective approach to deal with this challenge is the Value Grid Analysis Model.  The Value Grid approach provides a perspective beyond traditional linear progression of activities, where organizations need to balance equilibrium between suppliers and manufacturers aside from concentrating only on reducing lead times.  It outlines new opportunities and risks for organizations.

The Value Grid Analysis provides a number of routes to improve Performance and reduce risks.  It encompasses the following 3 pathways—or dimensions:

  • Vertical pathway – using traditional Value Chain, companies find opportunities upstream or downstream from adjacent tiers in the existing Value Chain.
  • Horizontal pathway – companies look for opportunities from similar tiers in multiple (parallel) Value Chains.
  • Diagonal pathway – explore opportunities to create value across multiple value chains and tiers.

The Value Grid Framework necessitates diverting leadership attention towards 3 key opportunity areas to create Competitive Advantage:

  1. Customer Demand
  2. Information Access
  3. Multi-tier Penetration

Let’s dive deeper into the 3 opportunity areas.

Customer Demand

The first opportunity area to drive competitive advantage pertains to controlling internal and external customers’ demand.  It warrants a company to manage customer demand upstream (suppliers and companies that supply to suppliers) as well as downstream (customers).  By managing customer demand downstream, organizations control the decision makers responsible for the purchase decision.  When companies are unable to control the decision makers, they look for levers across the Value Chain to influence decisions.  These levers include direct advertisements to the end users, focusing on distributors, or incentivizing retailers to recommend a product.  Organizations also try to influence upstream, e.g., their R&D units, to create products which can be used in conjunction with the existing product range to boost their efficacy and benefits for the end-users, ultimately influencing consumers’ decisions downstream.

Information Access

The 2nd opportunity area involves linking information sharing to influence decision making.  A few manufacturers prefer to partner with those suppliers who openly disclose the information (capabilities, flexibility, and pricing structures) of their 2nd-tier suppliers with them.  This assists them in planning and helping the suppliers manage materials and prices better.

For instance, with increased tariff on imported steel and price of steel continuously going up, car manufacturers like Honda purchase steel in bulk and sell it to their suppliers at a reduced rate.  This helps them keep the prices of their cars down and compete better.

Multi-tier Penetration

Nonlinear thinking (Value Grid Model) enables the organizations to determine innovative solutions beyond the scope of traditional Value Chains.  To manage excess demand organizations take on multiple Value Chain tiers to control demand and buyers’ power.

Leading manufacturers evaluate multiple value chain points for their participation in order to scale.  They sell not only to Original Equipment Manufacturers but also in the aftermarket.  Supplying to more than one Value Chain tier allows organizations to withstand pressure from OEMs to reduce costs, demand shifts, and offers attractive margins.

Interested in learning more about the 3 opportunity areas of the Value Grid Analysis Framework?  You can download an editable PowerPoint on Value Grid Analysis here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro LibraryFlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

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