BMUS 19

REBUILDING GMOne-year on from its Chapter 11 exit, does the restructured auto giant

have the smarts to succeed in a changed operating environment?

TOY STORYMattel CEO Bob Eckert refl ects on 10 years at the top

THE OPTIMISTHow EMC Chairman Joe Tucci dealt through the downturn

WORK SMARTWhy tomorrow’s offi ce will have intelligence built-in

www.busmanagement.com • Q3 2010

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In the long and profi table history of global commerce, you can probably count the number of fi rms for whom business has been consistently easy on just one hand – and for the record, I can’t actually think of any right

now. Indeed, Since Ug the inventor debuted his new sled only to fi nd a rival had come up with the wheel it’s been a fact of life for every capitalist that sometimes, things go against you; you just have to roll your sleeves up and get on with the dirty business of survival. And whether it’s for internal reasons (mismanagement, oversight, negligence) or external factors (force majeur, market volatility or changing customer demand), managing that process well is essential.

For big companies, bouncing back from corporate scandal, fi nancial malfeasance or public disaster is diffi cult – but it isn’t impossible. Take the case of Mattel, for example. Back in 2007, the toymaker discovered it had a problem with some of its products being manufactured in China, when high lead paint levels led to the recall of millions of toys during the peak shipping months for Christmas delivery. No company wants to be perceived as putting the health of children at risk; it could have been a PR disaster. Instead, because of the swift, transparent and honest action it took – as well as the fact that it maintained open lines of communication with the media and other related stakeholders 24/7 – the incident is widely regarded as a model of crisis management.

“We knew we had made mistakes and I think we were quick to acknowledge that,” explains CEO Bob Eckert in our interview on page 36. “You need to tell people, ‘I don’t care what it takes. We will fi x this

Th e long journey backAll businesses hit bumps in the road;

it’s how you deal with them that counts.

Ben Th ompsonSenior Editor

and we will spend whatever we need to spend.’” It’s a lesson a number of other high-profi le executives currently mired in their own problems – BP and Toyota, to name but two – would do well to follow.

Even bankruptcy is no longer a stumbling block to building (or rebuilding) a successful fi rm. Modern wisdom has it that bankruptcy can be a good thing as long as a company can shed debt, fi x its processes and eventually return to profi tability. It’s a problem GM is currently grappling with following its highly publicized collapse last year. The company celebrates the one-year anniversary of its emergence from Chapter 11 this month, and after signifi cant restructuring things are looking up for the automotive giant: in April it announced its fi rst quarterly profi t since 2007, and there is no doubt the new GM is a slimmed down, more streamlined operation than its bloated and ineffi cient predecessor. Again, management is key; but does auto industry outsider Ed Whitacre have the knowledge to restore the company to its former glories? Our cover story on page 68 fi nds out.

All businesses hit bumps in the road now and again, and the best-run fi rms are able to ensure the wheels don’t fall off when they do. Last June, the wheels fell off for GM. It’s now down to a new team of mechanics to put them back on again.

FROM THE EDITOR 7

“Th ey’ve taken a lot

of the ineffi ciencies

out of the structure

in terms of the

management layers

and decision-

making, but they

didn’t in any way

penalize the product

programs or the

manufacturing.

Th ey preserved the

core of the company

while cleaning up

a lot of the historic

bureaucracy.”David Cole, Chairman

of the Center for

Automotive Research,

on GM’s restructuring

eff ort (p68)

EDS NOTE.indd 7EDS NOTE.indd 7 12/07/2010 09:0712/07/2010 09:07

EMERSON AD.indd 1 28/06/2010 13:45

36

46

84

68

Model of success

Obamacare: Looking after your business

One-year on from General

Motors emergence from

bankruptcy protection,

Ben Th ompson takes a

look at what changes have

been made and how the

automotive giant looks set

for the long term

Following the contro-

versial overhaul of the

country’s healthcare

system, Business Man-

agement takes a look at

how the changes will

aff ect America’s business

landscape

Led by charismatic Joseph

Tucci, EMC has defi ed

expectation and fl ourished in

a recession

Toy storyWhy Mattel CEO Bob Eckert

is rebranding the toy giant as a

“people development machine”

– and how a focus on getting the

company culture right is helping

him get there

Changing the game

CONTENTS 9

Contents2.indd 9Contents2.indd 9 09/07/2010 15:1909/07/2010 15:19

CONTENTS10

102

62

Self-service business intelligenceEllie Fields reveals the busi-

ness solutions provided by

self-service dashboards

The future looks cloudyMichelle Bailey gives her

forecast for the datacenters of

tomorrow

Head in the cloudBryan Doerr reveals how the

cloud is the solution to IT

outsourcing needs

Powering the technology generation Duke Energy’s CTO, David Mohler, talks about

technology’s role in energy

distribution today

Smarter, leaner, greenerWhy the workplaces of the

future will have integrated

intelligence built in to the

very fabric of the building

The future of modern medicineKaiser Permanente’s Rob-ert Pearl talks to Business

Management about the role

of technology in healthcare

today

Mastering multi-sourcing With outsourcing on the

rise, how can fi rms eff ec-

tively manage multiple

sourcing partners and

relationships?

Enterprise data quality governanceSome insight into the im-

portance of quality data

for businesses today

The paradox of global leadershipMike Th ompson ex-

plains the importance

of rethinking leadership

development

Driving design forwardLaurenz Schaff er lift s the

hood on the creativity

behind DesignworksUSA,

engineering heavyweight

and the world’s most in-

novative company

Doing business the intelligent wayHelena Schwenk of Ovum

outlines the latest trends in

business intelligence

technology

78

54

66

76

60

90

94

96

100

102

80

60

Panduit: Shahriar Allen

Gold sponsor

DesignworksUSA: Laurenz Schaffer


UNISFAIR AD.indd 1 08/07/2010 09:53

CONTENTS12

131 Marketing the MLS

136 36 hours in… Chicago

138 Gadget reviews

140 Book reviews

142 Agenda What’s on this quarter

144 Final Word with Jeremy

Roff e-Vidal, Capgemini

131

128

P.s.

56 Kent Christensen Datalink

58 Fred Stack Emerson

82 Joe Ruck BoardVantage

Executive Interviews

The cost of a cloudEurope’s ash cloud left thousands of

business people stranded away from

home, but some industries were able to

capitalize on executive’s travel woes

Media, innovation, productivity Tim Hughan explains how to maxi-

mize effi ciency for the web-enabled

business generation

Mobile forceLee Wagner explains how mobile tech-

nologies can improve businesses today

Connecting peopleNokia’s CIO talks about the impor-

tance of personnel in the world of

technology

The Lean SolutionBusiness Management fi nds out how

Lean and Six Sigma are bringing about

performance improvements

World leaderLike its products, Coca-Cola’s employ-

ees are all over the world. Chief People

Offi cer Ceree Eberly reveals the chal-

lenges of directing a global workforce

Money makerBen Th ompson speaks to the man who

brought the world of stocks and shares

to the masses

Pushing back the boundariesBusiness Management reports on how

philanthropy is entering the IT shop

through a new initiative

110

112

114

116

118

120

124

128


LAYERED TECH AD.indd 1 28/06/2010 13:55

“What stands out from this event was the quality of the speakers chosen to moderate the round tables. I like working with genuine facilitators who can open people up and keep the discussion moving.”Paul Bergamo, VP and CIO, Liberty Mutual

A Proven FormatThis inspired and professional format

has been used by over 100 executives as a rewarding platform for discussion and learning.

The CIO Summit is an opportunity to debate, benchmark and learn from other industry leaders.

A Controlled, Professional and Focused Environment

The CIO Summit is a three-day critical information gathering of the most infl uential and important CIOs from North America.

CIO Summit 2010

Find Out More Contact CIO

+1 212 796 2000

Chairman/Publisher Spencer GreenDirector of Projects Adam BurnsEditorial Director Harlan DavisWorldwide Sales Director Oliver Smart

Editor Ben ThompsonAssociate Editor Lucy DouglasContributors Ian Clover, Ross Densley, Rebecca Goozee, Sarah Herman, Jodie Humphries, Diana Milne, Nicholas Pryke, Julian Rogers, Stacey Sheppard, Marie Shields, Timon Singh, Huw Thomas

Creative Director Andrew HobsonDesign Directors Zöe Brazil, Sarah WilmottAssociate Design Directors Tiffany Farrant,Michael Hall, Crystal Mather, Cliff Newman, Catherine Wilson

Online Director James WestOnline Editor Jana Grune

Project Director Robert FishkinSenior Sales Executives Dean Devon, Adam Kolanko, Marisa EspositoSales Executives Brandon Abramowitz, Chris Burke, Ryan Fischer

Finance Director Jamie CantillonProduction Director Lauren HealProduction Coordinators Renata Okrajni, Aimee Whitehead

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20-22 SeptemberThe Fairmont Turnberry Isle Resort & Club, Miami

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THE BRIEF16

As America continues to nurse its wounds fromthe crippling economic crisis and businessesendeavor to return to a state of growth,President Obama’s proposed financial regula-

tory reform legislation reaches its conference committee.Since plans to overhaul the existing financial regulatorysystem were announced in June last year, they have beenmet with a barrage of opinion both for and against.Lengthy and complex in nature, the legislation is intend-ed to minimize the risk of a future financial crisis, includ-ing measures to establish a systemic supervisor, toimplement an arbiter between consumers and financialinstitutions and to impose a more stringent regulationson derivatives trading.

The proposals have attracted an abundance of at-tention, with many in America hoping to see the fi-nancial sector held accountable for the economicmaelstrom; it is also proving unpopular with some inthe financial services sector, who claim the reform is toostringent and will be detrimental to economic growth.But what will these changes mean for the country’sconvalescent businesses?

A level playing field, says Tim Duncan, serial entre-preneur and Chairman of the informal AmericanBusiness Leaders for Financial Reform group. “The finan-cial services industry needs to regain a lot of credibility inthis country and across the world,” explains Duncan. “I’m

Consumer protection or entrepreneur threat?

not sure that a lot of the executives in some of the larg-er companies and the banks really understand the extentto which people across the United States are upset aboutwhat’s happened to the economy.”

On the other side of the fence, John Dearie, VicePresident of Policy at the Financial Services Forum, ex-plains that contrary to popular belief, his organization isin favor of reform. “It has long been understood in thiscountry the framework for supervision and regulationwas inefficient,” Dearie explains. “One of the things thatmade us vulnerable to financial crisis was that no onewas looking at the big picture and so no one really had agood understanding of how risks evolving or emergingin, say, the mortgage market might affect financial insti-tutions and other aspects of the financial system.”

Duncan’s group are lobbying specifically for the in-statement of the proposed Consumer FinancialProtection Bureau, the agency that would operate as aregulator to oversee various consumer debts, such asmortgages, credit cards or consumer loans, providingconsumers with a buffer against lenders. Duncan sug-gests that the CFPB will benefit businesses looking tosucceed in today’s increasingly competitive market, ex-plaining that financial institutions across the board willbe offering reasonable, transparent financial products.“The biggest problem we’ve had in the past,” he explains,“is that you have a segment of the industry that has hid-

“One of thethings thatmade usvulnerable tofinancialcrisis wasthat no onewas lookingat the bigpicture”John Dearie

UPFRONT v2_25 June 09/07/2010 15:57 Page 16

THE BRIEF 17

den fees, has non-transparency contracts, unfair agree-ments that trap people into entering.”

Critics of the agency, most notably the AmericanBankers Association, claim that it would prevent smallerbanks from operating effectively. The ABA wrote a letterto Congress back in April, outlining concerns that CFPBwould subject banks of all sizes to a set of poorly con-structed rules in order to monitor retail bank products.Duncan disputes these concerns, pointing out that asmany as 98 percent of the banks in the US will be exemptfrom the examination authority of the agency. “The ideabehind this,” he explains, “is that the agency can focuson products. It’s not focusing on who’s originating thoseproducts, so if a bank is making a loan, or an auto lenderis making a loan, or a private payday lender is making aloan, what’s going to be looked at is the loan.”

More significantly, the Financial Services Forum isconcerned that the new consumer protection bureaucould have a potentially negative impact upon smallbusinesses. Though the Forum is strongly in favor of en-hancing consumer protection, Dearie explains that con-solidating the consumer protection duties of financialregulators within a single bureau could be a misguidedapproach to the issue. There is a feeling that consumerswill inevitably find it hard to get credit and, if they do, willbe obliged to pay higher upfront rates to ensure bankshave the necessary capital in reserve. For small business-es and entrepreneurs this could be a potentially cripplingeventuality, particularly in a time of recovery. “The inten-tions are good in terms of protecting consumers,” Deariesays, “but, in protecting consumers, I think there is a veryreal risk that a new agency in Washington could take anapproach that might negatively impact the kinds of fi-nancing alternatives that small businesses rely on.

“If your perspective is the business community, yourpriority with regard to finance is a wide availability of fi-nancial products and services and a low cost of capital.And I think both things are going to become more diffi-cult. It’s going to be more difficult environment for busi-ness to get the same kind of range of products andservices that they’ve been used to. So in that sense, Ithink it would amount to a more challenging financialenvironment for businesses.”

Duncan is not concerned, and explains that theagency, as with the greater majority of the reform legis-lation, is concerned with getting businesses going againin America. He adds that there are aspects of legislationthat deal with credit card fees and other such expensesthat concern small businesses that will ultimately provehelpful to the small businesses across the country. “Ithink it’ll, hopefully, begin to once again level the playingfield in terms of the cost of financial services and en-courage people to look forward instead of looking back.”

News in pictures

Leaders met in Toronto in June to address issues including the global economy. They agree that banksneed significantly higher capital reserves in order to avoid another financial crisis, which supports theproposed changes that feature in the regulatory reform legislation.

In one of the most hyped deals in American sporting history, LeBron James announced his decisionto sign to Miami Heat. James is the most valuable player to transfer between major clubs as a freeagent since Shaquille O'Neal signed for LA Lakers in 1996.

Disney lost a $269 million law suit against television company Celador. The British creators of Whowant to be a millionaire?, the hit TV show made popular in the states back in 1999, claim Disney didnot pay appropriate royalties for the show.


18 NEWS & NUMBERS

Social media in businessWith more people utilizing social media technologysuch as Twitter and Facebook, companies are comingto realize it is another resource to reach their clients.As such, many firms can now be found on a variety ofsocial media networks. Here we take a look at theFortune Global 100 Companies.

65% have a Twitter account

54% have a Facebook fan page

50% have a YouTube channel

33% have a corporate blog

FORTUNE GLOBAL 100 COMPANIES

How are the top 100 companies embracing and utilising

social media?

29 companies United States

3 companiesLatin America

20 companiesAsia Pacific

48 companiesEurope

[ Source: The Global Social Media Check-up - Insights from the Burson-Marsteller Evidence-Based Communications Group ][ Graphic by T Farrant | Twitter @fallenblossom ]

FREQUENCY OF ACTIVITY

68% 59% 36%

Percentage of Fortune 100 companies using their Twitter account per week

on average per week on average per month on average per week on average per month

Percentage of Fortune 100 companies using their YouTube account per month

Percentage of Fortune 100 companies using their Facebook page per week

Percentage of Fortune 100 companies using their corporate blog per month

27 tweets 10 videos 3.6 posts 7 posts

Two years on from its $850 million purchase ofBebo, AOL have sold the struggling social mediasite to private investment firm Criterion CapitalPartners for an undisclosed sum, reported to be

in the region of under $10 million dollars. Bebo, whichstruggled in the US since its launch in 2005 and foundmost of its users in Britain, was already beginning to strug-gle against Facebook back in 2008 when AOL took over.

The original purchase of Bebo, which took place be-fore the current CEO, Tim Armstrong, was at the helm ofAOL, had been part of a strategy to improve the interna-tional presence of the firm as well as grab hold of the fastmoving and highly lucrative social media business.Unfortunately, even as the best-laid plans often do, thisstrategy backfired, with the acquisition being describedby the BBC as “one of the worst deals of the dotcom era”.

Disastrous though it undoubtedly was, AOL is by nomeans the only media giant who sought to get in on thesocial media action and missed the boat. News Corp.paid around $560 million for MySpace back in 2005, andwere stung with $450 million worth of “impairmentcharges” last year. Also to blunder in the social mediaworld were British television broadcaster ITV, whobought Friends Reunited for £175 million ($262 million)and later sold it for just £25 million ($37 million).

Speaking at a conference following the sale,Armstrong explained, “Bebo was a major distraction forthe company. Every meeting I went to, everyone was talk-ing about spending the $850 million; it wasn’t working outthat well.” While the acquisition of Bebo was certainly ablack mark against AOL’s business record, it is by no meansthe biggest strategic error in the firm’s history – $850 mil-lion seems a tiny sum when compared to the $160 billionthey paid for Time Warner in 2000. And according to aspokeswoman from the company, the huge loss sufferedcan be turned into a “meaningful tax deduction.”

Internet giants jump onthe social media train alittle too late


NEWS & NUMBERS 19

Mineral richA team from the Pentagon have placedestimates of Afghanistan’s mineralwealth at around $1 trillion. The an-nouncement has helped reawaken re-solve to fight for the country, in orderto tap into its reserves of vital minerals.BMUS impact rating: ´´´

Recall As Toyota struggled with the effectsits product recall earlier this year, thecar manufacturer suffered anotherblow in June. A further 270,000 mod-els of the Lexus vehicle were recalledaround the world, predominantly inthe USA and Japan in order to fix anengine problem.BMUS impact rating: ´´

Russia speaks outRussia has rejected allegations of a spyring run in US after 10 people were ar-rested on charges of consipiracy to actas unlawful agents of a foreign gov-ernment. Renewed tensions betweenthe US and Russia come just days afterPresident Obama and PresidentDmitry Medvedev publicly enjoyed aburger on Medvedev’s visit to theWhite House.BMUS impact rating: ´´´

Around the world in 80 days

Our guide to the last quarter’s global events – and theirimpact on your business.

Blowing awayChina has boosted its production ofwind turbines so as to reclaim thecountry’s wind energy market fromforeign companies, including GeneralElectric. Investors, such as Siemens areresponding by offering newer technol-ogy to the Chinese market. BMUS impact rating: ´´´´

On the moveDespite signs of recovery of the US carmarket, major manufacturers areplanning to shift production to Mexicoto cut costs. This news comes a yearafter more than $80 billion was spenton propping up General Motors andChrysler in order to save Americanjobs.BMUS impact rating: ´´´´

Job cutsAccording to a government report, pri-vate employers significantly reducedjob creation in May this year. The pri-vate sector saw only 41,000 new jobscreates, drastically lower than the218,000 that were available in April.Wall Street viewed the figures as a pos-sible indicator that economic recoveryhas come to a stand still.BMUS impact rating: ´´´´

1. Mark Zuckerberg The CEO and founder of Facebook frequently topslists for his success in social media. Recentestimates place Facebook’s value at around $11.5billion. According to Zuckerberg, Facebook is almostguaranteed to reach one billion members, just notthis year.

2. Pete Cashmore The British born CEO and founder of Mashable, aTechnorati Top 10 blog on social media andtechnology. Cashmore himself has around twomillion followers on Twitter and Mashable currentlywelcomes 10 million readers every month,generating millions of dollars in advertising revenue.

3. Michael and Xochi BirchCreators of Bebospent £8000($12,000) buildingthe site, let itgrow into one ofthe most popularsocial networks inthe world, and

sold up at the height of its popularity, to AOL in2008 for $450 million. Two years later the brand’sworth shrunk to a fraction of that size.

…And the losersTGI FridaysThe restaurant chain set up a marketing campaignlast year, whereby ‘fans’ of TGIF mascot Woody’sFacebook page would receive a coupon for a freeburger. Rather than generating popularity for thebrand, all the page did was provide a platform forangry customers to post complaints that they hadnever received their coupon.

Nestle In March the global confectionary manufacturerdemonstrated how not to use social media.Antagonistic comments from the company itself onthe Facebook fan page sparked a barrage of postsfrom consumers accusing Nestle of unethicalpractices. This was exacerbated as Nestle told ‘fans’they would simply delete unfavorable comments.

Winners of the socialmedia movement…

Phot

o co

urte

sy E

wan

McIn

tosh

/Flic

kr


UPFRONT20

What do countries think aboutgreen brands?

It would be legitimate to think that with the US coming out of a reces-sion, shoppers would be more pre-occupied with the economic down-turn than saving the planet, and according to the fifth annualImagePower Green Brands Survey that appears to be the case, althoughthere is a growing concern for green practices.

Most consumers think the environment in their country is on the wrong track

USAUK

FranceGermanyAustralia

ChinaIndiaBrazil

47%48%

54%48%

42%29%

57%66%

34%37%

33%40%

43%

36%30%

65%

Wrong Track Right Track

Countries that felt greenlabelled products were

too expensive

5

USA | UK | France | Germany | Australia

Countries that found therewas a limited selection of

green products to choose from

2India | Brazil

Countries that found greenlabelling confusing or

untrustworthy

1China

Cost is the biggest factor for consumers choosing green labeled products

Agroup of the country’s foremost business leaders havecollaborated to create the American Energy InnovationCouncil. The group, which includes former CEO ofMicrosoft Bill Gates, CEO of General Electric Jeff Immelt

and chairman of Bank of America Chad Holliday, aims to boost thecountry’s economy, national security and environment through useof cleaner technologies to modernize the energy system.

The Council called upon Washington to invest $16 billion everyyear for research and development of clean energy, a $9 billionincrease from the current annual investment in this sector. Gatesexplained in an interview with NPR Media that funding fromgovernment is essential in order for the sector to flourish andprovided much-needed boost to the US economy. “Governmentinvestment unlocks a huge amount of private sector activity,” heexplained, adding that the funding would “create jobs and createnew technologies that will be productized.”

Keen to assert the US as the global leader in energy efficiency,the Council is looking to encourage home grown innovation in thissector. Council member and Silicon Valley venture capitalist, JohnDoerr pointed out that the US spends more annually on potatochips than it does on clean energy research, and his fellow member,Ursula Burns, explained that the country currently relies too heavilyon foreign investment in this sector.

Business leaders formclean energy council

Allocation of US taxesin 2009

44% Military19.7% Healthcare2.5% Energy and Environment


Research motion ADs.indd 1 08/07/2010 10:49

22 IN FOCUS

A series of unfortunateevents: the Gulf of Mexicooil spill at a glance

04.20At 11 pm EST, the Deepwater Horizon, an oil rig drillingfor energy giant BP at a well in the Gulf of Mexico, suf-fered an explosion on board killing 11 people. The rigsoon sinks into the ocean and oil begins to flow fromthree leaks in the well at a rate estimated as high as25,000 barrels a day.

04.30Around 1000 fisherman from the area, whose liveli-hoods have been indefinitely suspended by the spill,campaign for employment from BP to help with theclean up effort

05.18Waterworld star Kevin Costner holds a press conferenceto unveil a machine that his firm, Ocean TherapySolutions, has been developing, which he claims can sep-arate 97 percent of the oil from the water. The machinesare being sent to the Gulf of Mexico to aid the clean up.

06.15President Obama addresses the nation about tacklingthe issues in the Gulf. Two weeks earlier he had an-nounced plans to stop deepwater drilling for at least sixmonths, a decision which is overturned less than amonth later.

06.17BP commit to putting $20 billion in a compensationfund and state that they will not pay shareholders divi-dends this year, yet CEO Tony Hayward still refuses tostand down. This news comes amid speculation thatthey could be looking to a chapter 11 filing.

06.20Hopes that BP can recover in America from this cata-strophe dwindle as Tony Hayward commits yet anotherPR blunder, this time spending Father’s Day weekendon the Isle of Wight in Britain, watching his yacht raceat Cowes, fuelling anger among the American public.

06.29As BP’s clean up costs reach highs of $2.65 billion,British energy analyst, Fred Lucas, speculates that glob-al energy firms Exxon or Shell could potentially takeover for approximately £88 billion ($132 billion).

1

2

3 4

1

2

3

4

5

6

7


IN FOCUS 23

Ocean Therapy Solutions made headlines in May,when co-founder and Hollywood star KevinCostner held a press conference to bring atten-tion to the firm’s siphoning machines that sep-

arate oil from water, leaving the end product 97 percentclean. Costner explained how the largest machines canseprate 200 gallons of oil a minute, and the machines arenow being sent out to the Gulf of Mexico to help with themass clean up operation.

As BP chief executive Tony Hayward remains something of a blundering villain in theUS media, Costner and his business partner in the venture, John Houghtaling, haveemerged as national darlings, both testifying before Congress and stressing the impor-tance of cleaning up the spill.

Speaking to Next Generation Oil & Gas, Houghtaling outlined the challenges facingOcean Therapy Solutions, the problems of underwater blooms and successful trials. “Wehad been running the factory with no customers,” he explains. “It’s practically been dor-mant. So we have spun the factory back up. We have 10 V20 [machines] that are alreadymanufactured. Those are either on vessels right now, or they're being put on vessels inVenice, Louisiana.”

For Ocean Therapy Solutions, the disaster has very much been an event they wishedthey would never have to respond to. After witnessing the Exxon Valdez disaster, CEO KevinCostner invested $26 million of his own money into developing the separation machinesso if such a disaster happened again, there would be devices capable of aiding the response.

“The orders that we have gotten from BP are for the huge ones, the V20,” Houghtalingreveals. “To fill that order, we’ve got 10 of those down on the ground, and we're startingthe factory up. By August 1st, we will have all 32 of the big V20s working. And after August1st, we’re going to be able to make, at a minimum, 10 a week.”

Houghtaling was positive about his firm’s relationship with BP. “I sat with Doug Suttles(President of BP operations in Alaska) about four days ago,” he says, “and he told me at thevery beginning when we talked about the technology, he had looked into it and he justwithout any doubt says, ‘Let’s go with these [machines] immediately – let’s get them outthere.’”

Houghtaling went on to support BP’s Suttles, explaining how he had been keen to finda way of deploying Ocean Therapy Solution’s machines in the future. “Our vision was to bea metaphorical fire truck. And we have a fire solution, in case there’s a problem. And Suttlessaid he would be in favor of a program like that.

“Kevin and I have sat with Rahm Emanuel (President Obama’s chief of staff), SenatorMary Landrieu, and Senator Buchanan, and they’re in favor of this program. Kevin and I alsosat with John McCain, and John McCain has spoken with the governor, and they are bothin favor of the program.

“Really, the machines need to be in place on boats, and rigs, before there’s a spill, sothat we can deploy. Had we had machines out there at the spill, we would be recapturingall the oil without any dispersant. In addition to doing what we can to work on the clean-up, we are very intent on being able to help as a preventative measure.”

The Gulf’s glimmer of hope

Business disaster, PR nightmare, a $2.65 billion clean-upbill… and that’s not to mention the environmental effects.But for one company, the BP oil catastrophe has providedthe perfect business opportunity.

John Houghtaling5

6

7


IN FOCUS24

On April 3rd Apple’s greatly anticipated iPadhit the stores of America. Since it was cere-moniously unveiled in January, the tech-nology giant’s first tablet PC has received a

phenomenal amount of hype, even by their publicitystandards. Journalists, reviewers and bloggers quicklydivided into parties of iLove and iHate, producing cata-logues of materials about the device’s chic aesthetics,its lack of USB port, its variety of convenient functionsor its short battery life. Regardless of personal opinion,

it has become impossible to deny the success of theiPad, with unit sales hitting the two million mark in amatter of weeks and that figure projected to double bythe end of the year. But while writers busied them-selves with either praising or berating Apple, a morepressing issue for the publishing world has receivedcomparatively little media attention.

Whatever the iPad itself may lack, it is impossibleto ignore the effects that tablet PCs of this kind arehaving on an industry already reeling from a recession.Mobile internet access combined with features suchas electronic reader technologies and popular news-paper applications allow users to access everythingfrom the latest headlines to their favorite magazineson a single device, transforming the way people con-sume media. The publishing industry is in the processof undergoing significant changes to adapt to the dig-ital market and, according to industry experts, pub-

Tablet talent

The tablet PC is revolutionizing theway we consume media, but whatdoes this mean for the future ofpublishing?

“Publishers willhave to askthemselveswhether theyhave the rightstructure andright talent forthis new world”Lynne Seid, Heidrick &Struggles


IN FOCUS 25

lishers looking to stay relevant will need to incorporatethese changes into all levels of the business.

Lynne Seid, former president of advertising firmFoote, Cone & Belding and head of the digital market-ing unit at the leadership advisory firm Heidrick &Struggles, suggests that while publishers must incor-porate personnel with digital expertise into the busi-ness, those new media experts must have experienceof traditional publishing in order to ensure a success-ful business model.

“Organizations need talent at the top that canbridge the old and new worlds,” says Seid. “Ratherthan looking for change agents, companies need trulytransformational leaders who can add on capabilitiesto the organization.”

This shift in media consumption does not come asa surprise. Since the rise of the internet people haveturned to the digital world for their news, sales of tra-ditional publications have steadily fallen and publish-ers for the most part have managed to establish strong,content-rich websites. But while there has been a shiftin focus towards digital media, few publishers havemade the changes necessary to fully integrate digitalmedia into the existing publishing business structure.

“The implications of consumption from print todigital devices will echo back into the publishing or-ganization itself,” explains Seid. “Publishers will haveto ask themselves whether they have the right struc-ture and right talent for this new world.”

One of the biggest changes for publishing compa-nies is the shift in demands placed on employees. Moreemphasis on components such as search engine opti-mized content and video reports or interviews willmean journalists and editors must be familiar with amuch broader range of skills than was previously nec-essary. In addition, firms must have enough techno-logical expertise in place to stay on top on the fastmoving digital world without significantly reducingprofits. On top of that, the change in publishing medi-um will have huge consequences for the advertisingrevenue a publication can generate, as well as hardcopy sales.

Tablet PCs do not bring a complete transformationfor the publishing industry – digital media has beensteadily evolving since the mid 1990s – however theycertainly represent the next stage in media produc-tion. Publishers must meet the changing demands ofthe industry as we move into the era of the tablet PC.Seid explains, “The shift is forcing a new way of think-ing about what it means to publish a newspaper or amagazine or a book, and executives must understandthis dynamic process or they will simply have no placein the new world.”

Apple continues to top headlines this quarter with their latest gadgets.With iPad hype still warm off the press, the technology firm announcedthe release of its hottest new iPhone model. Hundreds of people waited inline at Apple stores across America on June 24th hoping to be among the

first to own the iPhone 4 and pre-orders surpassed 600,000, making the fourthgeneration iPhone the most popular model to date. This new model features ahigher-resolution screen than previous models, greater battery life, video chat viaWi-Fi and a gyroscope sensor for improved gaming. However, as we expect from anynew Apple gadget, the iPhone 4 has not been met without its fair share of criticism.Though technology columnists across the country are hailing it as the phone to beatthis year, speculation remains rife that Apple will be overtaken by brands using theGoogle Android mobile operating platform within the coming years.

Google’s Android mobile operating system is a relative neophyte compared toApple. However a recent survey of 2733 mobile application developers highlightedthat more than half prefer the Android to Apple’s iOS system, the platform usedin the new iPhone, seeing it as the competitor with the highest long termpotential. The platform favored by manufacturers Samsung, Motorola and LG, theAndroid operating system is currently welcoming 100,000 new users daily, and isset to surpass iOS by 2012 to become the most popular mobile operating systemin the world after Blackberry’s.

Apple or Android?

35%RIM

BlackberryOS

9%28%Apple iPhone

OS Android

OS

+2% +2%-2%

Operating system market share


UPFRONT26

Top 10… Most Innovative CitiesA recent survey of the 100 largestmetropolitan areas in America hascompiled the country’s most innovativecities. Looking at factors such as numberof patents per capita, venture capital percapita and the ratios of high tech, scienceand creative jobs in the area, Forbes wasable to determine which cities arepioneering tomorrow’s technology.

San Jose, California Silicon Valley leads the country as a magnet forthe brightest minds in business. San Jose andits neighbors are home to some of world’sleading technology companies includingGoogle and eBay.

Austin, Texas A surprising runnerup in Forbes’s survey,Austin produced onaverage 1.7 patentsper thousandresidents over thelast 12 months. TheCockrell School ofEngineering andIBM’s research labhave been attributedto the city’s success.

Raleigh, North Carolina Forbes nominated Raleigh as the country’s Most Wired City for its strong

mix of academics and industry. Major technology players Cisco and Lenovobenefit from a pool of talent at Duke, North Carolina State, and University ofNorth Carolina.

San Francisco, California California’s second of threeappearances in the top 10 had thesecond highest rate of financialinvestments in ventures per capita.

Seattle, WashingtonThis rainy city boasts ahigher than averagenumber of creative jobs tobring it into the top five.

1

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UPFRONT 27

Portland, Oregon While having a lower than average rate of bothcreative and technological jobs, the people ofPortland had a strong level of patents per capita.

Boston, Massachusetts Highly rated in the investment category, Bostonbenefits from a relatively close proximity toHarvard University.

Provo, Utah Provo was the second strongest city for its

number of science and technology jobs per capita,and its proximity to Brigham Young University.

Madison,Wisconsin

Another stronguniversity city, Madisondid particularly well inits proportion of creativejobs per sector.

San Diego,California

Like San Francisco, SanDiego had a higherthan average rate ofinvestment per capita,highlighting Californiaas the best state tofind venture capital.

New York City,often consideredto be at thecutting edge ofso manyindustries, camein at adisappointing49th place, withone of thelowest rates ofpatents percapita of all thecities tested.

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How is the United States Department of Defence, which runs the most com-plex IT infrastructure in the world, tackling modernization of its legacy sys-tems? The Systems and Software Technology Conference (SSTC) attendedannually in Salt Lake City, Utah by thousands of defense contractors, feder-

al government CIOs and DoD software professionals, shed light on this question.The opening general session keynote, given by Philip Newcomb, CEO of The Software

Revolution, Inc., presented an impressive review of dozens of defense legacy systemsthat had been successfully modernized during the past decade using his company’s tech-nology, based on the Object Management Group (OMG)’s architecture-driven modern-ization (ADM) standards. It was eye-opening to learn that the DoD has an impressivelead on industry and most federal agencies in tackling its massive legacy system inven-tory. It has done so by using ADM, a software modernization approach that has beenshown to consistently deliver the highest quality modernized software, typically withsuccess rates approaching 100 percent.

The defence department has a long history of promoting systematic software en-gineering processes. With the Forrester Group citing 63 percent failure rate for past re-placement efforts, the DoD’s embrace of ADM is not surprising. With large modernizationprojects routinely delivered in months by small teams, ADM is an emerging body of OMGstandards supported by conformant tools, methods and practices that employ model-based, rule-driven analysis, transformation and refactoring to modernize systems intonew target languages, platforms and environments in a fraction of the cost, time andrisk of manual methods, and it works for virtually any legacy software language.

By highlighting the importance of ADM at the opening general session of the SSTC,the DoD implicitly embraced the coming of age of ADM as a mature technology for mod-ernizing its vast inventory of legacy systems. The key ‘game changing technology’ mes-sage at the SSTC this year was there is simply no longer any excuse for failure-pronemanual software rewrites. With nearly a decade of successes, architecture-driven mod-ernization is a proven approach with state-of-the-art tools and technology that can tack-le virtually any size or kind of legacy software modernization problem.

A decade of DOD architecture-drivenmodernization projects

UPFRONT28

We’ve all done it, we’ve all been there.You come into the office, sit behindyour desk and stare blankly at yourcomputer not knowing where to begin.

Your tasks lie in front of you in Excel spreadsheets,emails, MSProject tasks and random post-it notes liningyour desk. All the information from several disconnect-ed systems makes it impossible to get a clear view ofyour priorities, making it all the more difficult to deter-mine where to begin and how to manage your day.

A serious concern for the modern manager is em-ployees who spend time on the wrong tasks, the wrongpriorities, or waste their time trying to collect all thedata sources in one place. Most employees simply donot know what they are going to do each day, making itimpossible for management to have any level of visibil-ity into the organization’s resource allocation, staffinglevels, budgets and overall work load.

That is where Work Management comes in. Movingbeyond Project Management, Work Management bringsthese disconnected islands of information into one plat-form. Ad-hoc information, like emails and notes, andstructured information within projects and tasks get mi-grated into one holistic platform. With real-time project,task, budget, timeline and resource data integrated intoone location, workers now have a single location to de-pend on to be the definitive, one-stop work environmentused throughout the organization.

With everyone working in the same place, basedon the same real-time data, employees are empoweredto focus on the work that most directly affects the bot-tom line. Employees are now focused on the correct pri-orities and management can rest assured that everyemployee not only knows what they should be doingeach day, but that they are actually motivated and ded-icated to getting the work done.

For further information, please visit clarizen.com

Work management forthe 21st century


SOFTWARE REVOLUTION.indd 1 28/06/2010 13:58

UPFRONT30

The President of Bolivian Coca Industrialization Social Organizationshows two bottles of 'Coca Colla'.

The real thing?

An unlikely newcomer has made the world ofsoft drinks a little more crowded: Bolivia hasstarted producing a new fizzy drink using thecoca leaf. And just to make sure its competi-

tors in the global beverage industry sit up and take no-tice, it’s appropriated the look – and virtually the name –of its biggest rival.

Called Coca Colla after the Colla people, the Andeantribes who cultivate coca in Bolivia, Chile and Argentina,the new energy soft drink is being made by a private com-pany but is backed by a government policy of industrial-izing the cultivation of the coca leaf – a key element in theAndean people’s culture and economy. The leaf is a mildstimulant that wards off fatigue and hunger, and hasbeen used in the Andes for thousands of years in cooking,medicine and religious rites. However, it also provides theraw material for cocaine, the powerful narcotic that is theprimary target of the US-led ‘war on drugs’.

As such, the drink faces significant hurdles as it looksto challenge beverage giants such as Red Bull and itsnear-namesake. With the notable exception of Coca-Cola,products using coca leaves are banned in most nationsbeyond the Andes, and exporting the beverage would re-quire the International Narcotics Control Board to takethe leaf off the list of dangerous drugs, where it has beensince 1961.

The sticky brown drink has a red and white label, tastesultra-sweet and gives you a buzz; it’s not quite Coca-Cola,but it’s pretty damn close.

“I've developed my own secret formula. I startedmaking the drink at home, based on my beloved but oth-erwise reviled coca leaf and outsourcing the bottlingprocess," says the drink’s creator, Victor Ledezma. “Nowwe are building a plant in Santa Cruz and aiming to haveinvestments of at least $1 million. That's for a start. Thewhole world should know that coca, besides from itsgood taste, is good for the body and the soul.”

Drinks derived from coca leaves are nothing new. Atthe turn of the 19th century, Corsican entrpreneur AngeloMariani sparked controversy with his coca-based wine,Vin Mariani. The drink offered “health, strength, energyand vitality” and was even awarded official recognition

by Pope Leo XIII. More recently, coca leaves have beencited as elements in the formula of the Red Bull Cola en-ergy drink. But most famously, the leaves helped providethe kick in Coca-Cola’s original formula. The companydropped cocaine from its recipe more than 100 years go,but the secret formula still calls for a cocaine-free cocaextract. The Coca-Cola Company is said to import eighttons of coca leaves from South America each year, main-ly from Peru.

“The coca leaf has three alkaloids. Extracted from theleaf and concentrated into cocaine with chloride, the cocaalkaloid is highly stimulating and, potentially, very ad-dictive,” explains Dr Jorge Hurtado, a local psychiatristand coca expert who heads the International CocaResearch Institute. “However, the small dose present nat-urally, and unprocessed, in coca leaves provides only aslight energising sensation and it is not addictive; it car-ries less of a kick than a cup of coffee. The same appliesto Coca Colla or other coca-based products like tooth-paste, flour or sweets,” he adds.

The first batch of 12,000 bottles, priced about $1.50for a half-liter, were distributed in the capital La Paz, aswell as Santa Cruz and Cochabamba, in April. And if thecoca spin-offs work out, the government has said thatthe area of land authorized for legal cultivation of the leafmay expand from 12,000 hectares to as much as 20,000hectares.

MARKET BUZZIn 2009, some 3.9 billioncans of Red Bull EnergyDrink were consumedworldwide

Coca-Cola producesmore than half of theworld’s beverages, in-cluding the top-sellingMonster brand

By 2014, the global softdrinks market is forecastto be worth at least$483.8 billion

“I’ve developed my own secretformula. I started making the drinkat home, based on my beloved butotherwise reviled coca leaf andoutsourcing the bottling process”Victor Ledezma


UPFRONT 31


INTERVIEW32

Of all the C-level roles, marketing is perhaps the most hip. It’s the coolkid-brother to HR, the counter-culture cousin to uptight older relativessuch as legal and finance. And no one better reflects this desire to be atthe cutting-edge than Puma’s Antonio Bertone.

The son of Italian immigrants living in Boston, Bertone rocked up atPuma’s US door as a fresh-faced 22-year-old with a skateboard tuckedunder his arm. With no college education behind him or MBA to his name,Bertone knew more about 360-kickflips and 50-50 grinds than he didabout marketing metrics. But what he lacked in qualifications he made upfor with that most crucial of attributes: a finger on the pulse of what kidsfound fashionable and wanted to wear. He was also instrumental inPuma’s push from sports apparel into lifestyle clothing and skateboardingfootwear. “I had a very big mouth and I had no professional training,” hereveals bluntly. “When I came in I think there was a lot of wondermentfrom my perspective because I was like, ‘Wow, I get to make sneakers’.”

He had no grand visions of becoming the global marketing chief and amember of the board though. “I wouldn’t have even known what aCMO was back then; I was just happy to be employed,” he laughs. “Ididn’t go to university and it’s a daunting task when you’re a kid andyou have to pay for food and stuff.” Yet Puma employed him as atrainee marketing consultant and within three years he was elevatedto global marketing director. Not bad for 25.

Bertone, who has been CMO since 2007, insists inspiration for Puma’smarketing and brand strategy comes from people around him, themedia and even the weather. “I’m generally better when the weatheris nice,” he smirks. His efforts have a direct impact on Puma’s balancesheet so he admits getting a real buzz out of seeing what’s provingpopular in the stores. “I’m a little old-fashioned in that I still get excitedabout what sells at the register, so I love to go into the stores and seewhat’s selling; and I love it when it’s not the thing that you thought itwas going to be – that’s kind of fresh.”

Inevitably, not everything is a hit; some products or ideas will crashand burn despite all the market research. His assessment of the thinline between success and failure is somewhat enigmatic, but it still

Cool for catsHow do you promote an über-cool brand for the fickle sports lifestyle consumer?Antonio Bertone, former record shop owner, club promoter and now Puma’s ChiefMarketing Officer, explains.

conveys his point. “Product launches either make a nice big bowl oflemonade or a really shit omelet.” It comes back to the basic questionsthat need to be answered before any rollout: “You need to ask yourselfwho is going to wear this, who is going to pay for this and is it toomuch money? If you stick to those simple questions whenever you ap-proach a new product launch you will have much more success, butsometimes people just try to make it like curing cancer and that justmakes it too frickin’ complicated.”

Failure is all part of the learning curve for marketing execs and brandchampions. It makes you stronger, Bertone asserts – amongst otherthings. “It makes you humble, especially if you put hype behind some-thing and then you fall flat on your face – it stings for a little bit.Failures also make you smart, because you can’t have a crystal ball andanybody who pretends they do is full of shit. You’ve got to be human atthe end of this; it’s not like I’ve got some supercomputer spitting outthese ideas – it’s a human being and already that is faulty.”

And with consumer opinions and purchasing choices constantly evolv-ing, your marketing strategy needs to be fresh and relevant. Comingup with a hit advertising campaign or a groundbreaking online videothat goes viral is one of the biggest challenges. “I always used to havethis theory that marketing is like bug spray,” a cryptic Bertone explains.“You kind of come up with one bug spray and then the bugs get usedto that spray and they don’t die anymore, so you have to come up withsomething stronger to kill the bugs, and marketing is the same way.”

When it comes to his best “bug sprays” or successes to date, he is sud-denly reticent to blow his own trumpet. “I don’t know, I get freaked outby those kinds of questions,” he responds, slightly vexed. He reluctantlylets his guard down though. “I love the fact that we updated the over-all delivery, design, look and feel to contemporize Puma. I’m also proudof working on the first-ever Puma store in Santa Monica, which even-tually led to our rollout of retail with over 500 stores worldwide. Otherthan that, I find it freaky thinking about that stuff.”

So is Bertone as enthusiastic about working for Puma as he was whenhe arrived in his youth? “It’s been 16 years but I’m still really motivated.I still see a lot of areas where we can do better, but I think Puma is agreat company to work for – it really entrusts its people more so thanprocesses and I never feel like I’m a cog in the machine.” It’s not allplain sailing though. “I actually get to earn my pay check here; I don’twant to get comfortable.”

“Puma is a great company to work for – it reallyentrusts its people more so than processes and Inever feel like I’m a cog in the machine”


INTERVIEW 33


UPFRONT34

There is no denying California’s critical levels ofdebt. With a budget deficit of around $25 billionannually and two million residents out of work,America’s most populous state is crumbling be-

hind its sunny façade. California is quickly earning itselfthe nickname of ‘America’s answer to Greece’, with itseconomy rated more likely to default than countries suchas Kazakhstan. In April, unemployment rates stood sig-nificantly lower than the national average at 12.6 percent,a shocking figure in a state whose economy contributes13 percent of the whole country’s economic output.Manufacturers are shifting operations to other states, theprison system is overflowing and the education systemranks among the worst in the country.

California DreamingEx-CEO of eBay and Republican nominee for Governor,Meg Whitman, thinks she has what it takes to bring theshine back to the Golden State.

Help, however, could be on the horizon. WithGovernor Schwarzenegger standing down this year, fix-ing the economy is proving the prime concern for thoselooking to take over. This economic mess that Californiahas found itself swamped in might be an unattractive en-vironment for most budding politicians, but ex-SiliconValley matriarch Meg Whitman has taken it in her stride.As the Republican candidate for governor, Whitman isplaying on her experience of leading multi-billion dollarorganizations to succeed in the November elections.

Hers is an impressive resume, featuring stints at Bain& Co., Disney, Florists Transworld Delivery and Stride Rite.Most famously, Whitman was responsible for takingeBay, a specialist auction site with 30 employees and arevenue of less than $5 million, and transforming it intoto the world-renowned internet brand it is today. But de-spite impressive business credentials, she is a fledgling inthe world of politics. Getting a taste for it whilst on thecampaign trail endorsing John McCain in 2008, Whitman

“It is about timefor a governorwho has createdjobs, managed abudget, led andinspired largeorganizations”

Where she stands…Tax cutsWhitman proposes targeted andaffordable tax cuts for key sectorsso as to immediately spark jobgrowth. In the long term, sheplans to implement wider incometax relief. In addition she plans toeliminate taxes on small businessstart-ups, manufacturingequipment and capital gains.

Cut spendingWhitman plans to impose a capon spending, in order to enforcediscipline and protect tax payersfrom future sudden tax increases.

EducationWhitman intends to fixCalifornia’s education system,which currently ranks 48th in theUS, by maximizing the percent ofthe education budget thatreaches the classroom.


UPFRONT 35

Companies in this issue are indexed to the first page ofthe article in which each is mentioned.

ADPAOL2953 AnalyticsAlliance for Wellness ROIAltus CorpAT&TBavaria YachtsBMW GroupBoardvantageBoeingCapgeminiCenter for Automotive ResearchChryslerCigna CorpCIOs Without BordersCiscoClarizenCoca-ColaCoca-CollaDatalinkDesignworksUSADuke EnergyeBayEdmunds.comEmbraerEMC Corp.EmersonFordFrost & SullivanGartnerGeneral MotorsGenslerHarvardHEADHewlett-PackardHyundai Motor AmericaIBMIDC

IHS Global InsightinCodeINGIntelKasier PermanenteKraftLayered TechLexusLithiumMattelMeet the BossMicrosoftMITNissanNokiaNortheastern UniversityOraclePanduitPolitecPumaRBC Wealth ManagementRCARevolution ComputingRidgeway ChevroletSavvisSennheiserSGISiemensSix SigmaSmall Business AdministrationSoftware RevolutionTableau SoftwareToyotaUnisfairUnisysUniversity of MichiganVirtusaWang Global

Company Index Q3 2010has no experience in a position of public service, whileher Democrat opponent, Jerry Brown, served as governorin the seventies and is the current Attorney General.

This does not deter Whitman; in an interview withthe LA Times last year, she said, “This is something I’vedone before. I think maybe it is about time for a governorwho has created jobs, who’s managed a budget, who’sled and inspired large organizations, who listens well andwho can drive an agenda.” Certainly, Whitman’s claim isundeniable; her 10-year stint at eBay saw one of the mostnotable successes of a firm in recent years. She guidedeBay through the dotcom crash that rippled throughSilicon Valley in 2000 and 2001 and shrewdly pushed forthe purchase of PayPal in 2002 at the bargain price of $1.5billion, an acquisition that was widely considered one ofthe brightest big deals of the time. But an opportunisticbusinesswoman does not necessarily translate to a dy-namic politician, something California will certainly needin order to wade through the fiscal mess.

Though experienced in creating jobs and revenue byturning a small but successful firm into a global brand,Whitman is now faced with the challenge of managingthe state’s crippled education system, a suffering health-care system and a broke economy with resources thatstand at a fraction of those needed to meet the demandsof the public sector. In the last year, GovernorSchwarzenegger has been forced to make billions of dol-lars worth of budget cuts in order to fill the expandingfiscal hole, resulting in mass job losses in the public sec-tor. The cuts proposed last May outlined eliminations orsignificant reductions in funding to programs such as fi-nancial assistance for families, state drug programs andcommunity mental health. The construction industry hassuffered a 38 percent decrease in its workforce in the lasttwo years, and the real estate sector, once a booming con-tributor to California’s economic output, has lost around15 percent. As a hotbed for business innovation SiliconValley remains a promising economic resource forCalifornia, but the taxes slapped on small businessestoday are hindering entrepreneurs from flourishing andboosting the state’s economy.

As Whitman continues along the campaign trail, thequestion all Californians are asking is, “can that businesssuccess actually help turn the state around?” All sheneeds to do is persuade them the answer is yes.

125186584110, 1116510010082, 83100144656584128108, 11028, 98, 99120, 1312356, 5710076346510046, 609, 58, OBC651359565604610046, 1006546, 6054

65112, 1131264690841365923613910046651144660, 1104, 60, 6474327846756566, 67, IBC1005371168428, 2978, 7965114611996, 9746

Whitman’s campaign so far has cost $90 millionCalifornia’s deficit stands at $19 billion12.6% of the population is unemployed


36 www.busmanagement.com

BOB ECKERT ED P36-41_NEW.indd 36BOB ECKERT ED P36-41_NEW.indd 36 09/07/2010 14:2409/07/2010 14:24

www.busmanagement.com 37

Some interesting news from the corner offi ce: Mattel is not a toymaker. Or at least, it’s not just a toymaker: it’s a “people development” company. Here, CEO Bob

Eckert explains why encouraging people to enjoy themselves actually takes a lot of hard work – and why the approach paid dividends during the fi rm’s recall crisis and recent downturn in the economy.

By Ben Thompson

Some companies make products, others off er services; many do both. Nearly all claim to be about people. But not all demonstrate the same level of commitment to employees as California-based toy giant Mattel. As befi ts a company dedicated to coming up with new ways of having fun, Mattel and its enthusiastic (and hugely likeable) CEO Robert ‘Bob’ Eckert sees staff

members’ enjoyment of work as integral to the health and long-term success of the fi rm. “We create magic,” he says at our fi rst meeting, eyes twinkling. “Th e people who work at Mattel see that every day, they know that’s what they’re here to do. We work at fun. It’s a great place to work.”

It’s a message that Eckert and his leadership team are keen to promote. And sat in the lobby of Mattel company headquarters on a large corporate campus in El Segundo, just south of LAX airport, I’m certainly struck by an overwhelming sense of corporate benevolence. Behind the reception desk straight ahead is a large backdrop of chil-dren at play bearing the tagline, “Th e world’s premier toy brands, today and tomorrow”, and the toymaker is clearly – and understandably –



proud of its heritage: it has a huge portfolio of some of the world’s best-loved and longest-running toy brands, including Hot Wheels, which celebrated its 40th anniversary in 2008; Barbie, who turned 50 last year; and the octogenarian, pre-school favorite Fisher-Price, founded in 1930. Generations of kids have grown up with these brands, and Mattel is conscious of the legacy.

But the toys themselves only tell a fraction of the company’s story. To my right the Mattel federal credit union welcomes in a constant stream of employees looking for all kinds of fi nancial assistance; in a room off to my left a seminar on alleviating back pain at work is taking place in the company’s new digital training center. A TV-screen overhead exhorts staff to “create a healthy lifestyle, build a better fi -nancial future and enhance their work/life balance” like some benign Big Brother. And posters dotted around the open, airy space provide recognition of the company’s recent awards – with Fortune’s 100 Best Companies To Work For, Ethisphere’s Most Ethical Companies and CRO Magazine’s 100 Best Corporate Citizens prominent amongst them. If anyone’s in any doubt as to where its priorities lie, the fi rm’s charismatic leader dispels them instantly.

“People like to be around happy people,” Eckert insists in his offi ce up on the 15th fl oor. “We spend so much time and energy at work, you

really need to enjoy it; if you don’t like your job, go get another. It’s just a waste of a lifetime otherwise. Th e people that work here really get that. Th ey understand that we’re at the intersection of what is unique and innovative and new. Th ey understand the importance of toys to a child’s development in learning and socialization. And they all want to be a part of that. We create 8000 ideas a year for toys, and this doesn’t happen on a computer. It doesn’t happen in a system. Somebody comes up with these ideas. Somebody develops the ideas, engineers the ideas, gets them manufactured in Asia, gets them shipped to the right place in the world before Christmas and works with the retailer to get them sold. So we are truly a people-oriented organization, and recognizing that is key to our culture.”

With a strong focus on core brands, customer satisfaction and em-ployee welfare, it’s not hard to see why Mattel is the number one toy-maker in the world. But it wasn’t always that way.

10 years is a long time at the top for today’s chief executive. Indeed, according to recent research from Booz & Com-pany on CEO succession rates, in the past decade alone boards have shaved nearly two years off the average

CEO’s tenure, from 8.1 years to 6.3 years. “New CEOs have fewer years

How did Mattel handle 2007’s product recall? Eckert explains.

HAVE AN OPEN CULTURE INTERNALLY “We wanted to know what the issues were in order to be able to deal with them collectively and quickly. An open culture means people are engaged and there is no unnecessary fear that the messenger of bad news is going to get shot.”ENSHRINE HONESTY AS A VALUE “We talk about the value of playing fair. We want to do the right thing. We knew we had made mistakes and I think we were quick to acknowledge that. Our messages were very consistent, particularly in terms of speaking to parents.”TAKE RESPONSIBILITY FOR WHAT HAPPENED “We said, ‘We’re sorry; you don’t need to worry about your toys, we’re here to worry about the toys. We’re sorry we put you in this position where you have to think about your toys and you have to worry about how your children play.’”COMMUNICATION IS ESSENTIAL “Let people know exactly what happened and what you’re doing to ensure it doesn’t happen again. We were open with our communications – with regulators, with our retailers, with the media and directly with the consuming public.”HAVE A CRISIS MANAGEMENT PLAN “I don’t go anywhere in the world without the contact list for activating our crisis management plan. It’s in my wallet. It’s in my briefcase. It’s on my shelf here at work. I’ve got the chain of command on whatever the issue is and I can reach anybody, anywhere, 24 hours a day.”



in the role than their predecessors,” suggests Richard Rawlinson, Vice President at the management consultancy giant. “Th ey need to balance clarity and boldness with a realistic understanding of what is possible in their organizations.”

Eckert, who celebrates a decade at the helm of the toymaker this year, has done this better than most. He arrived in May 2000 to discover a company reeling from an ill-judged acquisition of children’s soft ware fi rm Th e Learning Company the previous year and rife with internal discord. Th e $3.6 billion deal was supposed to give Mattel a leadership position in the market for online education, adding popular titles such as Reader Rabbit, Where In the World Is Carmen Sandiego? and Pokemon to its portfolio; but the hoped-for synergies failed to materialize and led to management confl icts, rivers of red ink and a plunging stock price – not to mention a round of corporate blood-letting, including the resigna-tion of CEO Jill Barad. Eckert is the fi rst to admit that it was something of a baptism of fi re.

“We made that acquisition at the peak of the dotcom boom, and when that market imploded, unfortunately Th e Learning Company imploded with it,” he says. “Th e business was hemorrhaging cash. My predecessor had exited. A lot of the management had left . And while the culture at a deeper level was very positive, very warm, very friendly, very supportive and very nurturing, at the very top of the company the cul-ture had gotten a little dysfunctional. Th e company was in tough shape, but I saw it as a real challenge.”

He claims he was inspired to take on the role during a conversation with a Mattel director who, in response to Eckert’s question about what the company culture was like, told him it could be whatever he wanted it to be if he was in charge. As a result, Eckert’s fi rst move – right aft er cutting his losses with Th e Learning Co. in a pennies-on-the-dollar sale – was to try to change the culture for the better. “Being able to infl uence and change a culture as opposed to being a product of or infl uenced by a culture was really appealing to me,” he says – a process that he believes begins at the top. He’s certainly not your average CEO; he wears a name badge, eats in the company cafeteria most days and rides in the elevators with the rest of the staff . He fl ies American Airlines, eschewing the tradi-tional trappings of the corner offi ce and the luxury lifestyle. “Th ere was a time when the senior executives at Mattel weren’t like that,” he explains. “Th ey were very distant, very removed from the people that actually do the work here, they were isolated. I’ve tried to be more open. Th at’s just my natural personality.”

In addition to instilling that C-level visibility and accessibil-ity, the company has also made some signifi cant investments in people development, leadership development and functional training to let employees know that they are valued. “We want to make sure people know that for whatever time they’re going to spend here, we’re going to invest in them,” says Eckert. “Th ey’re going to learn. And if they decide to leave Mattel, they’re going to be better prepared, a better person, a better leader and a better manager than they were when they came here. Letting people know that we value them and are investing in them has paid tremendous dividends for us.”

When Eckert joined the company, business outside the US represented just 29 percent of Mattel’s overall sales; last year it was 46 percent. Here he reveals why expanding internationally is a key part of its focus.

Our publicly stated goal is 50 percent, but our President of International knows the day we achieve 50 percent his new goal is 60 percent. When I joined the company, I

benchmarked the really well-run global consumer goods companies – Unilever, Proctor & Gamble, Coca-Cola, Kraft Foods – and typically about half of their business was done outside of the US. It seemed to me that at 29 percent we were underdeveloped – and as it turns out, about half of the global toy business is done outside of the US, so there’s a lot of growth potential there.

Economies are growing. Middle classes are growing. Populations are growing in many parts of the world. So virtually all of the growth in this company is coming from outside the US. Today, the global toy industry is about $50 billion. We’re the largest toy company in the world at $5 billion, and we only do 10 percent of the world’s toy business. But in a place like China, which is a huge and quickly developing market, the entire toy business is maybe $1-2 billion today, and of that the branded toy business where we want to play is maybe only between $100-300 million. That’s the whole market, and we only have a small share of that market. So we’ve got to develop the toy business.

The economy helps. People investing more in their children and wanting to see their children have a better future helps. But we’ve got to create the toys that appeal to that market, and then promote toy brands and our brands specifi cally. So it’s a challenge from a marketing standpoint, but not unlike the challenge our predecessors faced when they developed the toy market in the 1950s in the US.

I got an email last week from one of our directors on a business trip to China and she said, “Bob, I just went into a mass merchandiser here in Shanghai and the toy department is really small, it’s at the very back of the store and it looks like they could use some help in how they display toys”. That’s not atypical. We’re used to walking into stores here in the United States where the toy section is a big, beautiful department with lots of brands; it’s very colorful and exciting and entertaining and a fun place to shop. But if you go to a mass merchandiser in China today, toys are probably category number 83 out of the 100 categories they have in the store, and we’ve

got a lot of work to do to help them realize that if you put enough energy into it you can make toys number

60 in a hurry, and then someday if all goes well it can be like a Walmart in the United States

where, during the holiday season, toys is one of the two or three most important departments in the store at Christmas. But we’ve got a lot of work to do to help retailers understand that, and it’s going to take a lot of time to develop those markets.



It’s all part of his plan to make Mattel a truly 21st century busi-ness – one that embraces greater communication, collaboration and partnership as a means to achieving its goals. It’s most apparent in the rapport the company has with its employees, but it’s also there in the relationships it has built with suppliers, manufacturers and retailers. Increasingly, companies are being forced to look outside of their own corporate boundaries in order to deliver the best results for customers and shareholders alike, and Mattel is no exception. “A business can no longer be isolated in its own little space,” asserts Eckert. “It really started with our retail customers, who were increasingly open, more demanding

and more willing to partner with vendors regarding how to build their business. We saw the benefi ts of that, and have embraced a similar ap-proach here at Mattel. We are more collaborative. We are more open. We take advantage of our scale. It’s good for business and we get better ideas when we’re more open.”

One such example is the series of strategic alliances the company has built with its retail partners. “We are sitting down and talking

about where the toy business is today and where it can go in the future, and the strategies we can jointly deploy to achieve that end state in a few years. If we have a common view of the future and a common strat-egy, then decisions around pricing, assortment, marketing, etc. take on a diff erent perspective. So we are constantly engaged with retailers in this business. It is so fast-paced. It is so seasonal. It is so product-oriented. None of us is smart enough to do this by ourselves, so we work collaboratively with our customers to fi nd out what’s important to them and how toys fi t into their strategy, and that makes the partner-ship that much more productive.”

And such a strong focus on communication was to prove invaluable as the company faced up to the biggest challenge in its history.

Bob Eckert is not a superstitious man, but even so he is the fi rst to acknowledge that Friday 13th has taken on a heightened sense of signifi cance for Mattel. In the fi rst instance, it was on this date in December 1998 that the fi rm struck the ill-fated

Learning Co. deal that very nearly sunk the company; in the second, it was on Friday 13th July 2007 that Eckert received the news that was to turn his world upside-down and catapult Mattel onto the front pages of newspapers around the world for all the wrong reasons.

“I was sitting in my offi ce right here when our Worldwide EVP of Operations and the Senior Vice President of Product Integrity walked in and said, ‘We think we have a problem’,” remembers Eckert. “And in



my experience, when the head of quality walks into your offi ce and says there’s something wrong, the antenna goes up straight away.” Th e news was bad: an internal probe had discovered a Chinese manufacturer had used a non-approved paint pigment on a range of the company’s toys – including characters popular with young children such as Sesame Street’s Big Bird and Elmo, and Nickelodeon’s Dora the Explorer – violat-ing Mattel’s own stringent in-house safety standards.

What do you do when faced with such a problem? For Eckert, the answer was simple. “Th e fi rst thing we had to work on was fi nding out the scope of the problem,” he says. “How big is it? Where is it? How many toys are involved? What caused it? How long has it been going on for? We had a lot of homework to do but fortunately we had a lot of profes-sionals on the ground who started digging right away.” What they found was frightening: around 1.5 million Chinese-made toys worldwide could contain excess lead levels in their paint. In the worst cases, the lead in paint was found to be signifi cantly over the US federal limit.

On August 2nd, the company recalled the toys, including 967,000 in the US. Th en came the hammer blow. Just two weeks aft er the initial recall, Mattel took the decision to recall an additional 18 million toys worldwide, this time over concerns about high-lead levels and the use of small, strong magnets that could be dangerous to children if two or more were to become loose and ingested. A third recall of a further half-million toys followed in September.

Such a public relations disaster would have fl oored most companies, but the Mattel machine quickly sprang into action. In fact, the fi rm is now widely praised for the way it responded to a potentially crippling crisis. “It took us some time to adequately defi ne the scope of the prob-lem,” he admits. “It wasn’t like day one we understood it. However, we knew we had a problem with what ended up being 83 products recalled on August 2nd. Even then we increased our testing, looking for more, and by August 14th we had our second recall. We tend to have two or three small recalls a year in the toy business, but when you have two big recalls two weeks apart you’re suddenly talking a whole diff erent level of crisis.”

In response, the company essentially shut down its supply chain in its two busiest shipping months, August and September, in order to contain the impact. Th e other thing that Eckert says was key was seek-ing advice. Drawing on a previous crisis management case study – that of Johnson & Johnson’s handling of the Tylenol recall in the 1980s – he called a retired J&J director to ask for help. “He told me that there’s two things that are important,” recalls Eckert. “Number one, the CEO needs to be seen as active; whether you like it or not you need to be visible. People need to see somebody and they need to see you, not a subordinate. And number two, you need to make sure people understood this isn’t about money. You need to tell them, ‘I don’t care what it takes. We will fi x this and we will spend whatever we need to spend. Today I’m not the

MATTEL’S SUMMER WINS



capitalist concerned about profi ts. I’m the person concerned about your kids and I will do whatever it takes fi nancially, culturally, personally to make sure you don’t have to worry about your kids anymore.’ Th at was great advice.”

And Eckert took it, putting himself at the forefront of the media eff ort and taking direct responsibility for rectifying any issues and ad-dressing consumer, retailer and regulator concerns head on. He won cus-tomer kudos for his open communication style and plaudits both inside and outside the business community for his clear-headed handling of a diffi cult situation. And he won the respect of his employees for his hon-esty and transparency. It’s a lesson a number of other high-profi le execu-tives currently mired in their own problems – BP and Toyota, to name but two – would do well to follow. Typically, however, he’s reluctant to take the applause, preferring instead to share the credit with his 27,000-strong team. “It was a big challenge for the company as a whole, but the people of Mattel delivered unbelievably during some really demanding, taxing, trying times,” he says.

It’s typical of a man who claims to be a big believer in the Boy Scout motto ‘be pre-pared’ to take nothing for granted. “We didn’t practice a recall related to lead paint but when that issue appeared we did have a plan in place regarding who does what when, and how we engage,” he says. “Th e other thing is that we’re a global company and around the world, someone is always available 24 hours a day, seven days a week. So twice every day, seven days a week, we had phone conferences – one at 7am Pacifi c time and the other 4pm Pacifi c time (the perfect transition between either

Europe and Asia and the US) – to coordinate what had been happening on a given continent, what needed to happen in the next 12-hour period and what the impact of that was globally. We had 30 or 40 people on the line all over the globe at diff erent levels in the organization, so we were pretty current all the time. Th ere weren’t many surprises.”

They say whatever doesn’t kill you only makes you stronger – and Eckert certainly feels the experience, whilst hardly ben-efi cial in the short-term, has actually helped forge a stronger bond between Mattel and its employees, between the man-

agement team and the people on the front line. More importantly, it has also enhanced the levels of trust between the company and its customers.

He feels such mutual trust has been invaluable during the recent downturn, where tightening belts and pulling together has been para-mount. “We all hunkered down,” he says. “We were tough on the cost side of our business. We were tough on expenses and spending. We had

layoff s. We had no promotions, no salary increases. And we didn’t make so many toys. Our vendors had to deal with that, and we didn’t sell too many toys to our retail custom-ers who in turn didn’t want to buy too many toys. It was a tough year all round. But some-how we got through 2009 together.”

Fast forward to 2010, and Eckert believes the fi rm is in much better shape to capitalize on any potential upturn in the economy. “Th e company did better than I expected in 2009,” he maintains. “It was a tough year for our employees but they really stepped up and de-livered. Our sales were down in 2009 by about



eight or nine percent. Revenues were down. But our profi ts were up over 30 percent. Our cash fl ow was also very strong. It was the best perform-ing year I saw among Mattel’s employees and the most challenging year we’ve had. So if they can do that, if we maintain that discipline and focus, we’ll have a really good 2010. Th at’s where all the investment we made in people really paid off .”

Allied to this optimism is the fact that a number of big entertain-ment properties are set to drive sales this year and next for the toy giant. Mattel has a strong relationship with fi rms such as Disney, Warner Brothers, Nickelodeon and the Cartoon Network, which Eckert says pro-vide it with great intellectual property. “Right now Toy Story 3 is incred-ibly popular,” he enthuses. “It is a fabulous movie. It’s just a really warm story and toys are obviously at the center of that and we’re fortunate to make a lot of the toys that support the Toy Story franchise. Our number one priority is to do the best job we can for the intellectual property that comes out of television and movie studios.”

Mattel is also set to follow in the footsteps of its great rival, Hasbro, and begin developing stories around its own brands. “Th ere has been a new genre in fi lmmaking that starts with the toy and turns it into an entertainment property,” says Eckert, “and we’ll participate in that. We’ll probably do some things with brands like Masters of the Universe, which at one point was bigger than Barbie. We’re also looking at other proper-ties that have been away for a while – for instance, we had a property called Major Matt Mason that was about our fascination with life on the moon, and it turns out that it was one of Tom Hanks’ favorite toys and he wants to make a movie out of that. I don’t think that turning toy proper-ties into movies is going to be around forever, but as long as people in the entertainment business are interested in that then we’ll participate.”

Certainly the future looks bright for the toy giant. According to investment bank Caris & Company, key sales drivers in 2011 will be

the launch of Cars 2, Warner Brothers’ Green Lantern and a possible Monster High live-action musical movie from Universal. Key 2012 drivers will be the release of Batman 3, Ghost Busters, a Barbie movie and Tom Hanks’ Major Matt Mason treatment. As with Cars, the stu-dios are also planning follow-on entertainment to support Toy Story and Green Lantern as ‘evergreens’. But while bullish on his company’s prospects over the next few years, Eckert maintains that the results will only come if he and his team remain focused on developing the right culture. “Mattel is fi rst and foremost a people development machine,” he concludes. “We’re helping kids develop, and while we’re helping kids develop we’re helping ourselves. And hopefully, that will continue long aft er I’m gone.”


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On the day of our meeting, Joe Tucci is a man of di-vided loyalties. As CEO of one the world’s largest IT infrastructure fi rms, he’s spent the past nine years putting Boston on the technology map through an ambitious acquisition strategy that has seen his fi rm – the $14-billion, Hopkinton-based EMC Corp. – become the number-one data storage solution pro-

vider in the world, as well as signifi cantly expand its product portfolio and IT consulting and services businesses through a number of strategic investments. He lives and breathes Boston; nearly 9000 of the company’s approximately 43,000 employees live and work in Massachusetts, and Tucci is intensely proud of what he and his team are building down in the Cradle of Liberty. It’s a tightly knit fi rm with strong roots in the local community. Th ere are productive links with Harvard, MIT, Northeastern and the numerous other colleges and univer-sities in the area. And EMC is a major sponsor of the local football, basketball and baseball teams. But therein lies the rub: this weekend his beloved New York Yankees are in town for the opening game in the 2010 MLB season, and for one night only Tucci is hoping against hope that not everything goes right for the people of his adopted hometown.

A native New Yorker, Tucci grew up just blocks from Yankee Stadium in the Bronx, watching greats such as Yogi Berra and Mickey Mantle take teams apart for fun. “Baseball is in my blood,” says the tough talking chief executive. “I always dreamt of playing pro-baseball.” Indeed, in his early 20s, he played in semi-professional leagues as a catcher – “the one position where I could see the entire game and call the shots,” he recalls with a grin – until a skiing accident put paid to his major league dreams. Even so, the hugely competitive Tucci never lost his love of the game and appetite for a scrap; instead, he transferred his keen analytical skills and ability to read a situation before making the right decision to the world of big business, and has never looked back.

Since his arrival at EMC in January 2000, Tucci has led EMC through a period of dramatic revitalization, continued market share gains and sustained double-digit growth. Most notable has been his transformation of the compa-ny’s business model from what was a near exclusive focus on high-end storage platforms to what is now the industry’s most comprehensive portfolio of best-of-breed platforms, soft ware, services and solutions that enable organizations to successfully make the transition to what EMC calls ‘private cloud’ computing. Today, EMC operates with a balanced product portfolio in which soft ware and

Not many companies can claim to be bigger now than at the start of the downturn. But led by charismatic New Yorker Joseph Tucci, Boston-based EMC continues to rip up the regular recession playbook.

INSIDE THE C-SUITE

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those cutting jobs was a real technology ‘Who’s Who’: Microsoft , IBM, Adobe, Yahoo, AOL, AT&T, Sprint, Cisco Systems, Nokia, Seagate and Sun, to name but a few. Even Google made cuts in its sales and marketing and recruit-ing forces.

Yet unlike many in the soft ware industry, EMC has weathered the recessionary whirlwind particularly well. It took $500 million out of its cost base between 2008 and 2010 – and yet it has a higher headcount now than at the same time last year and is aiming for 18 percent revenue growth by 2011. Ambitious? You bet. Achievable? Tucci certainly believes so.

For one thing, the company’s cash position is really strong. “Despite spending almost $3 billion on acquisitions since 2008’s economic crisis, our cash is ahead of where it was 18 months ago,” he says, leaning across the desk in his understated offi ce to make his point. “And if you look at how we ended the year, we ended it with the best quarter in our history. Sure, the downturn aff ected us, but we have emerged with a record quarter, with close to record cash, a couple of great acquisitions, and with forecasted growth of 18 percent on the top line. So yeah, I think we dealt with this recession much better than most.”

Later in April, the fi rm backed up this success by an-nouncing record fi nancial results for the fi rst quarter of 2010. So how did they do it? “It took a lot of hard work,” he concedes. “But the other part of it was that we didn’t deny what was coming.” One element of this transparent

services generate more than 35 percent of its annual reve-nues, a far cry from when he fi rst arrived and the company was known purely as a hardware heavyweight. Over the past nine years, Tucci has doubled revenue, transforming EMC from a supplier of high-end data storage systems to a multi-faceted vendor of storage, virtualization and security products with $14 billion in sales.

Unsurprisingly, people at the company love him for it. “He puts himself last, his customers fi rst, and leads with humility,” explains former head of EMC Investor Relations, Polly Pearson. “He off ers praise to his people profusely, and seeks no accolades. He spends most of his time in the fi eld, not in any executive suite. And he has a brilliant understanding of business strategy.”

Riding out the stormWe meet at the fi rm’s Hopkinton campus on a grey

weekday in April. Th e rain is hammering down on the rooft ops, as it has been for days; Boston has been expe-riencing some of its wettest weather for years, and the incessant rainfall provides an apt metaphor for the fi nan-cial storm that has been pummeling IT companies large and small for the best part of two years now. According to outplacement company Challenger, Gray & Christmas, the technology sector announced 174,629 planned job cuts in 2009, 12.3 percent higher than the 155,570 job cuts an-nounced in 2008 and the biggest year-end total since 2005, when tech employers eliminated 174,744 jobs. Th e list of

Founded: 1979

Headquarters: Hopkinton, Massachusetts

CEO/Chairman:

Joe Tucci2009 revenues:

$14 billion

Worldwide

employees: 43,000

Country presence: >80

R&D investment (2009): $1.6 billion

Market capitalization (March 2010):

$38 billion

AT A GLANCE

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approach was to ask employees to help out by taking a fi ve percent pay cut (Tucci himself slashed his own pay by over 20 percent) and promising to keep layoff s to a minimum if they did; the response was overwhelming. “More than 85 percent signed up voluntarily to the measure because they knew it would keep EMC stronger, preserve jobs, and they liked the program we laid out for them,” he says. “Th at’s pretty amazing. I’ve always said that whatever doesn’t kill you makes you stronger, and in fact I think you learn more in tough times than good times; it’s how you react to external and internal events in a tough period that really shape a company. We found ways to be more effi cient and we learned a lot.”

For Tucci, the key to getting that message across suc-cessfully was to ruthlessly focus on what he calls the most important aspect of leadership: communication. “Th e three rules of managing in a tough environment are com-municate, communicate more and communicate again,” he explains. “And then you start over: communicate, communicate more, communicate again, and go back to point A. You have to communicate a balance of reality and honesty, with vision, strategy and proof points built in. If we do X, this is what’s going to happen. If we do Y, this will happen. You honestly address the reality of the situation. ‘I thought this would happen, but we fared even better that that’. Or ‘I thought this would happen, but we fell a little short for these reasons; here’s what we’re going to do about it’. You have to be very open, and I don’t care where you’re

from in the world, people react to that. If they think for a second that you’re giving them spin, you’ve lost them.”

Catching the next waveTh e reality of the situation is that actually, the compa-

ny has little need for such spin; as far as Tucci is concerned, EMC is in great shape. “Th ere’s this great wave of change that is happening right now in the form of cloud comput-ing, and we think virtualization and storage are incred-ibly important to that,” he explains. “You look at survey aft er survey that say companies are going to spend more on virtualization, companies are going to spend more on storing information, companies are going to spend more to make sure what they’re storing is compliant in terms of governance, risk and compliance (GRC), and this is where our strengths lie.”

While some enterprises still shy away from the idea of cloud computing, a recent survey of over 1500 global CIOs showed that investigating the possibilities of the cloud was their number two priority for 2010. Worldwide spending on data center technology infrastructure and services exceeds $350 billion annually, according to McKinsey and Company estimates, with half of that spent on capi-tal expenses and half on operating expenses. Further, an estimated 70 percent or more of those costs are expended to maintain existing infrastructures, leaving 30 percent or less for new technology initiatives and applications that can provide breakthrough diff erentiation for businesses. It

EMC became the fi rst company to have a logo on the famous Red Sox uniform in April 2008. The company is a major sponsor of the MLB franchise, and recently had a section of the famous Fenway Park named after it.

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is also estimated that approximately $85 billion, or 20 per-cent of this total market, can be addressed with data center virtualization and private cloud technology by 2015. Th e cloud is coming, and EMC plans to be at the forefront of that movement.

Indeed, Tucci feels that cloud computing off ers the greatest opportunity to transform the IT landscape since the advent of distributed computing in the mid-1990s, and follows previous waves such as mainframe, minicomput-ing and PCs as a potentially game-changing technology. “In such waves of change, companies can get very dislo-cated and disrupted. In a way, it throws a lot into the air, and how you embrace that change and what technologies you have at your disposal will determine how well you do.”

In this regard, EMC is very well placed. Driving the demand for cloud computing models are the increased complexity and costs inherent in current data centers, and the explosion of data that only promises to grow, says Tucci. Such data growth comes from multiple sources, including the growth of mobile device users, medical imaging advancements, increased access to broadband and smart devices. But unlike fi rms such as Amazon and Google, which use cloud computing to deliver their own

online services and host business applications for other fi rms through so-called ‘public clouds’, EMC is pushing the concept of ‘private clouds’ where individual companies create specialized online data centers. Tucci predicts that thousands of businesses will set up private clouds in the next few years, and he is positioning EMC as a major sup-plier of the hardware and soft ware they will need.

“If you look at some of the basic tenets of cloud com-puting, we’re sure X86 technology plays a major role, we’re sure virtualization plays a major role, you have to build in a lot of automation, you have to fi nd ways to deliver IT as a service,” says Tucci. “And if you think of what EMC does, we’re the leader in virtualization through VMware and X86 technology, the leader in information management, the leader in information security – all pivotal technolo-gies that will help form this next wave of computing.”

In response to this growing trend, EMC recently announced the Virtual Computing Environment (VCE) coalition – a three-way collaboration with Cisco and VMware – that promises organizations of all sizes an ac-celerated approach to data center transformation and sig-nifi cant reductions in both capital and operating expenses. Th e partnership aims to deliver the next generation of data center architecture, products and solutions (or Vblocks – complete technology packages that have been built, tested, proven and documented by the VCE coalition) to acceler-ate customers’ ability to increase business agility through greater IT fl exibility, and lower IT, energy and real estate costs through pervasive data center virtualization and a transition to the private cloud. Need an internal cloud capable of supporting 2000 virtual machines? Th ere is a Vblock for that, as the commercial might say. “I don’t think any company can get where it needs to be by itself,” explains Tucci. “I think you need to fi rst of all have a good business yourself and then you need to cooperate.”

Looking to the futureFor Tucci, riding the next technology wave is all about

looking aft er the long-term interests of the company – something he concedes is increasingly diffi cult in today’s results-obsessed environment. “It’s getting more like a sprint than a marathon,” he admits, referring to the relent-less pressure to hit quarterly earnings targets. “And in a sprint, if you don’t start well it’s almost impossible to win. In a marathon you can fall down, and as long as you don’t hurt yourself you can get up and run because you’ve got 26 miles to catch up. But in a 100-meter dash, if you fall down you’re done.”

Th e challenge for EMC is that business survival is increasingly like trying to run a marathon at 100-meter pace. Companies need to be agile enough and fast enough to be quick-to-market in a rapidly changing technology environment, but, as Tucci is at pains to point out, they

At the end of April, EMC reported fi rst-quarter 2009 revenues of $3.15 billion, refl ecting solid revenue results in a challenging global economic environment. Through its continued emphasis on operational effi ciency, EMC generated operating cash fl ow of $864 million and free cash fl ow of $681 million, all contributing to record cash and investments of $9.8 billion.

David Goulden, EMC Executive Vice President and Chief Financial Offi cer, said, “EMC’s fi rst-quarter results refl ect the resiliency of our business in a very challenging global economy. We executed well on our cost reduction plans during the quarter and maintained disciplined expense control, which resulted in decent profi tability and excellent free cash fl ow, while continuing investments to further enhance our product and services offerings and expand our customer reach.”

Goulden continued, “We are taking additional near-term cost reduction actions that will save EMC an additional $100 million in 2009. We now expect to reduce EMC’s 2009 Information Infrastructure costs by approximately $450 million from our 2008 spend, increasing to approximately $500 million in 2010. We believe these near- and longer-term actions to improve our effectiveness and effi ciency will help EMC ride out this period of economic uncertainty and put us in a position of even greater strength when conditions improve.”

EMC’s best estimate is that 2009 global IT spending will decline as a percentage in the very-high-single-digit to very-low-double-digit range compared with 2008. EMC also expects second-quarter 2009 global IT spending will probably be fl at compared with the fi rst quarter of 2009, and the second half of 2009 will be stronger than the fi rst half of the year.

Solid returns

“It’s getting more like a sprint than a marathon, and in a 100-meter dash, if you fall down you’re done”

EMC_2.indd 50EMC_2.indd 50 09/07/2010 13:5209/07/2010 13:52


also need to be in business for the long haul if they are to be truly successful. Balancing that focus on the long-term whilst keeping shareholders happy is key. “You need to set the right expectations and do what you say you’re going to do,” he suggests. “A lot of people complain about too much short-term focus or too much long-term focus; I fi nd if you have a good long-term plan and you come clean and tell the world what you’re going to do this quarter, next quarter, and the one aft er that in order to achieve those aims, they’re usually very accepting.”

For instance, EMC will increase its R&D expendi-tures this year by a not-insignifi cant 20 percent to around $2 billion, while since 2001, the company has invested approximately $11 billion in upwards of 50 strategic ac-quisitions. “On the one hand, that suggests I’m not maxi-mizing profi t, per se; but I am investing, and the stock went up as a result. I think our shareholders are happy with the fact that EMC is going to deliver a pretty good top line, a pretty good bottom line, and that we’re invest-ing for the future.”

Such long-term thinking is a big part of the company culture; Tucci is one of only three men to take the role of CEO since EMC was founded in 1979. But while he has committed to stay on until the end of 2012, the fi rm’s lead-ership beyond that date is less certain. High-profi le hires, such as Pat Gelsinger from Intel as President and COO of Onformation Infrastructure Products, along with a recent reshuffl e in the executive suite, suggest that the company

Product placement in Hollywood blockbusters is big business for an increasing number of fi rms in all kinds of verticals. And now technology hopes to get in on the action, too.

EMC is betting that the technology experts who make buying decisions at big companies could be infl uenced by seeing certain systems and solutions in the movies. “They form the backdrop to key scenes,” explains Mark Fredrickson, EMC’s vice president of marketing strategy and communications, who has placed EMC products in a number of high-profi le entertainment vehicles in recent years.

For instance, when Leonardo DiCaprio and Russell Crowe face off inside a US embassy in Body of Lies, an EMC Clariion system lurks in the background (see picture). Kiefer Sutherland’s counter-terrorism team in the hit TV show 24 are regular users of EMC technology. And the Shia LaBoeuf thriller Eagle Eye features a command center stuffed with EMC hardware.

And while Fredrickson concedes that corporate technology buyers won’t necessarily purchase a million-dollar storage array just because they saw it in a movie, he does feel it helps break the ice. “It doesn’t get you the business,” he says, “but it gets your call returned.”

High tech on the big screen

EMC has invested $11 billion in 50

strategic acquisitions

Tucci is aiming for 18 percent growth

in 2010

EMC_2.indd 51EMC_2.indd 51 09/07/2010 13:5209/07/2010 13:52


is already looking beyond Tucci’s tenure, while the CEO himself has admitted that the current executive manage-ment structure needs to be enhanced and expanded as the fi rm progresses from $14 billion in annual revenues to a $25 billion IT infrastructure company increasingly capable of competing among the tech titans. Currently in the running for the top job, according to the Wall Street Journal, are Gelsinger; Howard Elias, President and Chief Operating Offi cer of Information Infrastructure and Cloud Services; and David Goulden, current EVP and Chief Financial Offi cer. According to Tucci, it’s all about having options. “You’ve got to assume something could happen,” he says. “Say you get hit by the proverbial bus tomorrow, then you need to have plans in place for that.”

So what can his successor expect from the job? “In a business like this that changes so frequently, there’s a lot of pressure,” he says. “Th ere are some businesses that have a lot of time to create change, but technology’s not one of them; the cycles of new products and the ways you can get disrupted occur very quickly. So there’s always a lot of pressure on, and that’s never fun. But on the other side it’s tremendously challenging; it’s like the world’s greatest game of chess, and you’re playing against some really great players. So it’s incredibly invigorating, and it’s intellectu-ally challenging. It’s a real thrill, and I like it. But I would not call it fun. I defi nitely would not call it fun. Fun is when I’m scuba diving, fun is when I’m playing golf, fun is when I’m with my kids. Th at’s fun.”

Such candor – not to mention self-awareness – is refreshing in a leader, and one of the reasons Tucci’s man-agement style has proved so successful over the years. “I’ve witnessed him handle brutally strategic situations and confrontations with such wisdom, conviction and blunt honesty it took my breath away,” says Pearson. “He does not fear doing what he sees as the right thing; he cares, big-time.”

Which brings us back to that season opener at Fenway Park, and Tucci’s other great passion. Th e Red Sox over-came multiple defi cits en route to a memorable 9-7 victory over Tucci’s Yankees – their bitter rivals and defending World Series champions – thus subjecting the EMC boss to much short-term teasing from his staff at HQ. But like Tucci, the Bronx Bombers are nothing if not resilient; at the time of writing they currently have the best win-loss ratio in the league for 2010, top the division and remain favorites to defend their title. It provides confi rmation of an age-old sporting truism that an ex-ball player such as Tucci would appreciate: that championships are won over a season, not on the basis of one game. He knows that im-mediate results don’t automatically translate into longer-term success, and under his guidance, EMC certainly won’t be taking anything for granted. But they will be expecting plenty more wins over the years ahead.

Curriculum vitaeBorn: 1947

Education: Bachelor’s degree, Manhattan College; MS in business policy,

Columbia University

Career: 1969 Started as a management trainee in RCA’s computer division

and became a systems programmer

1972 Joined Sperry Corporation, an early computer manufacturer,

where he continued programming

1986 Sperry merged with Burroughs Corporation to become

Unisys, where he rose to the role of president of US information

systems

1991 Became chief executive of Wang Global and guided the

company through a quick emergence from Chapter 11 bankruptcy

protection 2000 Joined EMC as president and COO

2001 Became chairman and CEO

2006 Became president, CEO and chairman

Family: Married with two children and two grandchildren

Hobbies:

Water sports, downhill skiing, golf, playing guitar

EMC_2.indd 52EMC_2.indd 52 09/07/2010 13:5209/07/2010 13:52

SGI AD.indd 1 01/07/2010 13:36

The future looks cloudy

Michelle Bailey gives Business Management theforecast for the IT infrastructures of tomorrow.

TECHNOLOGYFOCUS

…

MICHELLE BAILEY_june10 09/07/2010 15:27 Page 54


The world of IT is evolving. Again.Billed as the greatest transformation inthe use of the internet since it began,cloud computing is pushing a revolu-tion in IT infrastructure for the mod-

ern business. And with good reason; the efficienciesthat come with the cloud and virtualized data cen-ters are being commonly recognized by businessesthe world over as crucial to operations today. For afirm that spreads across multiple offices, states oreven countries, immediate access to the vast quan-tities of important and sensitive data, without com-promising security, could be potentiallygame-changing – not to mention the cost saving in-volved in the shift to a virtualized data centre.

The cloud has been steadily evolving for anumber of years now, and as it begins to maturesome of the kinks that have hindered companiesfrom jumping on board in the past are beginningto be ironed out. “By far and away, security is theoverarching concern around public cloud envi-ronments,” explains Michelle Bailey, ResearchVice President for IDC’s Enterprise Platformsand Data Center Trends unit. Indeed, security ismore often than not a firm’s top priority whenimplementing any IT infrastructure. Whether it’shighly confidential client data for, say, a financialinstitution or a healthcare provider, or simplysensitive company information such as payroll orstaff recommendations, protecting company in-formation is paramount. Bailey underlines thispoint: “That's one of the reasons why we at IDCpredicted that the private cloud will have so muchmore momentum behind it because you can stillcontrol security in the same way you’ve alwaysbeen able to control security.”

Bailey’s statement highlights a common feel-ing among organizations today. When it firstemerged as a new and untested system, manyfirms were cautious about fully transferring theirIT infrastructure into the unknown cloud. Soonindustry heavyweights such as Google began todevelop cloud-based programs and systems thatwere manageable and carried a familiar and trust-ed logo, encouraging wider participation across avariety of industries. Now, as the cloud becomesmore recognized in the workplace and mobile de-vices such as smart phones and tablet PCs en-abled with Android technology emerge onto themarket, more organizations are identifying thebenefits and establishing their own networks.

“I think it’s easy for people to think of thepublic cloud because there are players that have

such great visibility in the market like Google andAmazon, for example,” explains Bailey. “It’s easyto understand what the public cloud means.What’s fuzzier is this notion of a private cloud.”Bailey goes on to explain that a private cloud pro-vides exactly the same automated informationservice as a public cloud, but can be accessed fromwithin a firm’s own data center using the firm’sown resources and remaining secure and confi-dential to that firm. “You could actually be goingto a hosting provider, buying dedicated systemsand infrastructure from them, but they are help-ing you to provide that utility pricing that goesback to your business,” she says.

Cost cutterKey benefits to a cloud system when design-

ing a data centre are twofold: time and money. “Ithink it’s all about money and it’s all about eco-nomics,” explains Bailey, “so if you’re a publiccloud provider, you can run a data center at acompletely different cost point than you can atypical, internally managed data center. There’svery good reasons why they can get that kind of

leverage, and it’s because they tend to have fewerapplications to support.” Bailey goes on to high-light that a cloud-based data center runs on a pay-as-you-go system, so parts of the data center thatdo not get used will no longer be wasted, an ap-proach that both saves on overheads and im-proves energy efficiency.

The resounding reason behind the popular-ity of the cloud as a platform for today’s enterprisedata center is its specific customization for thebusinesses it is built to support, says Bailey, socompanies can utilize the center to its maximumpotential. As well as being able to eliminate re-dundant parts of the data center so as to reducewastage, any individual firm can develop its ownapplications and programs for use across its datacenter, a time-efficient technology that couldmean potentially huge bottom line savings for amulti-national company.

“Application development is another incred-ible use of public cloud,” says Bailey. “If you have aneed to build an application quickly, send it out to

the public cloud, build it out there, once it’s readyand you feel like it’s ready to fall into the mainte-nance mode, then you can bring it back into yourown data centers.” She goes on to explain thatthose applications are economical in themselves,stating that the majority of enterprise applicationsappearing in the cloud today have a lower value.

Beyond the scope for company or industryspecific applications, the cloud also enables a firmto share its products more quickly, whether that’susing the public to share upcoming products withthe market, or using the private cloud to shareprototypes with other members of staff. “I thinkthe more important driver around moving to acloud strategy is about the time to market, if youhave an element of your portfolio that you wantto rapidly build out.”

Looking to the futureStill a relatively young technology, enterpris-

es across America still have a lot to learn from thecloud, but as Bailey explains, that can only comewith time. “People will learn as they go with thepublic cloud – and there’s going to be many fail-

ures along the way, but ultimately that’s where anelement of the market will be going,” she says. Shemuses over the biggest drivers behind the devel-opment of the cloud as a business platform, goingon to predict that the customers moving towardsa private cloud data center will have a focus onstandardization, but develop standards that close-ly mimic those that can be seen in public cloud inorder to maximize the opportunity to federate inthe future. However, Bailey says, “I don’t know ifstandards are the greatest driver right now or thegreatest inhibitor.”

Ultimately, as with most revolutionary tech-nologies, Bailey predicts that it will be a youngman’s game, with fledgling businesses that areflexible and bursting with innovative brains see-ing the maximum potential for the cloud. “WhenI think about the cloud over the next five yearsand I think about the companies that will makebest use of it, I think of newer companies thathave new applications and don’t have a legacy en-vironment they have to deal with.” n

“I think the more important driver around moving to a cloudstrategy is about the time to market, if you have an elementof your portfolio that you want to rapidly build out.”

MICHELLE BAILEY_june10 09/07/2010 15:27 Page 55

EXECUTIVEINTERVIEW


What challenges do businesses face when imple-menting virtualization infrastructure into their data center?Kent Christensen. In general, getting started is fairly

straight-forward and many organizations are well under

way. However, as virtualization becomes more mission

critical, the challenges in getting optimal results for the

business can begin to materialize. In most cases, when

organizations initially embarked on virtualization, they

did not foresee the degree to which it would eventu-

ally scale, involving not just servers, but also integrating

storage and networking and eventually aligning with

business processes. Th us, one of the biggest challenges is

implementing a top down approach with all stakeholders

feeding into the solution.

What steps can businesses take to successfully move toward the virtual data center?KC. Some of the technology is new and, as a result, can

require diff erent skill sets or at least better collaboration

with IT teams and business units. Identifying a vision

and implementing a virtualization strategy in line with

that vision is a good start. It would be unusual though for

an organization to go from virtualizing a few servers to

having a well-architected virtual data center or even a pri-

vate cloud in one step. Th ere are many incremental steps

that can be implemented that make progress toward the

vision and provide tangible benefi ts to the organization

along the journey. Examples include:

• Leveraging enterprise features of a server virtualization

management suite to provide a platform more suitable

for mission critical applications.

• Aligning the storage architecture to complement and

extend server virtualization while also reaping signifi -

cant benefi ts in storage effi ciency and utilization.

• Integrating a converged network strategy to optimize in-

frastructure and integrate with the overall architecture.

• Aligning the virtualization services off ered to what busi-

ness units require to drive growth for the organization.

When implemented and managed successfully, what advantages can businesses expect to gain from a vir-tual data center?

KC. Th e most immediate is signifi cant cost savings. IT

will require fewer physical resources across servers,

storage and networking to deliver the same or more

applications to the business. Th e next is simplicity, in

that a common application platform can be leveraged to

provide more services with fewer platforms to manage,

which ultimately increases operational effi ciency. With

that comes more fl exibility and agility, making IT more

valuable to the business. Revenue generating applications

can be brought up in a fraction of the time with better

levels of service and at a reduced cost.

What do you expect to see in the coming years in terms of virtualization technologies? Do you antici-pate any new factors coming in to play in virtualization infrastructure?KC. Th ere will be signifi cant advances in technologies in

several areas, including management, integration and

cloud computing.

In terms of management, the hyper-visor is becoming

a commodity and the framework that manages the virtual

environment provides the value. Examples are VMware

Virtual Infrastructure and vCenter, Microsoft System

Center and Virtual Machine Manager, or Citrix Essentials.

For integration, a virtualized data center will still re-

quire technologies from multiple vendors. Increased inte-

gration of server, storage and networking technologies will

create complementary architectures with fewer manage-

ment points that will work together to meet business needs.

With the cloud, the ability to apply cloud concepts,

such as policy-based, services-oriented and automated

self-service devices, that are aligned with business needs

will become more prevalent. Ultimately this will require

additional standards for portability and security to enable

virtual data centers or private clouds to morph into hybrid

clouds that interface with public cloud providers.

At Datalink, we meet with customers who are at a

variety of stages in adopting virtualization technolo-

gies. Our focus is on transforming their data centers to

become more effi cient, manageable and responsive to

changing business needs. We help them leverage and

protect storage, server and network investments with a

focus on long-term value.

Virtual reality

Datalink’s Kent Christensen reveals to Business Management how a virtualized data center can revolutionize your business.

Kent Christensen is a virtualization practice manager for Datalink, a data center solutions and services provider for Fortune 500 and mid-tier enterprises. Christensen leads Datalink’s virtualization practice, keeping abreast on the latest technology developments, directing the adoption of virtualization hardware and software technologies and services, and consulting with customers regarding their data center strategies.

For more information, contact Datalink at (800) 448-6314 or www.datalink.com.

Datalink.indd 56Datalink.indd 56 09/07/2010 14:2009/07/2010 14:20

DATALINK AD.indd 1 28/06/2010 14:35

EXECUTIVEINTERVIEW


Keeping cool

Emerson’s Fred Stack talks to Business Management about keeping temperatures down for IT infrastructure while maintaining effi ciency.

For large technology companies, running a wide-spread IT infrastructure can raise chal-lenges. How can businesses ensure maxi-mum effi ciency in the face of the challenges posed by having such demanding technol-ogy infrastructure?Fred Stack. Businesses can ensure maximum

effi ciency by reducing energy consumption at

the IT equipment level. Th is approach has the

greatest impact on overall effi ciency because

the energy savings cascade across all support-

ing systems.

In 2008, Emerson Network Power unveiled

a roadmap for optimizing data center energy

effi ciency called Energy Logic, which explores

how IT equipment and supporting power and

cooling infrastructure can deliver a 50 percent

or greater reduction in data center energy con-

sumption without compromising performance

or availability.

At the core of the Energy Logic approach

is the Cascade Eff ect, which illustrates how

the IT load is directly correlated with the data

center’s UPS and cooling requirements, driving

energy consumption on the infrastructure side

as a result. By focusing on saving energy at the

initial server component level rather than at the

power and cooling level, energy consumption

savings will cascade down through all facets of

the data center. For instance, one Watt of energy

saved at the server component level creates a re-

duction in total facility energy consumption of

approximately 2.84 Watts.

Energy effi ciency has become a hot topic across all industries. What are the main challenges technology companies are faced with when trying to implement energy ef-fi ciency?FS. Rising energy costs and an increased focus

on environmental responsibility have pushed

many companies to look at energy effi ciency as

a way to cut costs. At the same time, new ap-

plications have emerged, making the business

world increasingly dependent on the IT infra-

structure that supports those applications.

Th e challenge for data center managers

now is to maintain or improve availability while

simultaneously reducing costs and increasing

effi ciency. A rash of well-publicized data center

outages in 2008 and 2009 led to speculation that

cost cutting was resulting in increased down-

time. In the wake of those outages, respondents

to Emerson Network Power’s fall 2009 Data

Center Users’ Group survey showed a renewed

emphasis on availability. It jumped from the

fourth-most important concern just six months

earlier to the number one concern of data center

and IT managers participating in the study.

How can businesses today maintain energy effi cient practices without compromising on productivity?

FS. Th ere are various tactics, specifi c to cooling,

that can help businesses maintain effi ciency

without compromising availability. Th e fi rst,

which has a signifi cant impact on all other ac-

tions recommended, is a proper isolation of the

hot and cold air. Th is is achieved through hot

aisle/cold aisle arrangement of the IT racks,

blanking panels in and between the racks (and

between the rack and the fl oor); sealing cable

entry cut-outs; and plenum air return tactics.

Th ese tactics enable the increase of the cold

aisle and CRAC return air temperatures, which

increases both effi ciency and cooling capacity.

To allow for future IT expansion, data cen-

ters are designed with excess cooling capacity.

Using variable capacity cooling tactics – includ-

ing variable capacity compressors such as digital

scrolls, variable airfl ow on CRAC or CRAH fans

or variable speed components within the chiller

plant – to match the actual load will reduce

energy consumption. Some of these tactics can

be retrofi tted in existing data centers. For in-

stance, upgrading a blower system to variable

speed and reducing fan speed by 20 percent will

result in a 50 percent reduction in fan power

consumption. Using high-density cooling tac-

tics to bring cooling closer to the heat source can

reduce cooling power consumption by as much

as 65 percent compared to traditional, room-

only designs.

Cold aisle containment is another tactic

that can minimize hot spots and lead to a signifi -

cant reduction in carbon footprint, with energy

savings of 50 percent compared to conventional

perimeter cooling when intelligent controls are

utilized. Economizers, which use outside air to

reduce work required by the cooling system,

can be an eff ective approach to lowering energy

consumption if they are properly applied and

maintained, thus mitigating the availability

risks caused by issues such as gaseous contami-

nation and transitions to and from free-cooling.

Emerson.indd 58Emerson.indd 58 09/07/2010 14:2209/07/2010 14:22


Can you outline some of Emerson Network Power’s solutions for these issues?FS. One critical feature in all of Emerson

Network Power’s Liebert cooling units is the

implementation of the Liebert iCOM controls,

which enables independent control of each

unit’s cooling capacity and air fl ow manage-

ment. Th is optimizes the variable capacity

features and allows for a variety of intelligent

control algorithms depending upon a user’s

room architecture and operational practices.

Th e most advanced implementations utilize

sensors located at the server racks to control

the temperature and the air fl ow to precisely

meet the needs of the servers.

Other solutions include high-density,

row-based cooling options like the Liebert

CRV, which brings cooling closer to the heat

source and continually adjusts to changing

operating conditions based on real-time tem-

perature and humidity readings. Th e Liebert

SmartAisle solution utilizes cold aisle contain-

ment to increase cooling effi ciency and rack

capacity. Th is option can deliver greater than

30 percent energy savings and a 40 percent

cooling capacity increase without compromis-

ing availability.

Another option, the Liebert Air Econo-

mizer System, utilizes advanced enthalpy con-

trol to deliver average annual energy savings

of 30 to 60 percent depending on geographic

location. It is compatible with downfl ow con-

fi gurations of the Liebert DS and Liebert CW

precision cooling systems. An example of rack

cooling that eliminates the need for cooling

system fans is the recently released Liebert

XDR, which results in savings of over 90 per-

cent compared to perimeter cooling.

How do you assess which of your solutions would be the most effective for each par-ticular customer?FS. All companies have unique needs, so cool-

ing options need to be assessed accordingly.

Our sales representatives utilize a consulta-

tive approach that focuses on listening to and

observing the user’s needs, enabling the rep-

resentative to properly advise the customer on

various approaches. Additionally, we off er a

full suite of assessment services that includes a

detailed CFD analysis of a site’s infrastructure,

which can identify effi ciency solutions without

implementing additional cooling hardware.

Data centers are most effective when they are accessible by most staff members. How can businesses ensure they fully opti-mize their data center’s potential? FS. Th e best practice is to minimize physi-

cal access while maximizing virtual access.

Gaining control of the infrastructure envi-

ronment, through centralized monitoring

and visibility, leads to an optimized data

center that improves availability and energy

effi ciency. Centralized monitoring system

– such as Liebert SiteScan or Liebert Nform

– provide not only a window into equipment

and facility performance, but also point out

trends and prevent problems wherever they

may be located.

What do you predict will be key infl uences on energy effi ciency in this industry over the coming years?FS. In 2005, an EPA study determined that

the IT industry accounted for 1.5 percent of

all energy consumed within the US. Since

that time, the demand for IT applications

and productive output continues to rise ex-

ponentially, but the actual energy consumed

is fl at to down. Innovations in hardware and

application approaches have reduced energy

consumption reductions despite increases in

work output. Examples of this include the

elimination of the CRT display for LCD tech-

nology, and the adoption of virtualization

techniques that increases the server utiliza-

tion from 10 percent to 80 percent.

Th e next step in the evolution of data

center cooling is to eliminate the need for any

fans (which typically account for 10 percent

of the IT server energy load) in the cooling

system or the servers. A fl uid cooling approach

– not water, but a two-phase refrigerant – re-

sults in the energy consumed by the entire

cooling system being less than the energy

consumed by the server fans alone. Th is chal-

lenges the math on how to claim a percentage

of effi ciency improvement. We prefer to call it

energy consumption elimination.

Because of the perceived trends from the

2005 EPA study, government regulators are

poised to implement regulations that stifl e

these new innovative approaches. Without

interference, technology will continue to de-

velop to meet rising user demand. Data center

managers will continue to seek out ways to

cut energy consumption while preserving

uptime, and precision cooling is just one of

the areas that will be impacted.

Fred Stack is the Vice President of Marketing of Liebert Precision Cooling at Emerson Network Power. He is responsible for developing new precision cooling product development roadmaps that refl ect evolving market needs and incorporate new technology. These roadmaps are the foundation for his teams development of new products and application engineering tools to fi ll gaps in data center infrastructure.

“One Watt of energy saved

at the server component level

creates a reduction in total

facility energy consumption of

approximately 2.84 Watts”

Emerson.indd 59Emerson.indd 59 09/07/2010 14:2209/07/2010 14:22


INTELLIGENTWORKING

SMAR

TER,

LEAN

ER, G

REEN

ERWhy the workplaces of the future will have integrated intelligence built in to the very fabric of the building. By Ben Thompson

Continued on Page 61

The brand new, state-of-the-

art building certainly looks

like the sort of modern cor-

porate edifi ce that manage-

ment likes to eulogize over and

employees love to work in. Th e glass

and steel exterior, accented with redwood reclaimed

from water towers, is the epitome of commercial chic.

Th e roof is an eco-friendly ‘living’ structure that sup-

ports and conserves wildlife systems while insulating

the building and minimizing heat gain. A bright, airy

atrium runs the length of the structure, letting natural

light fl ood into offi ces located down a central spine and

off ering uninterrupted views of the tree-lined creek

running through the campus. To the naked eye, Pan-

duit’s new global headquarters building in Tinley Park,

Illinois, is a shining showcase of what the modern, sus-

tainable business is all about.

But it is under the gleaming glass facade that Pan-

duit’s new nerve center really shows its smarts. Buildings

consume 72 percent of all the electricity produced in

the US and emit almost 40 percent of all greenhouse gas

emissions, according to the US Green Building Council.

But by integrating critical building functions that are

historically siloed – such as control, computing, com-

munications, power and security – Panduit’s holistic

approach to building design, construction and operation

hopes to reduce energy use by as much as 30 percent.

“Th e new world headquarters brings to life our

vision for creating environmentally sustainable and

healthy places to work,” explains John Caveney, Pan-

duit’s CEO. “We set out with a mission to create the

‘building of the future,’ and we feel we’ve set a new prec-

edent by combining state-of-the-art visibility and con-

trol for all critical building systems, sustainable energy,

operational cost savings and intelligent design features

− all aligned under a single unifi ed infrastructure.”

Th e building, which opened in April to great ac-

claim, provides state-of-the-art visibility and control

into all critical building systems, integrated and aligned

under a single, unifi ed, intelligent infrastructure. De-

signed to maximize sustainability, global collaboration

and innovation, the HQ will initially serve 800 employ-

ees and will be able to accommodate an additional 800.

Th e fi ve-story building comprises 280,000 square feet of

offi ce, conferencing and training space and will enable

collaboration through unique design fea-

tures such as open offi ce concepts, shared

workspaces and the deployment of the

latest technologies to connect internal and

external employees, partners and customers.

Robert Smith is the company’s Director of Global

Real Estate. As de-facto project manager for the devel-

opment of the new building, Smith’s team fi rst conduct-

ed numerous interviews with senior management and

other key stakeholders to establish exactly what it was

the fi rm was trying to achieve with the new build and

how that would help defi ne who the company was. “We

used this project to redefi ne how Panduit was think-

ing about our workspaces,” he explains. “I believe that

your physical environment aff ects the way you do your

work, aff ects the way you live and the way you interact

at home with your family, so I really wanted to make

sure that this space – and all of our spaces in the future

– supports who we want to be as a company.”

Th at vision is guided by a number of key principles.

“Every project we have, we want to demonstrate our

global vision of the company,” he says. “We want to

focus on innovation, collaboration and sustainability,

and whenever we design a new project we use those

tenets to guide our direction.” For instance, in order

to reinforce the fact that Panduit needs to be a col-

laborative environment, Smith explored the concept of

open-offi ce working. “Before, our environment was 70

percent closed offi ces; now, 90 percent of our staff works

in an open-offi ce environment and we’ve created ‘touch

points’ where employees naturally collide, increasing

the collaboration elements of the design.”

Panduit has always been committed to sustain-

able practices within its manufacturing environments

– even before it was cool to be green – and thus the

LEED verifi cation system was seen as a natural way to

incorporate sustainability into the project. To ensure

that Panduit’s commitment to innovation and the

environment were refl ected in the design of the world

“We used this project to redefi ne

how Panduit was thinking about

our workspaces”

90 percent of

Panduit staff work in an

open-offi ce environment

Panduit.indd 60Panduit.indd 60 09/07/2010 14:2309/07/2010 14:23



The introduction of automation has done a great deal to addresses effi ciency challenges, albeit in a limited way. For instance,

automation has proved successful in provid-ing real-time information around such items as connectivity, which defi nes the relationships between connected network devices. This has enabled functions such as asset tracking, automated documentation and troubleshooting, which in turn helps streamline infrastructure operations pro-cesses and assists with capacity planning.

However, today’s automation systems must expand functionality to include energy and environmental capabilities. In addition to connectivity monitoring, systems must enable enterprises to understand what is happening from an energy consumption perspective. They must help to monitor and measure heat generation or humidity within the data centers, so that data center owners and managers have a complete end-to-end solution.

By integrating new data center infrastructure management (DCIM) capabilities alongside traditional intelligent physical layer management (IPLM) capabilities, enterprises can monitor and catalog complete network performance and energy consumption within data centers and other IT environments, for organizations to better understand their own carbon footprint and put a strategy in place to reduce it.

This end-to-end monitoring of the physical infrastructure also provides the visibility, which is often lacking, to effectively execute virtualization initiatives. In the past customers have been doing

a lot of consolidation, playing with form factors of devices and merging multiple facilities into one. Now, many are adopting a virtualization approach. Yet, industry sources have estimated that only 20 percent of today’s virtualization is in a true production environment, while 80 percent is still in a development environment – meaning that most are not yet ready to risk the complete jump to virtualization. The biggest reason cited for the hesitation is lack of visibility of a management solution that can effectively monitor from an end-to-end perspective across the physical and the logical infrastructure. This lack of visibility from a physical infrastructure perspective makes resource provisioning, capacity planning, or remote management diffi cult to do in an effective, energy optimized, sustainable manner.

Intelligent appliances and software can help to address all of these challenges holistically, bringing them all together to provide information that can help improve operational effi ciency.

Panduit’s approach is to provide complete visibility of the data center infrastructure. By monitoring real-time data, as well as the environmental factors that may impact that data, you not only have powerful information on the performance of the network, you have an appropriate level of context about that information to make more meaningful operational decisions.

Panduit’s Physical Infrastructure Management (PIM) Software Platform works with PanView iQ (PViQ) System Hardware to visually monitor network connectivity in real-time, offering

such benefi ts as asset tracking, guided change procedures, and automated documentation. And the latest version of our PIM Software Platform is expanding these tools to enable complete data center infrastructure management, including management and monitoring of power usage, cooling temperature and humidity levels within data center racks and cabinets. By leveraging the power of real-time information in the context of connectivity along with power, cooling and space, the PIM Software Platform provides meaningful information that data enterprises can use to operate more effi ciently.

Optimization of the physical infrastructure of the data center in terms of the performance at the pod, cabinet and rack level can bring signifi cant benefi ts to the power and cooling systems infrastructure, potentially lowering operational and capital expenditures. For example, if an enterprise can identify ways to improve cooling effi ciency through passive means enabled by software-based automation, then it may be able to operate with fewer CRAC units, or operate at a higher thermal set point, increasing the overall effi ciency of the data center operations and lowering the operating expenses.

Panduit advocates a comprehensive approach to data center operations management. Software-based automation of the physical infrastructure that is integrated with the logical systems management software will play a critical role in the optimization of data center operations as we embark on virtualization and cloud computing initiatives.

Ask the expertEmbracing a new view for data center effi ciency

Enterprises are increasingly turning to automation, along with virtualization, to become more effi cient. Panduit’s Shahriar Allen explains why.



Continued from Page 58

headquarters, the company turned to leading architec-

tural fi rm Gensler – a mutually benefi cial partnership.

“Th rough our relationship with Panduit, we better

understand how technology and IT strategies can be

a key component to sustainability, and the monitoring

and control of a building’s energy use,” says Jay Longo,

Senior Associate at Gensler. “Th rough the UPI vision,

this building will not only be a standard offi ce build-

ing, but a fl exible workspace in which the occupants can

control their environment more readily.”

Indeed, it is the company’s innovative Unifi ed

Physical Infrastructure (UPI) concept that provides

the real key to the building’s success. Originally devel-

oped to deliver new ways to build converged physical

infrastructure for smart data centers and connected

buildings, the approach was so successful in reducing

energy use, improving operational effi ciency and mini-

mizing running costs that Panduit decided to apply the

same concept to the design of its fl agship headquarters

building. UPI provides a vision for the evolution of the

physical infrastructure that aligns closely with – and

provides a solid foundation for – the evolution of a

logical systems infrastructure as defi ned by leading IT

companies.

In this new headquarters, the company is practic-

ing what it has taught clients for years – how to build

sustainable, energy-effi cient environments. Th e site is

already being viewed as a model for best-in-class in-

tegrated buildings worldwide, and is expected to earn

LEED Gold certifi cation later this year, one of very few

such buildings in the State of Illinois.

By collaborating with UPI Technology Partners

such as Cisco, IBM, EMC, Emerson, Fluke, Haworth,

Lutron, Oracle and Tridium, Panduit is able to ad-

dress challenges that cut across multiple business and

technology domains. Th e company put together a large,

cross-functional group – involving representation from

facilities management, HR, marketing, R&D, external

design consultants and technology partners – to talk

about how it could incorporate unifi ed physical infra-

structure into the building, and the best ways to do that.

“It was a very holistic approach,” confi rms Darryl

Benson, Panduit’s Global Solutions Manager for Con-

nected Buildings. “We dived into every single aspect

of the building design to make sure everything was

aligned. I think that’s one of the diff erences that you’re

starting to see in the industry: traditionally, data and

communication have been an aft erthought, something

you would tie into the building at the end. With the

prevalence of network infrastructure and data design,

these systems need to be brought in at the beginning of

the process so it can be properly included in the design.”

And besides the benefi ts provided by a happier,

more motivated workforce and the obvious environ-

mental gains inherent in Panduit’s approach to building

design, the project has also realized considerable cost

advantages, too. Smith explains that the company has

already been able to decrease its energy usage by be-

tween 30-35 percent as a result of utilizing the UPI con-

cept and adhering to LEED standards. And with LEED

requirements accounting for around two percent of the

total building costs, Smith estimates that the return on

that investment will come in under fi ve years, with the

building design directly contributing to minimum sav-

ings of around $175,000 per year on energy usage, based

on current rates. “Lights, HVAC units and all other

devices in the building have an IP address assigned to

them and are connected back to the network,” he says.

“Because of that we’re able to very eff ectively leverage all

the natural light we have coming into the building, as

well as rapidly adapt to changes in temperature. For in-

stance, if it’s a sunny day, the system detects the amount

of natural light coming into the building and adjusts the

lights accordingly, resulting in a big energy reduction.”

Th e building is already attracting praise – from

employees who love the working environment on the

one hand, to industry experts impressed by the build-

ing’s attention to detail on the other. “Green buildings

are a critical part of the climate change solution and

Panduit’s approach is a great example of the impact we

can have on energy use and our carbon footprint when

we better integrate all the systems we depend on,” says

Doug Widener, Executive Director at the US Green

Building Council. “Th is is exactly the kind of innova-

tion we are looking for in buildings of the future.”

Ultimately, Panduit hopes the headquarters will

serve as both a functional, sustainable and innova-

tive workspace and a showcase for what the company

has to off er in terms of its technology solutions. “Th e

infrastructure provides the foundation upon which

our employees can better collaborate, and in parallel it

provides the intelligence that we need in that building

to provide for a truly sustainable environment,” con-

cludes Panduit President Tom Donovan. “Not only are

we doing the right thing for the planet, we’re also doing

the right thing for our employees; we’re driving higher

employee morale, greater productivity and, ultimately,

better fi nancial performance, which is important to all

of us.”

“It provides the intelligence that we

need in that building to provide for

a truly sustainable environment”

Panduit anticipates

savings of around $175,000 per year

on energy use as a result of the

new building

Energy use has decreased by

30-35 percent thanks

to the UPI approach


PANDUIT AD.indd 1 01/07/2010 13:29

PANDUIT AD.indd 2 01/07/2010 13:29

NEXT BIGTHING


While many in the IT industry continue

to move applications to the cloud, en-

terprises oft en transpose are hesitant

to jump into mass-market cloud off er-

ings. Many enterprises are concerned with the privacy

and security of their data, as well as the performance of

their cloud-based applications.

Savvis, a forerunner in utility computing, has

invested heavily in cloud and utility services for sev-

eral years. Based on extensive experience in deliver-

ing virtual and multi-tenant solutions, we addressed

enterprise concerns with our recently launched Savvis

Symphony line of cloud services, which layers a range of

enterprise-class cloud services on top of fully managed

infrastructure to create a fl exible, credible service off er-

ing tuned to the needs of clients.

In talking to numerous clients and analysts, we

learned that cloud buyers seldom considered the net-

work that provides access to cloud computing resources.

While Internet connectivity is perfectly appropriate for

some applications, enterprises learnt long ago that dif-

ferentiated network services are essential to acceptable

performance across the full range of enterprise applica-

tions. Accordingly, enterprise buyers are increasingly

aware that they need more from their cloud provider,

namely a completely integrated cloud infrastructure

that includes network services.

Th e fi nancial community off ers a prime example,

in which an entire ecosystem has been built around the

need for secure, consistent, low-latency access to mas-

sive hosted trading platforms and databases. In that

case, the network is anything but public, and there’s no

tolerance for inconsistent quality or oversubscription

of services. While the requirements for many organiza-

tions aren’t that extreme, similar requirements usually

are present in one or more corporate applications.

We have found that the scenario of a public cloud

versus a dedicated cloud set to meet the needs of a

demanding user community actually represents two

end points on a spectrum. In response to the range of

applications and related performance requirements

that fall in between, Savvis has expanded the concept

of cloud services into something that we refer to as the

converged cloud.

Th e converged cloud includes three major elements.

First, the commonly held concept of cloud – a managed

virtualized hosting environment – is certainly part of

the mix. We expand that concept by adding a secure,

low-latency distribution network, then enhance the

value proposition with a unique business model that

allows Savvis to off er a complete, end-to-end, quality

of service-enabled solution for our customers, from

inside the data center to the end-user location.

Th e Savvis Symphony suite of cloud services in-

troduces the converged cloud to enterprises. Th e suite

includes Savvis Symphony Virtual Private Data Center

(VPDC) and Savvis Symphony Open – both public

cloud services – which off er diff erentiated service levels

with predictable performance for scenarios ranging

from development and testing of new applications to

automated capacity increases due to seasonality or un-

foreseen demand for IT resources. Th ere is also Savvis

Symphony Dedicated, a private cloud service, which

allows clients to tailor and scale their dedicated infra-

structure at their own pace.

Our converged cloud includes network options

ranging from public connectivity over Savvis’ Tier 1 IP

network backbone to secure, low-latency, quality-of-

service-enabled Application Transport Services (ATS),

Savvis’ core Multi-Protocol Label Switching (MPLS)-

based service.

Th ere are few vendors that off er converged cloud

solutions with tight integration of technologies, appli-

cations and infrastructure delivered on a global scale.

Enterprises that shy away from mass-market cloud of-

ferings are looking for solutions that fi t their unique

needs.

Th e converged cloud isn’t just technologies coming

together to enable virtualized data center services or

multiple applications joined on a single virtualized net-

work. Th e converged cloud involves tight integration

of technologies, applications and infrastructure, plus a

commitment to deliver services to the most demanding

customers, anywhere in the world.

Head in the cloud

Bryan Doerr, CTO of Savvis Inc., outlines a “converged cloud” approach to satisfy enterprise-class IT outsourcing needs.

Bryan Doerr provides technology leadership for corporate strategy, product, software development, M&A support, and next-generation platform evaluation. Before joining Savvis, Doerr held positions in management, software technology research, and software development at Bridge Information Systems, Boeing and the Applied Physics Laboratory.

Savvis.indd 66Savvis.indd 66 09/07/2010 14:2309/07/2010 14:23

SAVVIS AD.indd 1 01/07/2010 13:33


MODEL OF SUCCESS?

Cover story.indd 68Cover story.indd 68 09/07/2010 15:0709/07/2010 15:07


Ridgeway Chevrolet knows all

about tough times. Th e cus-

tomer pictures and vintage

photos that cover the walls at

the dealership in Lansing, Illi-

nois, tell the story of a fi rm that

was born shortly before the Great Depression

and has survived numerous economic down-

turns over the intervening years. But even so,

when the news came last spring that GM would

be axing around 1600 of its dealerships as a

means to cut costs and streamline operations –

and that Ridgeway was one of the retailers on

the hit list – owner Bob Van Ramshorst must

have wondered whether the auto retailer’s time

had fi nally come.

GM, with whom the company had been as-

sociated from the beginning, was going through

the most diffi cult period in its history. Once

the largest company in the world, the fi rm had

been losing market share since the early 1980s.

A potent mix of high production costs, legacy

spending and the collapse in credit markets and

consumer confi dence led to losses of $30 billion

in 2008. Slow to move away from producing

gas-guzzling SUVs when consumers were look-

ing for more fuel-effi cient vehicles, GM also lost

its 77-year reign as the world’s biggest carmaker

when Japanese rival Toyota announced higher

vehicle sales that year. In June 2009, in a widely

anticipated move, GM was fi nally forced to seek

bankruptcy protection.

Former GM CEO Rick Wagoner – who

fought bankruptcy right up until the point in

March 2009 when the Obama Administration

decided he was standing in the way of progress

– believed the stigma of going under would

cause people to stop buying GM products, and

drive a lot of GM suppliers into bankruptcy too.

But on the one-year anniversary of its exit from

Chapter 11, GM is still standing – and many

believe it is now better equipped than ever

before to meet the realities of business in the

21st century head-on. Bankruptcy allowed GM

to tear up its labor contracts, repudiate much of

its debt, jettison non-profi table dealers, close

factories and brands it didn’t need and borrow

billions from the US taxpayer. In fact, according

to auto experts Edmunds.com, fi ling for bank-

ruptcy may turn out to be “one of the best things

that ever happened to the company.”

Th e slimmed-down GM has cut its oper-

ating costs by more than $10 billion annually.

It’s been one year since a chastened – and heavily restructured – General Motors emerged from bankruptcy protection. The move was trumpeted as a fresh start for the company. But are the changes enough to safeguard the automotive giant’s long-term future? By Ben Thompson

Th e company has fewer dealers, fewer divisions

and fewer employees. Most of GM’s old-guard

management is gone, signalling a fresh, new

outlook and a desire to embrace change. Th e

company has also decided to pick up its market-

ing game in an ostentatious way, hiring current

industry top gun Joel Ewanick – architect of

Hyundai Motor America’s recent marketing

successes, including the seminal Hyundai As-

surance program – from under the noses of its

Japanese rival Nissan. And most importantly,

the fi rm’s bloated product portfolio has been

signifi cantly streamlined, reducing redundan-

cies and confl icts of interest. “It is the smaller,

leaner, tougher, better cost-focused GM we’ve

been hoping for,” said George Magliano, an

automotive analyst with consulting fi rm IHS

Global Insight, on the fi rm’s emergence from

Chapter 11 last year.

Key to the fi rm’s turnaround has been its

appointment of Ed Whitacre as CEO. Follow-

ing in the footsteps of its great rival Ford, GM

looked to an auto industry outsider for inspira-

tion; Whitacre took over as chairman of GM

on July 10, 2009, and replaced the 25-year GM

veteran Fritz Henderson (himself a replacement

for Rick Wagoner, jettisoned in March 2009) as

head honcho in December. Both Wagoner and

Henderson were seen as ‘company men’ who

lacked the ruthlessness and dispassionate eye

required for a complete overhaul of the fi rm’s

structure, processes and personnel. Whitacre,

on the other hand, came from a telecoms back-

ground and wore his outsider status as a badge

of honor. “I don’t know anything about cars,” he

told reporters on his appointment. “But a busi-

ness is a business, and I think I can learn about

cars.” And while that might not have gone down

well in the auto industry’s Detroit heartland,

few could argue that a fresh perspective wasn’t

exactly what was needed.

Th e former AT&T CEO has already made a

big impact on how his new company operates.

Whitacre has shaken up the ranks of top man-

agement more than once. He has streamlined

decision-making with a few bold strokes. He

has set high goals and has frowned on excuse-

making. And when it comes to GM’s crucial

product-development and manufacturing

operations, Whitacre has known enough about

cars to leave well alone.

David Cole is the Chairman of the Center

for Automotive Research in Ann Arbor, Michi-

“I think all of the issues

related to bankruptcy will

remain controversial. But

if the products prevail, the

pricing is right, and the

consumer perceives that there

is real value in the product,

that’s what will really count”



From Concept To RealityFRONT Rounded side corners, a fl at front grill and a long windshield help lower air resistance, which extends battery life

REAR The aerodynamic spoiler and long rear window help air fl ow away quickly, lowering turbulence and drag

Electric motor The Volt is built around a set of components GM calls E-Flex, based on a fully electric powertrain; the only thing that powers the car is a 150hp electric motor

Gasoline engine The 1.4-liter fl ex-fuel internal-combustion engine turns on as needed to power the electric generator. Gas, diesel engines or hydrogen fuel cells could be used

Charge ports Ports on each side of the car allow a driver to recharge the batteries; a full recharge takes up to eight hours on 110V power, and about three hours using 220V

Battery pack A 16kwh lithium-ion battery pack provides enough power for up to 40 miles of driving before the generator is required

BrakesThe Volt’s innovative regenerative braking system redistributes power back to the batteries during braking

Inside Th e VoltThe Volt has been hailed as GM’s savior and the future of the American automotive industry. But what makes it so special?

Chevy Volt StatsAvailability: Nov. 2010Base MSRP: $40,000Est. tax credit: $7500Technology: Plug-in hybridBody type: SedanSeats: 5Range: 40 miles + gasBattery size: 16kWh

extends battery life



Five things you need to know

1 1. How does it work?The Volt is not a gas-electric hybrid in the traditional sense; it’s a plug-in electric vehicle (EV) propelled only by a powerful electric motor. The small gasoline engine works strictly as a range-extending generator to recharge batteries and provide current to the electric motor.

2 2. How far can I travel?A full charge will provide a maximum EV range of 40 miles; if your commute is shorter than that, the gasoline engine may not need to run at all. After battery power is depleted, the Volt should offer another 360 miles of range with the gasoline engine/generator providing the juice.

3 3. What’s the fuel economy like?In the worst case, when the battery is down to 30 percent charge and the gasoline engine needs to run for extended periods, the Volt should offer 50mpg. If your trip is shorter, say 60 miles (40 miles of electric operation and 20 miles with the gasoline engine running), overall fuel economy will be around 150mpg.

4 4. What will it look like?The production Volt differs substantially to the concept car, having undergone more wind tunnel testing that any product in the history of General Motors. Small changes to the surface deliver signifi cant gains in lowering aerodynamic drag, which accounts for 20 percent of the energy needed to move the car at speed.

5 5. When is it due?GM offi cials are backing the promised introduction deadline of November 2010. To meet that deadline, GM has made Volt development a top priority with considerable resources brought to bear. Estimates place the early production versions at $40,000, with costs coming down as production ramps up.

Comfortable RideGM says that the interior will be a strong point for the Volt. A driver-confi gurable, liquid crystal instrument display, seven-inch touchscreen vehicle information monitor and optional navigation system will all highlight GM technologies. Bluetooth for cell phones and USB/Bluetooth for music will be standard.

gan. He feels that the reorganization has been

a success – largely because it has not cut too

deeply into the company’s real areas of exper-

tise. “Th ey’ve gone through massive restructur-

ing, but have not in any way hurt their product

development or manufacturing,” he explains.

“Th ey’ve taken a lot of the ineffi ciencies out

of the structure in terms of the management

layers and decision-making, but they didn’t in

any way penalize the product programs or the

manufacturing eff ort. Th ey preserved what was

really the core of the company without tearing

that up. And I think that was very positive.”

To truly give GM a reasonable shot at

long-term viability, the new chief had to

transform the culture of one of the most os-

sifi ed large corporations in America. And in

this, he’s making noticeable progress. “He’s

done a very good job of cleaning up a lot of

the historic bureaucracy inside of General

Motors,” Cole admits. “He’s a pretty impatient

guy, but at the same time he’s somebody that

is very personable, he connects well with

people, and that’s important. I think with the

car guys there, he has a terrifi c team. It’s leaner

and faster than the old team, but I don’t think

they’ve compromised their ability to do things.

If Whitacre had come in and started to tear up

the manufacturing or product development

organization he would’ve failed. But he was

smart enough to realize that those areas are in

good shape and instead he just cleaned out the

management structure and tried to fl atten the

organization. What that does is it takes some

of the bureaucracy out.”

Cole admits that what has surprised him

most is the magnitude of the costs that GM has

been able to take out. He explains that just a

few years ago the major American manufac-

turers – with GM chief amongst them – had

a cost disadvantage of around $2000-3000 per

vehicle when compared with foreign competi-

tors such as Toyota, Honda and others, largely

because of legacy cost problems. “Th e com-

petitor with the better cost structures always

sets the price,” he says. “When you have a cost

advantage, you can put things in that dramati-

cally add to the value. And if you’re not that

fi rm, you start to do things to keep costs down,

like taking features out, cheapening the ma-

terials and the interior, things like that. What

bankruptcy has done is to give GM a cost ad-

vantage that it has not had in decades.”



news is that they didn’t go through bankruptcy.

Th ere’s no question that Ford has benefi ted in

the marketplace from not going bankrupt; it’s

been very positive PR for them. But on the other

hand, they’re now saddled with this $30 billion

debt obligation as a result, and GM just doesn’t

have that same burden anymore. I hated the idea

Th is is evident in the products currently

coming off the production line, with the forth-

coming Chevy Cruze a prime example. Due to

be built at the Lordstown, Ohio, plant, the new

compact sedan is expected to become one of

GM’s major sellers over the next few years. Th e

Cruze off ers more interior room, more miles

per gallon in the Eco model, and more standard

safety features than any of its competitors,

while options include an in-dash navigation

system with 40-gigabyte hard drive, pause-

and-play radio, downloading of audio CDs,

the ability to transfer MP3 fi les from a USB

memory device and heated leather seats. Cole,

for one, is impressed. “We drove the car in a

back-to-back comparison with its competitors,

and the diff erences in things like ride, handling,

noise, etc. were dramatic,” he says. “It’s a really

sophisticated car. And what it tells you is that

we’re seeing the emergence of a totally new

company that is in the sort of competitive posi-

tion that the old GM hasn’t been in for many,

many years.”

Indeed, GM posted a net profi t of $865 mil-

lion in the fi rst quarter of this year (compared

with a loss of $5.98 billion 12 months ago), a

turnaround the automaker believes could put it

on track for its fi rst full-year profi t since 2004.

Th e key to this success has been bringing down

the breakeven point for its products. Accord-

ing to analyst estimates, through the dramatic

reduction of debt associated with bankruptcy,

more global integration, plant closings, layoff s,

and the elimination of many of the legacy costs

related to retiree benefi ts and labor unions, the

company has been able to take around $5000

out of the cost of a typical car. “Th eir breakeven

point is way lower than it used to be,” says Jim

Hall, Director of Industry Research at 2953

Analytics. “Before, their breakeven was actu-

ally non-attainable with their market share. So

they’ve adjusted that. Th ey’ve also got a handle

on their labor costs, so they have a strategic ad-

vantage from a cost standpoint, certainly over

Ford; and they have cars in the pipeline that are

truly exceptional automobiles. Th ey have a lot

going for them right now.”

“Th ey have a cost advantage and can now

take a leadership position,” agrees Cole. “I think

they are poised to be more profi table than we

have seen them in many years.”

Indeed, in many ways bankruptcy – far

from being the wholly negative experience

that many expected it to be – has actually had

a number of strategic advantages for GM. “It’s

had some very positive benefi ts,” agrees Cole.

“One of the things I talk about is the parallel

impact on Ford, and the positive and negative

aspects of bankruptcy. Th e good news is they

didn’t go through bankruptcy. But the bad

Auto industry reboundsA year on from major brands Chrysler and General Motors fi ling for bankruptcy, the auto industry looks to be back on its feet. Recovery has been slow but steady, with a number of the brands enjoying growth in recent months.

Chrysler’s sales in May rose 32.7 percent from a month previously and the brand sold more than 100,000 units for the fi rst time since they fi led for chapter 11 in March 2009. Also enjoying considerable growth compared to a diffi cult year in last year are General Motors, where sales rose 17.5 percent in May. In fact, sales of the company’s four leading brands increased 31.8 percent, the eighth consecutive month of growth. Ford Motors saw a 22 percent rise, making May the sixth consecutive month of growth.

Toyota, on the other hand, has found sales haunted by the ghost of its product recall made earlier this year. Sales grew in May by a paltry 6.7 percent from the previous month, and then fell again by 14 percent in June. To add insult to injury, a further recall of 17,000 models was made at the end of June following an announcement from the Japan head-quarters that some of the Lexus luxury cars could have faulty engines.

Despite Toyota’s troubles, the auto industry is looking set to increase annual sales in 2010 for the fi rst time since 2007. Sales across the country fell 35 percent between 2007 and 2009, but based on fi gures from the fi rst fi ve months of this year the industry looks set to rebound.

10.4 million2009

14.4 million (est)2011

17.7 million (est)201517.3 million

2000 16.7 million2003

16.2 million2007

13.2 million2008

!

ONE VERY BUMPY ROADA look at car sales in the US

Sources: AT Kearney’s ‘14th annual analysis of the automotive industry’ Report, Wall St Journal

General Motors + 17.5% Toyota + 6.7%

Chrysler + 32.7% Ford + 23.4%

Percentage change in car sales between May ‘09 and May ‘10

Number of units sold



pursuits,” asserts Edmunds.com Senior Analyst

Jessica Caldwell. “It makes no sense to vie for

the title of world’s biggest automaker if that

puts them back into the hole from which we just

rescued them.” Caldwell’s fellow Edmunds.com

analyst Michelle Krebs aggress, maintaining

that the automaker must concentrate on return-

ing to public ownership, repaying taxpayers,

funding union healthcare and earning profi ts

– none of them easy tasks – before even starting

to think once more about global domination.

“Going forward, General Motors needs strong,

stable leadership that assures the American

public that the company will remain on track,”

she says simply.

Th at should be more than enough to

keep Whitacre and his team occupied in the

short-term, at least. Both GM and the Obama

administration are keen to see a return to

public ownership sooner rather than later, and

the recent profi t statements are likely to lead

to rising political pressure to push an IPO

through before the close of the year – particu-

larly with mid-term elections coming up in

the fall. But a recent GAO report suggests that

to buy back just the government’s 61 percent

stake, the company would have to achieve

a minimum market capitalization of $66.9

billion; given that the most GM was ever esti-

mated to be worth was $57 billion – and that in

of government involvement in the industry; I

just thought it was a terrible idea. But when you

look at the choice, there was no choice, because

we were at the edge of the collapse of a supply

structure that would’ve taken everybody down.

From a very practical standpoint, the cost of a

failure was much greater than the cost of help-

ing the industry through this period and pre-

venting it from disintegrating.”

It raises an interesting point: can the com-

pany shake off the negative connotations caused

by not just the bankruptcy itself but also by the

government bailout? “Th ere’s still that percep-

tion of them being Government Motors,” con-

cedes Hall. “Th e bottom line is that they have to

turn that perception around, and the way to do

that is through a successful IPO and advertising

that tells the unvarnished truth.” It’s a touchy

subject for GM. If there has been one major mis-

step made by Whitacre and his management

team over the past 12 months, it was the deci-

sion to release a series of ads that claimed the

company had paid back its government loans

in full in April – fi ve years ahead of schedule.

Unfortunately for GM, the public refused to

fall for its fi nancial cup-and-ball trick, leaving

the automaker open to accusations that it was

only able to repay the bailout money by dipping

into a separate pot of bailout funds. “It appears

to be nothing more than an elaborate TARP

money shuffl e,” said Senator Chuck Grassley,

the ranking Republican on the Senate Finance

Committee, in response to the claims. “I think

the one thing that a lot of people overlook with

this is where they got the money to pay back the

loan. And it isn’t from earnings. It’s actually

from another pool of TARP money that they’ve

already received.”

Cole believes that the controversy won’t

disappear overnight. But he does think that

the company can move on from the mistake.

“I think all of the issues related to bankruptcy

will remain controversial,” he says. “But if the

products prevail, the pricing is right, and the

consumer perceives that there is real value in

the product, that’s what will really count. And

when the company goes public, people will

forget about all the negative issues related to

bankruptcy.”

So where does the company go next? “GM

must maximize its second chance by continu-

ing to turn out great products at a profi table

level without getting distracted by egotistic

2000, when GM had eight marketing divisions,

controlled considerably more market share

and sold more than 17 million vehicles in the

US alone – such a fi gure would seem unlikely.

Nonetheless, sources believe the vehicle maker

is more likely to cut the valuation on the IPO

than delay it, and as such any deal could come

as early as August.

Th e important thing, says Cole, is not to

lose focus on the important thing: maintain-

ing the business fundamentals. “Look at the

Toyota situation and how quickly they went

from the top of the mountain to the valley,” he

says. “Th e reality is that if you get too comfort-

able, the risk of a catastrophe becomes that

much greater. Th ings happen very quickly in

this business, and there is no room for over-

confi dence or complacency in a world moving

as fast as this one is today. Th is applies to Ford,

GM, Chrysler, anybody.”

Not that this is likely for the Ridgeway

Chevrolet team who, along with 600 other GM

dealerships, were able to persuade the auto giant

of their strategic importance and avoid closure

earlier this year. And while cynics called the

U-turn the “lesser of the two evils” versus the

costs of litigating their termination, others

chose to take a more charitable view. Cole, for

one, believes reversing the decision on wide-

spread dealership closure was overwhelmingly

Whitacre’s announcement that

GM had repaid its government loans was seen as controversial –

not least because it was widely perceived the

debt had been paid back with yet more taxpayer

dollars



What we saidBack in October 2008, our cover feature focused on the demise of the American auto industry, and imagined what bankruptcy would mean for the big three. We didn’t call everything right (our prediction that Ford would quickly follow GM into bankruptcy has not, as yet, materialized) but the central contention – that bankruptcy would do wonders for a dying industry – still looks sound. Here’s what we thought back then…

“If anything, bankruptcy would do the carmakers some favors, affording them protection from creditors and allowing them to restructure without the straightjacket of prohibitive labor and supplier contracts. As to the argument that entering into Chapter 11 would hurt sales and stigmatize that company, one need only look at the example set by the airlines a few years back to see how such a situation would most likely pan out: once one fi rm declares, others would soon follow in order to share in the cost savings and leaner operating profi le, and prevent any one company from gaining a competitive advantage. Sure, it felt odd to fl y a bankrupt airline at fi rst, but once practically the entire industry had followed suit no one gave it a second thought. If

GM were to fi le, you can bet your bottom dollar that Ford and Chrysler would not be far behind.

“Tired brands and unprofi table dealers would disappear and the companies’ remaining resources could be focused on those products and dealers with the greatest strength and staying power. They might even emerge from the experience as effi cient, competitive organizations. “Failure is only the opportunity to begin again more intelligently,” Henry Ford once said, and there’s a good deal of truth in that statement.

“Finally, any government funding – rather than being poured into prolonging the death throes of an industry in terminal decline – could then be used as seed money for innovative ideas on how to take the industry forward, not merely as sawdust on the oil spills. This could be the start of a new age of American innovation, and a domestic auto industry that offers scope for emerging players with pioneering ideas. The future belongs to fi rms with greener vehicles, cleaner technologies and more effi cient solutions; given a level playing fi eld, none of the current Big Three would survive.”

positive. “Maintaining a positive relationship

with the dealers is essential,” he says, “not least

because in most cases, they’re the customer-

facing arm of your business and a key part of

your brand message and marketing.” Ridgeway

provides an all too rare tale of success against

the odds in the auto industry: February was the

best month ever for the dealership in terms of

the used car sales and vehicle service depart-

ments. “We should not be doing the numbers

we’re doing based on the sector,” says Sales

Manager David Crutchfi eld. “In some ways,

GM did us a favor by putting our backs against

the wall to fi ne tune our process. We’re very

quick to give God the glory.”

GM has certainly made signifi cant changes

over the last year. But if it fails to learn the les-

sons of the past, it’s unlikely that even God will

be able to save it a second time around.

One of Whitacre’s most signifi cant moves as General Motors CEO

was to halt the planned sale of European

operating arm Opel, seen as a key source of intellectual property and a development

test-bed


REVOLUTION ANALYTICS AD.indd 1 28/06/2010 13:56


The utility industry is in a state of transition. Society’sdesire for cleaner, greener energy is driving a trans-formation for traditional power suppliers, both interms of their operations and their product. In

order to enable that change, technology has played a greaterrole in energy distribution in recent years than it ever has be-fore. “The electric utility industry is essentially a 100 year-oldtechnology business,” explains CTO of utility giant DukeEnergy, David Mohler, which is ironic considering that in2006, when Mohler first took up the role as CTO, he was oneof the first C-level technology executives in the industry.

Indeed, the increasing demands on the utilities industryto create innovative and efficient low-carbon energy strate-gies has made the CTO an integral role to the modern utili-ties company operating in today’s market. Despite thehitherto limited duration of his role, Mohler has already wit-nessed a number of changes, and expects a lot more to come.“As time continues to roll forward the pace of technologicalchange continues to accelerate,” he says, “but we are now ata point where we have to make some true advances in thetechnology we deploy. We’re going to see some truly signifi-cant changes, and what we’ve really had to do recently isbroaden our view, so that now we look at what those trulytransformational changes could be.”

In terms of his responsibilities as CTO, Mohler’s role isfairly straightforward, taking charge of sourcing innovativeadvances in technology from research institutes, filteringthrough those technologies to ascertain which make com-mercial sense for Duke Energy, and integrating them into thebusiness model. He reveals that implementing the transfor-mational technologies that are needed to push the companyforward is not always easy, and one of the biggest challengesof his job is to get all personnel on board with a change. “Themore transformational the technology is, the more difficultit is [to implement] because if you are going to fundamen-tally change the way you do something, that’s usually a bigpill for an organization to swallow.”

Mohler’s solution to tackle this problem is to maintaina constant flow of communication across the company.“We’ve attempted to set up a kind of internal governance andcommunications structure so that on a periodic basis, ifthere’s something really major we’re doing, we put together

a group from across our company and we include those peo-ple in our decision process.”

He explains how he also conducts quarterly conversa-tions with subject matter experts as standard, to discuss whathis division has achieved in technology development, whatthe plans are for the imminent future and get an assessmentfrom other sectors of the business about what is working forthem and what is not. This process can raise its own chal-lenges, Mohler says, as one practice that may be successfulfor one division may not be what is really needed to taketechnology and performance to the next level across thewhole business.

Still, Mohler recognizes that continued internal com-munication is the most effective way to move the companyforward, and he tries to reflect this in his management style.“The leadership style I aspire to,” he explains, “is one wherewe have continuing conversations that are productive andthat are robust and that help everybody, including me, real-ly get their heads around all the issues that we confront as wetry to develop new technologies.”

This style of leadership is clearly effective. As well asbeing one of the country’s leading utility providers, DukeEnergy is something of a pioneer in the low-carbon energysector. The firm has been working for a number of years nowon various strategies to advance in this market, investing a

Powering the technology generation

Today, technology is playing a pivotal role in the utility industry. David Mohler, CTOof power giant Duke Energy talks to Business Management about how technologyis driving energy management into a new age.

CTOFOCUS

“We are now at apoint where wehave to makesome trueadvances in thetechnology wedeploy”

DUKE ENERGY_june10 09/07/2010 15:42 Page 76


it as one device in a network of devices and we really focusedon the network rather than any single device.”

Mohler points out that while technology innovation isan integral part of the business strategy, operating in the util-ity industry presents a very particular challenge. “People donot want their lights to go out,” he explains. “There is andthere needs to continue to be a real focus on reliability. Weare risk averse when we look at things that could impact re-liability negatively.” In addition, Mohler explains, sometimesknowing when to hold back on developing new technologiescan be just as efficient, and he is not one to ignore the ad-vances already available. “We don’t want to reinvent thewheel,” he says, explaining how Internet Protocol is a per-fectly efficient network communication device. “In my mind,and I’ve been pretty vocal about this in my industry, there isno need for us to go out and invent a new network protocolfor the utility industry. Let’s use what’s out there and what’salready got a lot of years of development behind it.

“Frankly the utility industry has been kind of parochialin its history and every utility wants to invent its own kind ofthing, and I think we’ve got to move beyond that if we reallywant to have the optimum value for us going forward” n

considerable amount of research time and resources into en-ergy efficiency schemes based largely around the wide-scaleuse of smart grid technology. This, Mohler explains, is allpart of the company vision to make the communities Dukeserves the most energy efficient in the world. He is modestabout the company’s leading position, and points out thatDuke’s competitors are never far behind. Still, he concedes,“I’d say we’re making giant steps in developing advancedforms of energy management.”

The smart grid is an integral feature of Duke Energy’stechnological development. As a piece of technology it is rev-olutionizing the utilities industry, with specialists likening itto the internet in terms of its potential for energy distribu-tion. Mohler explains that one of his primary objectives is toensure the grid itself will be capable of sustaining the tech-nological advancements that will emerge in the future. “Idon’t think any of us knows what the grid is actually going tobe capable of in 10 years,” he explains. “We want to build oursmart grid out so that it can incorporate that continuingtechnology development, even in areas that will surprise usin the future. Where we differ a lot from our peers is we didnot approach the smart grid as a metering exercise. We saw

$1 billion has been invested

in smart gridtechnology

DUKE ENERGY_june10 09/07/2010 15:42 Page 77

PROJECTFOCUS


pipeline. Th e maintenance impact is so small, we just

load and go. We spend three weeks of the month solving

new problems and doing new development. It’s been off -

the-charts successful.”

Spott continues, “Aft er the pilot we realized there

was no reason to look beyond Tableau for our distribu-

tion portal.” What started as a plan to support 40 prima-

ry users has already expanded two-fold, with 80 current

users. With even more expansion coming, RBC Wealth

Management has increased the Tableau platform with

the addition of the core license product. “We’re serving

groups we never thought we would serve.”

With the fl exibility of the platform, a wide range of

specifi c topics can be bundled in workbooks and projects.

Th is allows multi-dimensional access with the specifi city

and relevance needed by the users.

ExpectationsSpott believes that Tableau Server will continue to

grow in value for RBC Wealth Management. “Given where

I see this going, I’d expect we’ll be between 200 and 300

users by this time next year. It’s a grassroots eff ort that is

putting successful BI in groups where historically BI was

not readily available. Everyone who sees it, wants it.”

Spott is also expecting to save real dollars with the

Tableau implementation. One area of savings will come

from migrating to Tableau for mapping. “We’re migrat-

ing all our geospatial analysis and mapping to Tableau,”

he says. “I’m saving in the region of $100,000 over the

next three years by migrating our mapping services.”

For RBC Wealth Management, Tableau is a way

to deliver business-critical information to users while

giving users the ability to slice and dice data to answer

their own questions, all with self-service BI.

Self-service business intelligence

Tableau Software’s Ellie Fields demonstrates how business users can improve effi ciency through self-service dashboards.

Ellie Fields is the Director of Product Marketing at Tableau Software. Prior to working at Tableau, she worked in industry strategy and product management at Microsoft Dynamics. Fields is a graduate of Rice University and the Stanford Graduate School of Business.

RBC Wealth Management US is a national

full-service brokerage fi rm with over 2200

registered representatives, over $170 billion in

assets and a lot of data. Shawn Spott, VP and

Manager of Marketing Research, is responsible for the

strategic analysis of that data. “I’ve worked with many BI

tools that claim to put the power in the users’ hands and

simplify BI. And it’s never ever happened.” Th en Spott

and his team discovered Tableau.

RBC Wealth Management is now using Tableau

desktop and server services to deliver KPI and trend

information to business lines, sales development and

marketing groups. RBC leverages dashboards, tactical

reporting and direct data access while providing over

80 users, from executives to line managers to fi eld sales-

people, with decision support information. Th e platform

spans the entire retail database, integrating multiple data

sources with a total reach of about 1.25TB.

“I had spent 15 years in BI and I banged my head

against the wall repeatedly trying to convey informa-

tion to people through sheer volume. I came to the

conclusion that providing people with lots of data was

pointless. Th ey couldn’t consume it, digest it, synthesize

it,” said Spott.

Spott’s team partnered with IT to design a pilot

program on Tableau. “We created a suite of a dozen

reports and took it out to the fi eld. It had an amazingly

positive response from the users.” Spott’s team was also

impressed with the speed of the pilot rollout. “In August

we had an idea to implement Tableau Server; by the end

of September we were live in production and users were

already asking for more.”

Effi ciency Th e workload of Spott’s team to support the fi eld

dropped dramatically because Tableau allows users a

self-service model to get information. “Th e effi ciency

of my group has gone through the roof. I’ve got more

clients than we’ve ever had, I’ve got more reports and

we’re still doing new development. Because Tableau

Server provides us with the self-service model, we’re

able to continue to keep projects moving through the

“With the fl exibility of the

platform, a wide range of specifi c

topics can be bundled in workbooks

and projects”

Tableau.indd 78Tableau.indd 78 09/07/2010 14:2309/07/2010 14:23

Our award-winning products integrate visual data exploration and interactive dashboards to make BI analytics fast, easy and fun.

Create interactive reporting dashboards with drag and drop ease.

• Combine different databases into a single view

• Publish interactive dashboards to the web

• Link and fi lter all of the charts simultaneously

• Create reporting dashboards based on live data

Tableau is changing the way companies are analyzing and sharing their data. Learn more at http://www.tableausoftware.com/bmus

Copyright © 2010 Tableau Software. All rights reserved.

Deliver actionable insight through interactive dashboards

TABLEAU AD.indd 1 28/06/2010 14:00

tightening their belts, making sure that any cost cutting measures don’t cut across their top business priorities or cut out the valuable Brazilian rosewood with the deadwood. Moreover, they will increasingly focus on using BI to maximize revenues, optimize operations and grasp new and lucrative business opportunities before their competitors do. While a recession might well force companies to pull back on some IT investments, there’s rarely any question of a BI project being pulled or can-celled due to a cut in costs. If anything, an economic downturn could in fact speed up its deployment from a piecemeal departmental deployment to deployment across the wider enterprise. Ovum expects the risk-averse fi nancial services sector to lead the charge in new BI projects over the coming year as they realize the need to analyse their businesses and the market in order to boost revenue performance and to segment (profi table) customers more clearly.

However, BI customers are also becoming increas-ingly cost-conscious. Companies are insisting they do more and more sophisticated types of BI with less money

IT budgets are coming under increased scrutiny and pressure especially if the economic downturn continues. But, while a recession might well force companies to pull back on some IT investments,

Ovum believes that any new initiatives will address specifi c business pain-points and off er quick and visible payback. BI fi ts into this category – focusing on key issues like securing and increasing revenue from profi table customers, rationalizing and reducing operational costs, providing greater visibility into cross-selling opportuni-ties and improving customer satisfaction. Hence, Ovum believes that BI will continue to rank among the top three priorities for CIOs this year.

Recession busting technologyWhile many companies will instinctively use BI as a

cost-cutting tool, smart companies will continue to invest in BI solutions to intelligently scale back operations and maximize effi ciencies from business processes they al-ready have in place. In a recession, BI allows companies to take a more calculated and informed approach to

Doing business the intelligent wayOvum analyst Helena Schwenk explains why BI remains a top priority for CIOs and how they can employ the technology as a recession-busting tool.

“In a recession, BI allows companies to take a more calculated and informed approach to tightening their belts”

BUSINESSINTELLIGENCE


Helena Schwenk ed2.indd 80Helena Schwenk ed2.indd 80 09/07/2010 14:4609/07/2010 14:46

and IT staff . Ovum believes that’s a good thing – it will make BI more focused and effi cient, which in turn has a better chance of returning tangible benefi ts. It will also continue to force BI vendors away from their traditional premium pricing models, resulting in broader adoption of BI beyond an elite group of executives and analysts to front-line business users.

New modelsAs a result of the economic downturn customers are

becoming more risk averse and are looking for more cost-eff ective ways of implementing BI. Th is will challenge traditional BI and data warehousing implementation approaches and put new development, deployment and packaging models like open source, soft ware-as-a-service (SaaS) and pre-packaged appliances on the radar screens of more BI customers in 2010, particularly SMBs. Ad-ditionally Microsoft ’s market entry and BI strategy aim to make BI a commodity technology that customers will expect to implement easier and for a lot less than the complex, premium-priced solutions of the past. Th ese are some of the key BI technology trends that are developing:

Open source: Open source BI is still a fl edgling market and its evolution is still a far cry from its evolution to free solutions that are advanced by the developer com-munity around the globe. However, it is no coincidence that Linux is now the fastest growing platform for new BI projects. Th e continued interest in open source BI in 2009 is a clear counter-reaction against the market dominance of a few vendors due to consolidation. Open source BI pioneers like JasperSoft and Pentaho, which were once considered temporary illegal aliens in the BI market, are establishing themselves as permanent residents, getting funding, issuing new code releases and starting to win over larger non-traditional enterprise customers.

Economic forces are also playing directly to open source, particularly for fi rst-time BI buyers. Th ese com-panies are looking for a cost-eff ective way to deploy BI without having to fork out a heft y upfront fee for a pack-aged commercial off ering. First-time open source imple-mentations will always be prototypes. But if successful they will evolve into fully productive BI systems that are backed by commercially licensed support services from open source BI vendors.

SaaS BI: Providing BI as a hosted online service is gaining increased market acceptance, especially among smaller, cost-conscious businesses. 2010 will be a decisive make-or-break year for SaaS BI adoption, especially as seemingly similar cloud infrastructure models start to take root. Most of the early adoption thus far has been among SMBs or departments of large organizations. Th e real test for SaaS BI will be to break into the enterprise market. When SaaS starts to uproot complex enterprise

applications, including BI, it will truly have broken into the mainstream. But vendors will start to demonstrate how a small and simple SaaS solution can quickly kick-start an actionable enterprise-wide BI strategy without having to undergo a big and complex customized en-terprise data warehouse (EDW) project fi rst. In large enterprises, Ovum expects these SaaS deployments to proliferate by fi rst complementing existing BI tools, ap-plications and infrastructure.

Ultimately any spike of SaaS BI adoption rests on the success of SaaS’s poster-child application, namely Salesforce and whether it can withstand the economic pressures being put on its slim margins model. However, Ovum expects at least one major breakthrough this year – the on-demand model will also (fi nally) enable BI ven-dors and partner channels to off er functionally focused or vertically oriented analytic solutions, without the pain of conventional BI deployment approaches. Ovum believes there is an untapped opportunity for vendors to off er vertically focused SaaS that can quickly plug skill-gaps in organizations that are restricting them from doing specialized and advanced analytics like pipeline analy-sis, predictive analysis and fraud loss prevention. BI in the cloud will also ride on the coattails of steady SaaS BI adoption. Even though the defi nition of cloud computing continues to shift like the clouds in the skies, the notion of hosting BI infrastructure and using BI services will start to gain the attention of CIOs and IT directors. Much of that is due to the noise that major cloud platform players – Google, Microsoft , Amazon, Salesforce.com and others – have made in 2008.

Application form factors: Th e emergence of new competition from infl uential vendors like IBM, Oracle, HP, Microsoft and Teradata is helping to reinforce the value of data warehouse appliances and is bringing it into the BI mainstream as an alternative model. Th e appliance form factor – which gives companies the operational ability to plug and play BI technology without wasting time and money on assembling the hardware and soft -ware infrastructure – is catching on fast and threatens to break the traditionally high price-entry barriers for BI. Signifi cantly, it off ers mid-sized fi rms a chance to engage in complex and high-end BI, which can be deployed at a fraction of the cost and time compared to traditional enterprise data warehousing. In the coming year, Ovum expects more BI tools and applications will be increas-ingly bundled with data warehouse appliances. More data warehouse vendors will also pre-integrate BI tools and applications – either their own and/or those of their part-ners – into their appliance bundles. Th ese data warehouse/BI appliances will also be increasingly tailored, packaged and priced for specifi c vertical market segments and even specifi c functional applications.


Helena Schwenk is a Senior Analyst within Ovum’s software application team and is based in the UK. She has over 15 years’ experience working within the IT industry as both an analyst and IT practitioner. Her areas of focus include business Intelligence, performance management and data warehousing. Schwenk holds a BA (Hons) in Computing and Information Systems.

Helena Schwenk ed2.indd 81Helena Schwenk ed2.indd 81 09/07/2010 14:4609/07/2010 14:46

Please give us an overview of your compa-ny and products?Joe Ruck. BoardVantage is the leader in boardportals. Of our customers 25 percent areFortune100, but we also have plenty of smallerorganizations including not-for-profits. Wereplace mailings of large board books with24x7 secure online access, giving directors ac-cess to more information in a more timelyfashion. The board portal is more than a doc-ument repository though; we support a fullrange of board processes including consents,approvals and director questionnaires. We alsoimprove the efficiency of the CorporateSecretary’s office – the people who support theboard process. Regulatory changes have dra-matically increased the workloads of boardsand a lot of this has fallen on the CorporateSecretary’s office, who are very much deadlinedriven in preparing material. By streamliningboard communications we get them back timeon deadline when it matters most. We alsoprovide implementation of our board portal asa service, which reduces costs involved for theclient.

What is unique about the board portalmarket?JR. I think our catch phrase, ‘security with sim-plicity’ sums it up pretty well. Events such asconfidential merger and acquisition discus-sions, company strategy or CEO evaluationswould all be market moving if they ever be-came prematurely or inadvertently public.Security is non-negotiable. At the same time,many board directors are starting to usecomputers for the first time, so ease of use iscritical.

Since companies take the security of boardmaterials so seriously, we undergo in-depththird party audits and security reviews regu-larly. Very few commercial applications will

have had its security tested as thoroughly asBoardVantage’s.

What are some of the emerging trends youare seeing in your market?JR. Lately demand outside the boardroom hasbegun to outstrip demand inside the board-room. Senior leadership teams need to collab-orate around a variety of confidential issuessuch as new product launches, HR matters andcompany strategy. Email is risky since the con-

tent is still accessible by system administrators.Executives are nervous about that.

Then of course there’s the iPad, whichshows all the signs of becoming the preferreddirector platform. We moved up our supporttimetable as a result. Much board work is re-view focused, so a device aimed at content con-sumption is ideal for that, and the iPad may beeasy enough for traditional directors who stillstruggle with laptops to use.

What business drivers for growth do yousee for the future?JR. BoardVantage is 100 percent committed tothe board portal business and will continue in-vestments to maintain the leading market po-sition. We see collaboration for leadership andproject teams as a major growth area. There isa growing awareness of the need for collabora-tion tools and uneasiness about the weak orabsent security of the consumer tools and so-cial networks, whose business models arebased on advertising. We have no idea whatour customer’s content is, as our securitymodel has been based on the design premisethat no BoardVantage employee can view anycustomer content. It’s my belief that an in-creasing amount of commercial content willneed to be stored in systems like BoardVantageto maintain privacy. So far, in our conversa-tions with existing customers, we’ve seen a lotof shared enthusiasm for this premise. Thiscoupled with businesses’ renewed appetite todeploy next generation collaboration applica-tions is going to fuel our growth in the future.We’ll be introducing some very exciting newproducts into the marketplace this year. n


Joe Ruck explains why a secure and stable board portal is important for today’sbusiness leaders.

EXECUTIVEINTERVIEW

Joe Ruck is president and CEO of BoardVantage. Previouslythe senior vice president of marketing at Interwoven, Ruckhas held sales, marketing, and executive positions at SunMicrosystems, Network Appliance, and GenesysTelecommunications, subsequently acquired by Alcatel.Ruck holds a BS in engineering from Oregon StateUniversity and an MBA from Santa Clara University.

Security board

“Events such as confidentialmerger and acquisitiondiscussions, company

strategy or CEOevaluations would all be

market moving if they everbecame prematurely orinadvertently public”

BOARD VANTAGE_june10 09/07/2010 15:44 Page 82

BOARD ADVANTAGE AD.indd 1 28/06/2010 13:41


Obamacare: looking after your business?Following the passing of the highly controversial healthcare reform legislation, Business Management takes a look at the story so far. What does the reform mean for the industry, how will it affect your business and how can a healthy work force improve your bottom line? By Lucy Douglas

HEALTHCARE FOCUS

Th is legislation will not fi x everything that ails our healthcare system, but it moves us decidedly in the right direction. Th is is what change looks like

Barack Obama

Healthcare.indd 84Healthcare.indd 84 09/07/2010 14:3209/07/2010 14:32


Back in March, the President achieved the goal that had eluded a string of his

Democratic predecessors and successfully passed legislation to overhaul the

country’s healthcare system. In one of the most rigorous pieces of reformatory

legislation this country has seen, the Aff ordable Care Act will bring medical

care to a vast majority of the 47 million uninsured American citizens – a luxury that had

hitherto passed them by. Following the close triumph of his bill with 219 votes to 212, the

President said: “Th is legislation will not fi x everything that ails our healthcare system,

but it moves us decidedly in the right direction. Th is is what change looks like.”

However, critics of the legislation – and they come in scores – fear that the reform

will mean increased taxes and compromised healthcare standards. For many in the

People are thinking more about accountability and responsibility

Lillian Petty

Peopabou ity and



multibillion-dollar healthcare industry, the legislation

represents a social transformation that would bring care

to the masses at considerable cost to higher earners and

lucrative businesses. Insurers will be obliged to off er

care to all patients, regardless of pre-existing conditions.

Some prescription drugs will be subsidized, and four

million senior citizens previously falling into the so-

called Medicare “donut hole” can expect fi nancial relief

for prescription drugs. Th e list of changes goes on, and

will continue to grow until at least 2015, when the fi nal

provisions of the legislation as it currently stands will

come into play.

Th ere is no doubt that Obamacare will benefi t the

individual. An estimated 95 percent of the total popula-

tion will be able to access medical care under the reform

law, which equates to 32 million citizens who had previ-

ously gone without health insurance. But what will be

the wider implications on America’s private sector and

its host of healthcare heavyweights?

According to a report by Reuters back in March, the

country’s health insurers stand to lose out the most under

the provisions of the legislation. Consumer protection

regulations will prevent insurers from discriminating

against consumers with pre-existing conditions, from

capping the amount of funding consumers can receive

HEALTHCARE AROUND THE WORLD

USA Private healthcare system

Funded by the private sector with citizens taking health insurance from employers, the government or private schemes. The largest health insurer is the Federal government, with two funded schemes, Medicaid and Medicare, that provide health cover to certain low income groups, such as children or the elderly, and groups in need of continuing medical care, such as people with a disability.

Business impact: 76%Offering healthcare insurance as an employee benefi t is commonplace.

The majority of large corporations offer employees some healthcare benefi ts, however according to a survey conducted in 2008, only 38 percent of the small businesses asked were in a position to offer health insurance.

Expensive premiums that can rise without warning make insuring diffi cult for businesses. However employees can come to depend on health insurance benefi ts and can take or leave jobs because of it. Employers in America assign 13 percent of their payroll to health insurance.

Republican representatives hold a rally to oppose health care reform


It has been a tough couple of years for small businesses. Only the very good or the very lucky have managed to weather the

fi nancial storm that swept across the nation. While there were reports that recovery was under way in the early part of this year, business taxes and unemployment rates remained high, capital and fi nancial products were increasingly harder to come by and both businesses and consumers continued to spend less. And these factors impeding income all came in addition to the fi nancial burden that small businesses have been carrying for as long as they can remember: health insurance benefi ts for employees.

According to the US Small Business Administration (SBA), small businesses were paying as much as 18 percent more for the same health coverage as larger companies prior to reform. This was largely because they were unable to pool their risks in the same way that large corporations could, meaning a single employee with a health problem could bump up premiums for the whole company. The premiums were also volatile; reports have shown premiums rising by as much as 25 percent year on year, meaning that an employer able to offer its staff health benefi ts could potentially have that luxury taken away within weeks. And in addition to the costly premiums, smaller companies were incurring higher charges for costs such as administrative fees. For a fi rm turning over less than a million dollars a year, picking up a health insurance bill for tens of thousands of dollars in times of such economic uncertainty could potentially be crippling. Given these fi gures, it hardly comes as a surprise that 13 million of the uninsured working people in America today work for businesses with 100 employees or less.

Despite these numbers, however, offering health insurance benefi ts is a main concern for small employers. “We know from surveys that healthcare was actually a number one priority for small businesses overall,” says Christine Koronides, a Senior Policy Advisor at the SBA. “And it’s polled that way since 1986.” And while 96 percent of business remain exempt from any responsibility mandates the reform legislation will bring, not offering insurance can prove more detrimental to the business in the long term. Koronides and her colleague, Hayley Matz, believe small businesses are liable to lose strong, hard working employees purely because

annually and from rescinding coverage to consumers. In

addition, Medicare will be required to ensure that at least

85 cents of every dollar spent on a private plan goes di-

rectly on medical care, leaving only 15 cents for company

overheads, salaries and profi t.

While there are some benefi ts for insurance compa-

nies – fi rms such as UnitedHealth Group and WellPoint

have seen a $67 million tax delayed until 2014 – the leg-

islation will bring stringent regulations and huge tran-

sitions in the way these companies operate. In a letter

to Congress in March, David Cordani, CEO of Cigna

Corp., expressed concerns about the sustainability of

the bill. Cigna Corp clearly states that it is in support

of increasing access to healthcare; however, Cordani’s

letter highlighted a concern that the legislation would

in fact have the adverse eff ect on the system. “I strongly

believe that costs of healthcare will increase, not de-

crease, for the country as a whole and these costs will

further challenge job security and economic growth,”

he wrote.

For America’s businesses too, the implications are

vast. Insight from industry specialists states that those

most likely to feel the eff ects are businesses who employ

lower-income workers. According to a report carried

out in January by Tower Watson and the National Busi-

ness Group on Health, 71 percent of employers believe

that healthcare reform will increase the overall cost of

services in America and 69 percent thought their benefi t

programs would rise in price.

Th ese concerns are hardly surprising, given the

extent of anti-reformist lobbying that has taken place

over the last year. Between the vehement Republican

politicians, who remained unanimously against the

legislation throughout the process, and the outraged,

oft en violent, demonstrators in Washington, little has

been done so far to put the anxieties of concerned em-

ployers at ease. “Of course US healthcare costs remain a

big concern and it is likely that healthcare reform will be

the subject of continued debate in the country for years

to come,” says Richard Buino, a spokesperson at Kraft

Foods. “We’re hopeful that the recent reform legislation

will contribute to a stabilization of these costs.”

While more people are getting used to the changes

since the legislation was passed four months ago, anti-

reform protesting has by no means disappeared. Will the

reform succeed in stabilizing the expensive and volatile

system, making healthcare accessible to millions more

Americans, or will Cordani’s concerns materialize, and

the legislation only send the costs higher and further

hinder the economy from recovery? Perhaps it is still too

early to tell, but one thing is for sure: industries and busi-

nesses across America are going to be feeling the eff ects

of the shake-up for many years to come.


JAPANCombination system

This system is funded partly by job-based

insurance premiums and public taxes,

making payments mandatory but

healthcare is universal and no one can be denied care. The system consumes

about eight percent of the country’s GDP, roughly half than in

the US, however some think the system is

unsustainable.

Business impact: 40%

Employer insurance programs have suffered

as the economic dip has meant that many

employers are unable to offer insurance.

The USA Spent$2.4 Trillionon healthcare

in 2008

Premiums rise by up to 25%

each year

TAKING CARE OF THE LITTLE GUY


insurance are so great, small businesses should be able to, and continue to want to, provide health insurance for their employees.”

The tax credits are not the only benefi t small business can expect to see this year. The new regulations on health insurance companies that prevent discriminatory practices will allow employers greater access to policies for their workforce. However some of the biggest changes are still to come. In 2014, Matz says, the state run exchanges will come into place, providing a whole new level of benefi ts to small employers. “It’s going to allow small businesses to pool their risks together and have a larger economy of scale to provide more options and lower-cost insurance to their employees.”

With businesses of all sizes across the country looking to return to a state of growth post-recession, traditional methods of healthcare provision and the crippling costs they brought were proving more an obstacle for employers than a benefi t for employees. Research suggests that had healthcare costs continued to rise at the same rates seen in recent years, the number of uninsured citizens in America would have grown to 72 million by 2040, leaving no doubt that a major reform of the system was essential in order to ensure medical care for the nation and a much needed boost for the business economy. As such, small-to-midsize businesses have largely been in favor of the reforms. “Overwhelmingly,” says Koronides, “what we’ve seen in talking to small businesses is that they want to offer health insurance and with these measures, like the exchanges that will help them access affordable quality plan, they’re going to do it. They’re jumping at it. They want to do it.

they cannot afford to pay for healthcare. “We met a small business owner in Connecticut,” Matz says, “who lost an employee who had been there for seven years. The job that the employee took was actually a lower paying job, but it provided healthcare. The employee had a son who needed treatment for an illness, so he couldn’t afford not to have healthcare.”

Such scenarios provide something of a catch 22 situation. Without being able to offer this crucial benefi t, small businesses fi nd it diffi cult to attract and retain good employees, making it increasingly hard for them to compete with large fi rms when it comes to taking on new talent. However, without the best team it is impossible to generate the profi ts required to offer employees healthcare benefi ts.

As such, so-called Obamacare could not have come at a better time for small businesses. Mass job loss and internal budget cuts in both the public and private sectors across the country mean that the number of uninsured Americans rose signifi cantly as a result of the recession. Following a tense year for the new President and his cherished reform proposals – which dominated his manifesto during the election campaign back in 2008 – the legislation has brought some welcome relief for businesses looking to regenerate.

Small businesses that have been offering their employees healthcare can benefi t from tax credits, a provision that has taken immediate effect to bring a fi nancial reward to such fi rms. Matz says that there are about four million businesses that will be eligible for some form of tax credit this year, based on the insurance that they already provide. “Depending on the size and the wages of employees, [the tax credits] can cover anything from 35 to 50 percent of the costs that an employer is paying for an employee’s benefi ts,” adds Koronides. Indeed, these are impressive deductions for businesses, with a sizeable government budget to back them up; according to reports, there is over $40 billion in tax credits available that these four million businesses can access.

This remarkable allowance marks just a fraction of the fi scal budget that has been put aside for healthcare since the reform. An estimated $938 billion in funding will be spent on the sector over the next 10 years, and according to the Congressional Budget Offi ce, that boost to the sector will result in a projected $138 billion reduction in fi scal defi cit during that same period. Critics of the legislation largely object to this budget, claiming that it is unsustainable, but Matz explains that the Affordable Care Act is based on incentive. “It takes the approach that if the costs are lower and the benefi ts of health


FRANCESocial insurance

National citizens are covered by public health insurance funded by mandatory health insurance contributions from employers and employees. Patients pay doctor’s bill but are reimbursed by the public insurance. Many people take out extra insurance policies to cover eventualities that are not covered by the public insurance.

Business impact: 27%Less competitive because the public insurance contributions are set

as mandatory, however they do contribute to employers overheads.

32 Millionuninsured people

can now access care

$938 Billionto spend on healthcare

95% of the population

will be covered



PREVENTING THE HIT

Wellness and preventative healthcare is

becoming a hot topic. For a number of

years now healthy living campaigns

have gathered force, but with the

healthcare industry in a state of transition, preventa-

tive measures are taking place as a form of healthcare

in their own right. And for Lillian Petty and the Al-

liance for Wellness Return on Investment, this is the

ideal time to promote the benefi ts of preventative care.

“What we’re doing right now is continuing the thrust,”

says Petty when I caught up with her aft er the Alliance’s

annual planning meeting. “We’re trying to reach out

and partner with some other national groups that are

focusing on health and health initiatives, until we see

how the regulations are going to help or hinder corpo-

rate America.”

Two years ago, America was spending an over-

whelming $2.4 trillion on healthcare, equalling 17 per-

cent of the GDP. Th is is an alarming statistic, especially

when we consider that many of the leading causes of ill-

ness, disability and death are preventable. Moreover, the

Journal of Occupational and Environmental Medicine

estimated the overall annual costs of poor health in the

workplace to be around $1.8 trillion.

With these fi gures in mind, the wellness provisions

in the newly instated legislation seem long overdue.

Th e President’s Recovery and Reinvestment Act, which

provides a $1 billion investment for prevention and

wellness strategies that are designed to improve the

country’s health and reduce the costs of healthcare in

the future, is undoubtedly a step in the right direc-

tion, but it seems a paltry eff ort when considering the

amounts of cash that the nation’s businesses have been

hemorrhaging on healthcare for perfectly preventable

illnesses. “We’ve got to continue the whole measure-

ment of population engagement,” explains Petty, “get-

ting people involved, getting corporations to not wait

on the government, but to go on taking care of the

health of your population.”

Petty and the Alliance recognized that the growing

costs of healthcare were unsustainable for businesses

long before the government did, and have been work-

ing on various strategies to demonstrate the business

benefi ts of an employee wellness program. “Th e data

repository of the Alliance captures all the health

claims by each person,” she tells me, “and that’s medi-

cal, prescription drug or whatever, and we fi nancially

impact that through our analytics as an off -set to

people participating in our wellness programs. And

from that we get a fi nancial result for each individual

company’s measure of wellness, and we can get an

aggregate result.”

Finding a way to measure the fi nancial return on in-

vestment of wellness programs for a business had proved

the biggest challenge, as the success of the investment is

measured by an outcome not occurring. Fortunately for

the Alliance, the erratic rising costs of insurance became

enough of a reason for businesses to get on board with

wellness and preventative care for employees. At Kraft

Foods, Richard Buino explains how pleased the fi rm is

that wellness incentives had been included in the new

legislation. “Our prevention eff orts include a 100 percent

coverage for annual physicals and health screenings,

education, disease management and assistance to sup-

port well-being and to identify and manage risks,” he

says, highlighting that many of Kraft ’s US employees can

also benefi t from on-site fi tness centers and access to an

on-call nurse.

It’s not just global corporate employers like Kraft

who have been caught up with the wellness and preven-

tion movement. Health insurers themselves are starting

to see the opportunity for this new concept in healthcare.

David Cordani, CEO of Cigna Corp, outlined preventa-

tive care as a key concern for the fi rm, stating that: “True

healthcare reform must focus on prevention, encour-

age and reward healthy behaviors and ensure access to

routine preventative care.” Cigna have since expanded

in this market and now provide onsite health services to

their clients.

Petty explains, however, that incentives from insur-

ers only represent one part of wellness as a business strat-

egy. It’s a focus on the long-term, she says. “It’s not just

implementing an incentive program alone and thinking

that’s it,” she says. “Behavior is such that you don’t know

what’s going to cause people to act and to continue to stay

engaged to make a diff erence.” She goes on to explain that

the impact of wellness programs for a company should be

looked at over a three to fi ve year period, but they must

be implemented in a tactical way because the population

is always changing.

Ultimately, it is becoming increasingly clear that

a healthy workforce equates to a healthy bottom line.

While the reform legislation is making healthcare more

fi nancially accessible, cutting down on employees’ need

for healthcare in the fi rst place is surely the most eff ec-

tive way to see a reduction in the costly yet indispensable

expense. Slowly but surely, corporate America is start-

ing to get on board with this; as Petty says: “People are

thinking more about accountability and responsibility.

Companies have to look strategically at this and not just

look at buying one program; they need to think about all

the diff erent aspects that they can put around this whole

issue to make it a long-term part of their business strat-

egy, and not just a temporary fi x.”


UKTax-funded system

The National Health Service is government

funded with tax-payers money and covers all aspects of healthcare

from primary care physicians to specialists to emergency services.

Some charges are imposed on

prescriptions, however a number of social

groups are exempt from these charges, including

children, elderly and unemployed. There is also a private health

system in the UK, funded by insurance in

the same way as the US.

Business impact: 9%A tiny proportion of

businesses offer their employees private health cover. This is largely uncommon and not expected

by employees. Aside from this the business impact of healthcare is

minimal.

ed



HEALTHCARE FOCUS

The future of modern medicineKaiser Permanente has a lot on its plate at the moment. As the country’s largest non-profi t health provider, it takes care of 8.6 million people across nine states. CEO Robert Pearl reveals to Business Management how technology is helping to revolutionize 21st century healthcare.

Taking time out from the demands of daily

life for simple activities is not a luxury many

people can aff ord. Fortunately a few years ago

the internet came along and made it possible

for us to buy clothes or groceries, compare insurance

packages or get a credit card without ever having to

leave the offi ce. But while we can click our way to a new

suit or next year’s holiday from the comfort of our desks

there are some appointments that continue to require

face-to-face communication. Despite living in an era

of video conferencing, smart phones and Skype, the

demands of medical care, whether an emergency procedure or routine examination,

still necessitate accurate and personal interaction between an individual and a physi-

cian. So how can today’s technological advancements that have streamlined so many

industries be used to improve our healthcare system?

Dr. Robert Pearl, CEO of Permanente Medical Group, one half of healthcare giant

Kaiser Permanente, recognizes the importance of a high level of communication tech-

nology in healthcare. “I just don’t think,” he says, “that people are going to be willing

to accept that healthcare will be a century behind the rest of their lives.” Pearl, who

fi rmly believes that “medicine demands convenience and productivity,” has been a key

force behind developing and implementing innovative communication technology into

Permanente’s operations. He understands that this technology not only improves ef-



in the surrounding communities. He explains how KP’s

telecommunications have had an infl uence over such fi g-

ures, using a stroke patient by way of an example. For an

emergency patient who presents with the symptoms of a

stroke, an immediate consultation with the neurologist

is paramount; faster administration of powerful stroke

medication directly determines recovery and long-term

brain function, however can have dangerous side eff ects

if used inappropriately. KP’s technology can now link the

patient and the emergency room physician with the neu-

rologist, who may be some way away, in order to make a

fast and accurate diagnosis.

Convenient careTh e third element of Kaiser Permanente’s technol-

ogy scheme is the national website, kp.org, which con-

tains a homepage for each physician, as well as tools for

patients to manage their own healthcare. By utilizing

the technology on the website patients can make ap-

pointments, check laboratory data or order repeat pre-

scriptions, and in addition can start to manage illness

ranging from head aches or back pain, right through to

complex diseases such as heart failure. Pearl is keen to

emphasize the convenience aspect that this technology

brings to the lives of KP’s patients, for example people

who need to visit their doctor regularly for a particu-

lar medication. “Th at’s the kind of convenience people

want. Th ey want to be able to get their care wherever

they are, whenever it may be, and they’d like to have

more control.”

He once again draws on an experience from within

the company to highlight the potential benefi ts that

these advances in technology can have on individuals.

Accutane, he explains, is a very powerful treatment for

people with acne, particularly teenagers and people in

their early twenties. It is necessary to evaluate patients

using Accutane once a month, to make sure the treat-

ment is working and the patient is not suff ering from side

eff ects, such as depression. “It can be quite disrupting to

have to come to the doctor every single month in order

to be checked,” explains Pearl. “We’re now using video to

do that. And the advantage also is that quite a number of

people on the medication can go off to college, now we

can do it even though it’s a large distance away.”

Th e knock-on eff ects of these new effi ciencies in pa-

tient care on a patient’s business or employer are equally

invaluable. In the same way that the internet made it

possible for us to go about the mundane tasks of every

day life without leaving our desks, so these new systems

in healthcare have made it possible to consult with your

physician without necessarily having a face-to-face

consultation. “In Northern California,” Pearl explains,

“we take care of about 3 million people. We off er secure

FAST FACTS• Kasier Permanente

patients are 30 percent less likely to die from a heart attack or stroke than other patients in the surrounding communities.

• At the Garfi eld Center, KP has the largest human genomic database in the country, with 100,000 specimens.

• 93 percent of dermatology cases can be diagnosed at the fi rst visit to the primary care physician.

• If every American got the same care that KP provide, there would be 200,000 fewer heart attacks and strokes.

fi ciency at Permanente from a business perspective, but

it also directly improves patient care. “I do not believe

that quality medical care can be provided without the

advanced information technology systems in the 21st

century,” says Pearl. “Without having all the informa-

tion, one cannot make the proper diagnoses, one cannot

provide the proper treatment. Without the online tools,

people can’t get the convenience that they expect in so

much of their life.”

Paperless productivityKaiser Permanente are at the cutting edge of tech-

nology innovation in the healthcare sector, having

implemented three advanced IT systems into the busi-

ness that have helped to revolutionize patient care. Pearl

highlights that these innovations were developed from

the belief that “technology in healthcare should allow

us to eliminate distance.” Th e fi rst, he explains, is the

foundation of Kaiser Permanente’s electronic health-

care technologies, the electronic medical record, KP

HealthConnect. Th is system has all patients’ records on

one fully integrated database and allows any physician

that consults a particular patient to gain complete and

thorough access to that patient’s history so as to make

a comprehensive assessment in a more timely manner.

Updates to a patient’s records, such a new X-ray scan, will

instantly appear on the HealthConnect system, so as a

patient consults a variety of physicians, each one will be

able to access the most current records for that patient.

Pearl claims that we should expect to see more of

this kind of technology in the healthcare world in the

coming years, predicting that in the future electronic

management systems will be required as standard by

both the federal government and the patients them-

selves. “I believe that [this system] will require the

patient to demand the same level of convenience in

healthcare that they demand in the rest of their lives,”

explains Pearl, and likens the system to an ATM, high-

lighting how when a person travels to another country

and withdraws money, the ATM can inform that person

exactly how much money is in their bank account, in

whatever country they come from.

Beyond the database, Kaiser Permanente has imple-

mented video communication systems that create swift

communication links between physicians and their

patients, the research center and other physicians. Th is

allows specialists to decide on a course of treatment

for a patient without even being in the same hospital,

a potentially life-saving device. Pearl’s assertion that

these advanced technology systems are integral to

patient care is certainly accurate; the chance of Kaiser

Permanente’s patients dying from heart attacks and

strokes is 30 percent less than patients at other hospitals


Lithuim AD.indd 1 08/07/2010 13:15


messaging – what most people think of as email, but it’s

done through the same secure servers that a fi nancial

institution would use, so its fully protected in terms of

patient confi dentiality.” Pearl goes on to explain that in

the North California region around 5 million emails were

sent between patients and doctors last year. He reveals that

if just 20 percent of that fi gure had been an actual visit to

the doctor, that would represent 2000 years of patient time.

With the average KP customer earning $70,000 a year, that

represents an $80 million productivity saving. “I think

that’s what people want,” Pearl says. “We should be able to

give care wherever you are. It’ll also allow us to get rid of

time, whenever you want it, and it should off er you a series

of choices about how you want to obtain it.”

Research and developmentBehind Permanente’s technology innovation is the

Sidney Garfi eld Center, the headquarters of the com-

pany’s technology research and development program.

To demonstrate the center’s capacity for technological

innovation, Pearl explains the time it takes for a devel-

opment to be integrated into the Permanente system. “If

you read the literature on innovation in healthcare, it’s

about a 17 year time cycle between a new idea coming in

place and it actually being broadly implemented. I think

as a consequence of both the Garfi eld Center and other

innovative parts of our program and the integrated care

we have, we’ve taken that 17 year cycle and squashed it

down to two or three years.”

What the center does, Pearl explains, is to create some

foundational technology, such as the video technology,

and integrate that across all of Permanente’s operations.

“Th at same technology could be used in 30, 40, 50 other

ways, and we’re trying that right now,” he says, once again

pulling from his abundant experience of technology im-

proving healthcare. In dermatology, he reveals, the US

suff ers from a national shortage of specialists and conse-

quently patients oft en have to wait weeks of months to see

a dermatologist but at Kaiser Permanente, 93 percent of

dermatology cases can be resolved the same day through

the tele-dermatology scheme. “What we do is, while you’re in the primary care physi-

cian’s offi ce, we take an image, sometimes digitally, sometimes with video technology,

and the dermatologist looks at it. Very oft en we can make a defi nitive diagnosis and

save you time and get you the treatment to begin very quickly.”

All of the technology developments are integral to Pearl’s aim to drive the health-

care sector, which he describes as 19th century cottage industry, into the 21st century.

“We should be able to truly understand healthcare at an exponentially greater level in the

future than we have in the past,” he says, reiterating the cost benefi ts, the greater levels of

effi ciency and the preventative power of technology advancements. “If every American

got the same care that we provide today, next year there would be 200,000 fewer heart at-

tacks and strokes.” He could continue providing anecdotes from his experience as CEO

at one of the country’s leading health providers, but there is no need. Pearl’s examples all

point to one simple fact: technology has infi nitely improved patient care.

CONSULTATION TIME LINE

The time from fi rst consulting her primary care physician to receiving her medication is two hours

Patient X visits her doctor complaining of lung problems

Doctor sends Patient X for an X-ray

By the time Patient X returns to her doctor, the x-ray has been assessed by the radiologist and the report has been sent back to her doctor using voice recognition software

Patient X’s doctor is concerned, so he contacts the pulmonologist

at another hospital via video

communication and they examine the

digital X-ray that is now on the database

By the time Patient X reaches the

pharmacy, her medication is ready

to be collected

Together, the doctors reach a diagnosis and decide on a course of treatment

If every American got the same care that we provide today, next year there would be 200,000 fewer heart attacks and strokes

Robert Pearl


POLITEC AD.indd 1 01/07/2010 13:25

business impact through targeted IT spending. Others who lack the right competencies are more likely to experience sourcing ineffi ciencies caused by misalignment, idle resources, unnecessary processes, overloaded op-erations, a heavy inventory or a lack of focus,” concludes Ridder.

Mastering multi-sourcingWith outsourcing on the rise, how can fi rms effectively manage multiple sourcing partners and relationships?

Analyst fi rm Gartner, Inc. has identifi ed three major pitfalls that many organizations experience when striving for an effi cient and eff ective multi-sourcing environment. To over-come these challenges, CIOs and sourcing managers need

to develop specifi c competencies to master multi-sourcing.“Many organizations struggle to develop an eff ective and effi cient

sourcing environment, which is necessary to achieve positive sourcing outcomes,” says Frank Ridder, Research Director at Gartner. “A recent Gartner benchmark study found that 55 percent of global organizations manage their sourcing activities tactically and at an operational level, failing to add a strategic management layer and invest enough in devel-oping critical multi-sourcing competencies.”

In addition, Gartner predicts that through 2012, infl exibility caused by excessive cost reduction focus will result in business disruption in 30 percent of outsourcing deals, including the inability of the buyer to com-pete eff ectively.

Outsourcing deals are diffi cult to manage for four main reasons. First, many organizations lack the experience to properly oversee and es-timate the end-to-end eff ort that outsourcing requires. Second, a project team oft en centrally plans and executes sourcing projects amid emotion-ally charged political agendas. Th ird, new options, such as alternative delivery and acquisition models, change the way the sourcing lifecycle drives activities, and increases the complexity of the sourcing environ-ment and the decision-making process. Finally, the service provider landscape is dynamic, which makes it frequently challenging to fi nd the right one with which to build a long-lasting relationship.

Furthermore, once an organization has established an outsourcing relationship, it oft en faces further diffi culties because an outsourcing relationship frequently promises more than it delivers. Some challenges can arise such as, low end-user satisfaction, poorly defi ned business ben-efi ts and immeasurable deal benefi ts, complex governance and strained relationships.

As a result, organizations are frequently disappointed because their outsourcing contracts failed to deliver the innovation they had antici-pated. In addition, outsourcing deals oft en aren’t structured to provide the fl exibility needed to enable the deal to adapt quickly to changes in the market and organization. Th ey don’t always evolve due to factors on the client side such as organizations oft en failing to describe what evolution and innovation mean to them, and on the service provider side such as changes that may disrupt their businesses and jeopardize their margins.

Organizations can manage these challenges by building a success-ful, outcome-oriented sourcing environment. “Organizations that excel in sourcing have seamlessly integrated all providers, aligned all parties behind one goal, developed an agile sourcing environment and achieved

THE HEART OF THE MATTERGartner has identifi ed 10 key competencies to help organizations move toward effi cient and effective multi-sourcing.

Strategy management: It aligns sourcing actions with the business goals, strategy, frameworks and governance to ensure optimal ongoing business support.Risk management: It prevents, detects and mitigates sourcing risks to substantially reduce the levels of risk across all deals.Financial management: It formulates fi nancial targets with the business (for example, reduce total cost of sourcing by 15 percent in two years) to establish a clear guideline for all sourcing activities.Demand management: It oversees and prioritizes IT services based on demand to optimize resources and skills across all sourcing activities.Service management: It aligns the services across internal and external service providers to achieve seamless, end-to-end service delivery.Program management: It aligns portfolio and sourcing strategies so that projects achieve desired outcomes.Relationship management: It maintains the relationships with all internal and external service providers. It sets performance expectations with service providers, collects performance metrics for each and provides feedback.HR management: It helps to forecast and fulfi ll staffi ng needs relative to sourcing needs to ensure an optimal level of skills and resources.Performance management: It helps to optimize external service provider’s costs and ensure that new or revised business goals are always attained.Contract management: It manages the contracting process to meet the organization’s needs. It includes keeping internal contracts and industry best-practice contract templates for future use.

OUTSOURCING


OUTSOURCING ED P95.indd 95OUTSOURCING ED P95.indd 95 09/07/2010 14:2709/07/2010 14:27

ASK THEEXPERT


Large organizations operating on di-

versifi ed IT landscapes oft en experi-

ence the ill eff ects of poorly organized

master data and inaccurate, redundant

data fl ows. An inability to enforce and main-

tain data quality impacts critical functional

areas across the enterprise such as call centers,

service assurance and revenue management.

Lacking a complete 360 degree customer view

results in ineff ective customer issue resolution,

campaigns designed for the wrong target audi-

ence or poor vendor consolidation strategies.

Th ese issues can be attributed to poor

data quality resulting from distributed data

entry points and associated duplication of data

in multiple systems, along with the lack of a

single-source of master data.

In such a landscape, there is a growing

need for businesses to adopt a strategic archi-

tecture to solve critical enterprise data man-

agement issues by managing master business

data centrally and automatically publishing

it to all transactional and analytical systems.

Such a strategic data governance model will

also allow businesses to consolidate and har-

monize master data, develop a single, eff ective

way to maintain and author master data and,

fi nally, commission solutions to ensure the

quality of data.

Such master data changes are oft en com-

plex activities involving long project durations

and high costs and require organizations to

engage in a focused data quality governance

initiative to ensure that their enterprise data

can be leveraged to support their critical busi-

ness objectives.

A structured approachCustomer service management relies on

information from sales automation and CRM

systems to manage and track transactions

and for identifying new revenue opportu-

Enterprise data quality governance

Srinivas Durvasula of Virusa Corporation gives some insight into the importance of quality data for businesses today.

Srinivas Durvasula is Senior Manager of Business Intelligence Practice at Virtusa Corporation. With about 12 years of experience in information technologies and manufacturing management information systems, Durvasula is responsible for business intelligence solution consulting and implementation, program management for development and incubation of business intelligence and data management technologies and solutions.

nities. An accurate 360 degree view of the

customer is necessary to quickly respond to

inquiries and identify potential sales oppor-

tunities. Inconsistent master data contributes

to poor campaign management, ineff ective

issue resolution and product/service line re-

mediation failures.

But data quality needs are specifi c to the

business objectives of individual organiza-

tions. Here is a four-step process building the

business case for addressing organizational

data quality needs, which is a pre-requisite

for devising a data quality implementation

roadmap.

First, assess data qual-

ity. Data quality within sales

automation and CRM systems

should be assessed to identify

master data requirements asso-

ciated with customer master in-

formation and product/service

lines availed. Th is assessment

will help identify risks posed

by “AS-IS” data quality level to

achieving business outcomes

such as reducing customer

attrition or growing revenue

from an existing customer base.

Second, evaluate data qual-

ity requirements. Th e next step

is an evaluation of master data

quality and its variance with

key organization standards.

Business objectives should

defi ne the standard of the data

quality solution. For example,

new revenue through targeted

campaign management will need granular

analysis of demographic profi le and custom-

ers’ needs to arrive at expected conversion

ratio. However, in procurement spend analy-

sis, the benefi ts of commodity and vendor

consolidation and mapping may yield lower

returns as the spend value diminishes.

Th ird, enhance the data governance model.

Th e analysis of customer data fl ow variance

across the enterprise will expose complaints

and improvement areas within certain product/

service lines, while also providing mechanisms

to optimize the data governance model. Th is

will help in enhancing or developing data in-

tegration and gradual integration into Master

Data Management (MDM) initiatives.

Fourth, develop a data quality monitoring

framework. Ongoing master data monitoring

requires a pre-defi ned mechanism for moni-

toring business processes as-

sociated with master data. Such

monitoring will provide smooth

support for reporting and alerts

relating to changes to the cus-

tomer/product/organizational

master data repository.

Businesses that implement

these steps can enjoy a number

of key benefi ts such as the ap-

plication of organization or

industry standard master data

such as D&B, UNSPSC, etc. for

identifi cation of key master data

elements, or cost reduction due

to improved process effi ciencies

such as improved customer and

other third party interactions

and eff ective compliance. Fur-

ther benefi ts include enhanced

data governance models based

on pragmatic business con-

siderations such as immediate

goals of customer retention and long terms

goals such as improving market share and a

mechanism to monitor business process and

information alignment with business objec-

tives and goals.

Virtusa.indd 96Virtusa.indd 96 09/07/2010 14:2409/07/2010 14:24

VIRTUSA AD.indd 1 06/07/2010 11:11

Many companies today view themselves asembracing the future by adopting modernbusiness practices and technologies, howev-er their processes and corporate cultures can

expose them as seriously in need of a major introduction tothe modern world of the real-time enterprise.

It used to be rather easy to pinpoint what defined a com-pany. Companies had tangible products, a clear hierarchyand employees that you could supervise and communicatewith in person. A company’s intellectual property was theproducts they produced, and it was less important how theyproduced them and at what cost.

Globalization has forced companies to think differentlyand become more agile and dynamic. With the ability tospeak the same language and use the same tools (such asMicrosoft Word) and with the improved infrastructure ofthe internet as a solid platform for business execution, thenew demands and expectations of global organizations havecreated new challenges and introduced great opportunities.A company can now differentiate itself by being more agileand responsive to change by being one step ahead of thegame. The focus has shifted from what to how.

When companies were centralized and local, manage-ment styles tended towards a ‘command and control’ ap-

proach, where all decisions were centralized at the top anddictated down the command chain. There were lower ex-pectations for real-time responses and reactions because theinfrastructure was simply not there to support it.

For companies to succeed in the new world of global-ization and the culture of Web 2.0 immediacy, managersnow understand that success can be achieved only throughdelegation, distribution and communication. Using toolsavailable on the Cloud, access to real-time information acrossthe corporate landscape gives managers the ability to senseinternal and external challenges and respond accurately, ef-fectively and immediately.

A key factor in successfully managing globally distrib-uted organizations today is the ability to delegate the powerto make decisions. We no longer have the luxury of passingthe buck, and we don’t have the time to refer decisions up thehierarchy and wait for responses. Truly agile companies havegiven their managers the authority to sense and respond totheir own challenges. But responsible senior managers canonly have the confidence to delegate if the right tools and in-frastructure are in place to provide a real-time, accurate andspecific information about their organizational workings.

The next level of work place optimization and modern-ization is the ability to give a voice to each and every em-ployee and to give them the tools they need to contributeand react to the day-to-day challenges they encounter on thejob. With the socialization of work management, end usersnow get a voice within the organization; now they become aunique and critical contributor to the work process. For thefirst time, the human need to communicate is being facili-tated in the most relevant forum, in day-to-day work, wheregood and timely communications are a critical factor forsuccess.

Now, for the first time, management can hear the voiceof each and every employee in ways that are relevant and ef-fective for critical business decisions. With the ability to makereal-time decisions, workers are more involved, accountableand empowered to perform and deliver, making the whole or-ganization more productive. With the emergence of enter-prise-ready Software as a Service (SaaS) tools on the Cloud,management now has access to information across the globe,across the hierarchy and across cultures giving them the abil-ity to make the right decisions at the right time. n

Evolution of modern enterprise


Clarizen’s Avinoam Nowogrodski tells Business Management how real-time enterprisecan streamline communication and increase efficiency.

INDUSTRYINSIGHT

Avinoam Nowogrodski is aserial entrepreneur with over20 years of experience infounding and managingsoftware companies. Avinoambrings insight and expertise toClarizen's vision of bringingwork management to everybusiness. Avinoam successfullyfounded and managed severalcompanies, the most recent ofwhich, SmarTeam Corporation.

CLARIZEN_june10 09/07/2010 15:23 Page 98

CLARIZEN AD.indd 1 28/06/2010 13:43


Driving design forwardWhat happens when you take California car culture, mash it up with German precision engineer-ing, and let the result loose on everything from yachts to mobile telephones? You get the most innovative company in the world. Laurenz Schaffer, President of DesignworksUSA, lifts the hood on a creativity engine.

BMW_DesignworksUSA 100BMW_DesignworksUSA 100 09/07/2010 14:3009/07/2010 14:30


The logo is certainly ubiquitous enough. Look

around the crowded streets, driveways and

parking lots of any city in the world and there

it will be, a small circle divided into blue and

white quarters, encased by a black ring bearing the letters

BMW – a symbol of engineering superiority that is rec-

ognized, celebrated and lusted aft er by millions of people

around the world. Th e brand has become synonymous

with automotive excellence, its cars a byword for quality

and great design. But peel back the layers of today’s urban

landscape and the company’s infl uence extends even fur-

ther. Because from marinas to airports, hospitals to the

home, BMW is increasingly redefi ning the way products

with a host of uses and in a variety of diff erent industries

are designed.

Th e catalyst for this expansion was the 1995 purchase of a small but infl uential

creative studio located in Malibu, California founded in 1972 by legendary designer

Charles W. Pelly. DesignworksUSA had already built up a signifi cant reputation for in-

novation amongst engineering fi rms as diverse as Polaris, Hughes, Nokia and Compaq,

and having experienced the quality of its designs fi rsthand (initially via the studio’s

pioneering work on the BMW 850 seat in 1986, but also through a series of subsequent

collaborations), BMW was quick to acquire the fi rm’s deep well of creative expertise

when the opportunity arose.

Th e acquisition enabled the car giant to tap DesignworksUSA’s unparalleled under-

standing of consumers and the world of design that surrounds them, and explore new

opportunities outside of its traditional automotive background.

Earlier this year, in a refl ection of this subtle shift in emphasis from being a company

that merely designs cars to one that wants to be thought of as a design pioneer across

multiple sectors, BMW changed its advertising tag line from “the ultimate driving ma-

chine” – one of the most successful marketing slogans ever – to “a company of ideas”.



Since December 2009, President Laurenz Schaff er has led strategy and operations

for DesignworksUSA, which incorporates studios in Los Angeles, Munich, and Singa-

pore. He believes that with global resources and clients across a spectrum of forward-

thinking industries, the studio is able to leverage the lateral transfer of ideas across

multiple verticals. “Challenging the status quo by creating new brand and product

experiences that deliver better solutions for a changing world is what drives innova-

tion at DesignworksUSA,” he explains. Indeed, the fi rm’s ability to innovate across so

many diff erent industries is remarkable. Th e fi rm’s culture brings together the vibrant

interaction of a creative studio atmosphere with the quality and precision that distin-

Culture clubLaurenz Schaffer’s top tips for creating a more collaborative culture.

You need company vision. “Innovation needs to be embedded in a vision, in a strategy, and that’s a top-down thing, certainly. If there is no vision for innovation and if that is not embedded in the company strategy, then there is no operational means to do something about it.”

Avoid silos of interest. “These can be found in rigid structures with a departmental orientation, and is something that is very counterproductive in our experience. We have installed cross-functions that have the assignment to foster greater collaboration across silos, and these are important elements for us.”

Have passion for what you do. “This is probably the most important element. Everything that’s new and that shapes the future of the world around us; this is essentially what we are about. We’re really good at understanding what the future can look like and why, and I think that keeps us spiritually healthy.”

Education is a key aspect. “We collaborate with academic, technical and artistic institutions to spur exciting exchanges of design, technology and business knowledge. In the process, both sides gain new technical opportunities, intellectual horizons and artistic insights – and our clients benefi t as a result.”

guishes BMW. It’s an energetic environment that fosters

creativity, artisanship, responsibility, collaboration and

inventiveness, both for individual designers and design

teams – as evidenced by the large plaque on the wall

of the studio bearing the legend, “Great projects, great

work, great fun”.

Th e fi rm certainly encourages its staff to think cre-

atively, and it’s a strategy that seems to be paying off :

the studio was recently honored as the Most Innova-

tive Company in Design by Fast Company magazine,

and has won a host of awards for its projects. So what’s

the secret? “We have a set of values that are very much

based around addressing the individual spirit of our

employees,” he explains. “One is creating a collabora-

tive culture, another is that we cherish creative human

capital – the real asset of the company, obviously, is not

materials or hardware, but our creative people. Our

true diff erentiator is cross-fertilization, which is basi-

cally a belief that working across diff erent disciplines

is what drives good ideas. And then, of course, as we

move forward, we want to be a sustainable company in

everything we do.”

Schaff er believes that the diversity of projects the

company is involved in encourages people to think out-

side of the box. “It generates a certain excitement – one

day you are working on an airplane interior, the next

day on a coff eemaker and the next on a car,” he says. “I

think that diversity really keeps up the spirit and main-

tains the fun aspect of work. Th ere’s a lot of change in

terms of the project landscape that every designer here

experiences, working across diff erent industries, across

diff erent clients. As a designer, you always have a very

strong motive to innovate and to work towards the next

level. If you can do that across diff erent disciplines,

across diff erent industries, this is probably the driving

aspect there.

“Okay, there’s a product design department, there’s

an automotive design department, there’s a transporta-

tion design department. However, while our people

might have a particular department they call home, they

need to collaborate and work on diverse diff erent proj-

ects. A transportation designer needs to work on product

designs as well, and vice versa.”

Finding the right fi t Fundamental to the fi rm’s success is its deep belief

that no problem has a single solution; there needs to be

what Schaff er calls “a certain bandwidth of options”.

He feels such an approach has been invaluable this in

economic climate that has forced fi rms to be better at

measuring the value of everything they do. “Th is is a

good portion of our process: that we create multiple

solutions, multiple options that our clients can choose



from. We also back up diff erent design solutions with the proper rationale

as to their impact on a business case, strategy or plan. Th ere is always

target-setting, but the diff erent design options oft en achieve the target in

very diff erent ways.”

Making the right decision on which of those design options is the right

fi t always starts with a measurable outcome – either the volume turnover

that the client wants to achieve with a new product, or the revenue increase,

or an increase in brand value. “Th e way that we make decisions on what is

wrong and right is always based on criteria, fi rst and foremost – and these need to be set

not on the fl y but at the beginning of the project, certainly in terms of any fundamental

decisions around taking a particular design direction versus another,” says Schaff er.

“Th is decision needs to be evaluated by criteria that were set in the very beginning; not

by us, but by our clients. We need to understand why we are making a decision at all and

what the diff erent aspects of that are.”

An additional, critical aspect is how well a design solution fi ts consumer needs.

“We put designs in front of customers and ask them whether it fi ts in terms of either

their aesthetic requirements or their

functional requirements, whatever those

might be,” explains Schaff er, adding that

successful design is rarely an achievement

of just one area working alone. “It’s really a

collaborative aspect, where design speaks

to a marketing goal, and where a market-

ing goal speaks to a business goal and a

strategy in general.

“Designers certainly need their

window of freedom where they’re not dis-

turbed, where they’re not infl uenced, and

where they can play with their understand-

ing of the parameters and create a superb

design,” he continues. “But then, of course,

we also want to do intense workshops with

our clients or hold decision-making meet-

ings, or ask the customers that ultimately

will buy the product certain questions. So,

we’re involving diff erent parties, diff erent

people, at certain points in time.”

Schaff er maintains that managing cre-

ativity and innovation is all about people

management, with a good awareness of

the make-up of each project team – fi rst

of all from a hiring/selection standpoint,

and then from a development standpoint –

being essential. “Selecting the right teams

is key,” he says. “Th ere are personalities that

need to click, people need to brainstorm,

to build on each other’s ideas, to basically

push boundaries in teams. Managing that

process is a very important aspect.”

Keeping people grounded in reality is

also an important element: designing for

the realities of the world, as Schaff er calls

it. “Th e only way to do this is to send them

out in the world,” he laughs. “We make

them understand what consumers really

want and need. Th ere are research tech-

niques to do that, ethnographic research

for example, simple observation. And there

is, obviously, also information that our

designers are utilizing, data around target

groups, customer mindsets, values, and so

on, and this all needs to be understood. Th e transforma-

tion process of all of that information into a creative idea

and the result is the essential part of it, but it’s not that

this is only based on individual imagination. It’s really

about understanding the premises and the framework

before you start to create an idea.”

In the end, it all comes down to having the right pro-

cesses in place to manage the development of a particular



idea. “Th e design process itself has a couple of aspects

around fostering innovation. Many of our projects have

a very deep strategy phase and a research phase where we

create the right understanding of the framework – basi-

cally, the knowledge fundaments, either when it comes to

trends, technologies, demographics, all sorts of areas that

need to be known as a starting point for new ideas. And

then, within the consequent project, there are a couple of

milestones where we make sure that the innovation level

is properly achieved.”

Ideas for livingOne of the fi rm’s most recognizable innovations

is the pioneering work it did on BMW’s GINA Light

Visionary car concept, which showcases the direction

that BMW designs may take and the new materials and

technologies that it plans to adopt in the future. Th e

GINA Light Visionary has an almost seamless outer skin,

a fl exible textile cover that stretches across a moveable

substructure. Individual functions are only revealed if

and when they are needed. As such, the car can change

its shape as many times as the person behind the wheel

decides to do so. Fancy a rear spoiler? It’s yours at the

fl ick of a switch. Want a low-slung skirt? You got it. Th e

headlights are revealed when the fabric moves apart, and

the engine is accessed when the bonnet seemingly splits

to reveal its innards. It’s a revolutionary concept that has

petrol-heads and design afi cionados alike purring.

“I think big ideas must be seen, and they must be put

in the right spot,” says Schaff er. “It needs a management

mandate so that these ideas are picked up, and a vision

that has been formulated to develop the idea to a greater

extent. Th is was exactly the case with this car concept,

where the original idea was more about moving struc-

tures with a construction principle around bones and

skin, very much like a body part, for example. And that

was then transferred to the area of car design, where the

idea of replacing sheet metal with fabrics and replacing

rigid structures with something that can move to pro-

vide new functions and new aerodynamics was really

paradigm shift ing.”

In the case of the GINA Light Visionary Model,

BMW DesignworksUSA is not just interested in an-

swering the question of how the car of the future will

look, but primarily wishes to explore the creative

freedom it has to off er. All ideas that the GINA Light

Visionary Model presents are therefore derived from

the needs and demands of customers concerning the

aesthetic and functional characteristics of the car and

their desire to express individuality and lifestyle. “I

think understanding the future is something that all of

our projects somehow incorporate,” says Schaff er.

Together with the BMW internal design depart-

You’re the president of a collaborative design studio headquartered in the US, with

links to a European parent company and offi ces in Asia, working roughly 50 percent

for BMW Group and 50 percent for other clients. I’m guessing that’s a 24-hour

working day.

It is a 24-hour day. If you look at the time zones, usually when we start it’s late afternoon in Germany, and the middle of the night in Asia. But a lot of the projects that we are doing are across all three studios. Especially in the larger programs, input from different cultural areas is needed, different viewpoints are required, so we just hand over when our day ends. Whenever we fi nish our working day, the other two studios continue. So, it’s really a 24/7 workday.

What kind of communication technologies or processes do you have in place to

ensure that smooth handover?

Well, classic things, really. There are web meetings that we do, there’s the FTP service, there are certain tools in the design area that allow people to collaborate, to create quick snapshots of status that can be then discussed in a different environment. But we use standard tools. It’s not so sophisticated, actually. It’s more about how we use the tools and how you understand collaboration in general.

With a 24-hour working day, how do you turn that off ? How do you say, “I’m not

taking that call anymore?”

I switch off my Blackberry, that’s the fi rst thing. And then I try to have a program for myself, a point in time where I say work is over, and I create my other life; my life with my family, for example. We do something together, and we have a plan, what we want to do, what we want to enjoy together. And with that, there is a clear understanding on my side that work stops at exactly that point in time.

And how do you make time within work itself?

First of all, delegation is important. There are more really good people in the company than just me. We have experts that can make decisions in very clear areas, and they take responsibility for those areas. They are made accountable for the decisions as well, and they know what they are doing. My responsibility, overall, is steering the organization. Answering fundamental questions about where we are heading with the company is one area that I’m steering; managing confl icts of interest is another. I’m also heavily involved in making important decisions in terms of client collaboration. There are important milestones in a project, but I don’t need to make decisions on everything; it’s really about having a team that is capable of working together and making decisions themselves.

So, what’s left on your to-do list? Is there anything that Laurenz Schaff er would

really like to achieve in life?

Shaping the future.

It’s that simple?

It’s that simple. The company is working pretty well. The teams are superb. We’re on a growth path. But shaping that in accordance to a more major strategy is one of my future achievements.

A day in the life

Laurenz Schaffer’s working day



I think big ideas must be seen, and they must be put in the right spot


GOOD DESIGN AWARDREDDOT DESIGN AWARDINTERNATIONAL FORUM DESIGN AWARDINTERNATIONAL DESIGN EXCELLENCE AWARD

KEY

Saceo Coffee

Ecopod: E1 Series

Villeroy & Boch: Hype

BrandAttitudes

TechnicalOpportunity

FutureContext

APPROACH

Design

Development

DirectionTo Understand

To See

To Believe

RemingtonShavers

K2 BlackHank One

A design statement that expresses Saeco’s passion for coffee. Elegant contour lines symbolize the flow of coffee to create unmistakable brand continuity.

Cutting-edge goggle ventilation with a net fit seam between goggle and helmet

Motorola Iden2003 winner

A phone is designed for long life and durability.With immediate results Motorola’s entire annual sales projection being surpassed within two quarters.

World’s first motorcycle head-up display.

BMW AGBlue Eyes

Hydrogen-Powered Salt Flat Racer Made from recycled BBQ grills (the wheels) and an oil drum (the body), this concept car uses hydrogen that's extracted from a fin-shaped fish tank.

Rolls-Royce Phantom

BMW Z4

BMW X5 PROCESS

BMW 3Series

PRODUCTS

2003 winner

HP Officejet All-in-One 8500

All-new design language for bathroom equipment, for the first time, lever and spout form a compact integrated whole.

A compact recycler for home or small office use.

AeroVironments: AVX400A small turbine generator that canbe attached to the parapet wall of low-profile commercial buildings, especially “big box” retail stores

and warehouse distribution centers.

Whitestar SignatureA surgical platform uses ultrasound

to remove cataracts. By loading it with an simple touch-screen and

stacking its components vertically, saves time and space in the OR.

2004winnerEmbraer :

Legacy 500Designed to bring

simplicity, transparency,light, and serenity.

Bavaria Deep BlueBavaria’s first “premium

motorboat” with a wider bow and deck areas dedicated to

BBQ, seating, and social gathering.

The World’s Most InnovativeDesign CompanyFast Company 2010 List

The art of innovation is key for every business savvy company in the world, but few can claim to be quite so innovative as BMW Group DesignworksUSA. Crowned as the “#1 Most Innovative Company in Design” by Fast Company magazine in 2010, the company simply brings a unique approach to design.

Founded in 1972 by designer Charles Pelly, the firm opened in Malibu Canyon with only three designers. Early customers included Hyster and the Otis Elevator Company. In 1986, it received its first BMW project, the BMW 850 seat. In the same year, the company moved to Agoura. In 1988, DesignworksUSA moved to Newbury Park, and began designing for Nokia and Siemens. In 1991 BMW acquired a large percentage of the company, by May 1995 BMW AG purchased the remaining percentage of DesignworksUSA.

PRODUCTSPROCESS

APPROACHCLIENTS INCLUDE

John Deere: X series Lawn & Garden Tractor



says. “Obviously, if you go to Asia then there are dif-

ferent preferences than in Europe and in the US, and

this is what we want to understand.” Th e design teams

at BMW DesignworksUSA are incredibly diverse, with

24 diff erent nationalities represented in a company of

just 130 people. “Th is defi nitely helps us to understand

the diff erent contexts that will be transported into our

design solutions.”

It’s a close-knit, team-oriented environment – a cul-

ture that Schaff er is keen to nurture. “In our world, it’s

not so much about me; it’s very much about us. Th is is

a culture that lives off a number of people, a culture of

teams that need to work together.” As a trained designer

himself as opposed to just a businessman, Schaff er feels

it’s easier for him to motivate his staff and connect with

them on a creative level; there is mutual professional re-

spect there. “You always feel connected to the profession

deeply, and it’s very enjoyable to watch the teams design

and to take part in the process and to see how things

evolve,” he admits. “I’m a designer at heart. However, I

understand that, due to my assignment, I have a diff er-

ent task now. My principles are challenging people while

supporting them and providing feedback.”

He’s clearly doing something right: as the awards

roll in, so does the work. Schaff er believes such client

partnerships succeed because they are grounded in col-

laboration. “We work with our clients to craft strong,

enduring brands, helping their businesses thrive where

it counts – in the market,” he says. “Our future is very

much about understanding new and diff erent markets.

We’re also looking into new services. So, our current core

competency is about design and design consulting. As we

move forward, we want to look into other areas such as

branding a little better, the area of research and strategy

is something that is certainly growing with that, and

that will ultimately create new products that are future-

oriented, and that satisfy customers.”

What will your product landscape look like in fi ve

years’ time? And how will your product prosper best in

that landscape? Th ese are the type of questions Schaff er

and his team are committed to answering. Of course,

even when you’re designing the future, you can’t get ev-

erything right; sometimes you have to watch others take

the applause. So what does it feel like when another fi rm

delivers a game-changing product or a revolutionary

design? “It feels good,” beams Schaff er. “Every innovative

idea is good, even if it’s competition. And it also serves

as a reference point, of course. As we want to understand

our internal successes, we also want to understand the

competitive successes and see what we can do about it

in regards to our further development. So, it’s important

not only that we innovate, but that the world around us

does as well.” Amen to that.

ment, the three DesignworksUSA studios participate in

an internally competitive process for the design of new

BMW Group products, and are credited with a number

of successful projects, including the interior of the 2009

BMW Z4 Roadster and the trendsetting X5 sports util-

ity vehicle. External clients include Boeing Business

Jets, HEAD, Hewlett Packard, Microsoft , Saeco and

Sony. For Bavaria Yachts, the fi rm created the Cruiser

55, which redefi ned the sailing experience for the re-

nowned shipyard, as well as the iconic Deep Blue 46,

which off ers the ideal combination of space and form.

Th e Landscape Forms Metro40 collection, a range of

essential furnishing elements for urban transit cores,

brings comfort and dynamic design to city streets. Th e

Legacy 500 for Embraer, the world-leading jet manufac-

turer, exudes a meticulous eye for detail with elegant

forms rendered with premium fabrications. And its

range of headphones for Sennheiser off er an exceptional

audio experience for a range of applications, including

water-immersible sport variants as well as high-end op-

tions craft ed in aluminum.

“Some of these projects serve as internal bench-

marks,” explains Schaff er. “Th ey are used to help us

understand how the success came about: why someone

came up with the idea at all in the fi rst place, and what the

path was to a fully developed product. It is about how the

idea was developed, and what the process was behind it.

Th is is something that we can then either try to replicate,

or adapt to another type of project with diff erent goals.”

Of course, innovation itself takes many forms – from

brand new, game-changing innovation to more subtle

innovation that builds upon and refi nes existing ideas.

At BMW DesignworksUSA, Schaff er and his team are

fascinated by both. “It’s a matter of the project specifi cs,”

he enthuses. “Not all of our clients want us to innovate

completely, while there are a couple of projects where

the clear goal is to make the next leap ahead, and if that

is the case then we try to understand what the possible

solutions are to do that in a design manner. So it’s really

a matter of the client, the project type and the individual

requirements of the company. We really want to under-

stand every single project in and of itself and what need

it serves and why we need to create individual solutions

for that project, versus another project that has very dif-

ferent goals.”

Building the futureDiversity of thought and perspective is critical to a

company such as Schaff er’s that caters to global clients

operating in hugely diff erent cultural marketplaces. “I

think having diff erent inputs and viewpoints on what

is desirable, or where a design fi ts in to a specifi c cul-

ture or a behavioral need, is one of our strengths,” he

In our world, it’s not so much about me; it’s very much about us. Th is is a culture that lives off a number of people, a culture of teams that need to work together



OF

A C

LO

UD

TH

E C

OS

T

It may have been hovering over Europe, but the cloud of volcanic ash that brought air travel to a grinding halt certainly made its presence felt stateside.


Ash cloud.indd 108Ash cloud.indd 108 09/07/2010 14:2909/07/2010 14:29


There are plenty of unforeseen

factors that could stop us from

getting in to work. Maybe there

was an accident on your route

to the offi ce and the traffi c was

bad; perhaps there was a prob-

lem with the subway and your train was de-

layed; you might have had a family emergency

that called you back for a couple of hours. Or

maybe your fl ight was cancelled due to the

cloud of volcanic ash the swept across Europe,

grounding fl ights and closing airspace for

weeks at a time.

Back in April, an eruption from Iceland’s

Eyjafj allajokull volcano resulted in a cloud of

ash fl oating east across Europe, causing all

fl ights into or out of major business destina-

tions such as the UK, France, Germany and

Scandinavia to be grounded. Costing airlines

billion of dollars, the knock on eff ects on all

industries were felt the world over. A report by

the US National Business Travel Association

(NBTA) found that 80 percent of the compa-

nies surveyed had been aff ected by the airspace

closures. Furthermore, across the 234 major

global corporations asked, the average costs

of contingency travel arrangements came in at

$197,000 per company, with an aggregate 160

personnel from each fi rm stranded abroad and

unable to return to work.

“Th e immediate lesson,” explains Michael

McCormick, COO at the NBTA, “is the power

of travel management at work.” McCormick

went on to highlight additional personal ef-

fects felt by business people stranded away

from home, explaining that most of the

companies who did not have strong travel

management programs in place did not in all

likelihood meet their duty-of-care responsi-

bilities to their employees.

As with crises of any sort, the businesses

that came out on top throughout this event

were those that had built in a natural redun-

dancy, durability and resilience capability into

their operations. Iceland’s ash cloud crisis has

highlighted once again that risk mitigation,

impact minimization and sustainable contin-

gencies are more important than ever before

in today’s culture of unrestricted travel and a

mobile workforce.

For one industry, however, the ash cloud

brought a golden opportunity to boost busi-

ness. With so many global fi rms looking to

ensure that an empty seat did not equate to

an absent worker, the telecommunications in-

dustry was in a prime position to capitalize on

business executives’ travel woes.

Th e last 10 years has seen the rise of the

internet and a boom in technology, two events

that combined have led to a transformation in

telecommunications. Where businesses were

once reliant on antiquated systems such as fax,

advances in communications technology have

made it possible to attended meetings, address

staff , interact with clients, access company

fi les and pass documents around without even

being in the same country, let alone the same

offi ce. Th ese technologies, when implemented

eff ectively, can minimize the business damage

caused by a missing employee.

At the cutting edge of telecommunicatory

systems is Cisco, a world leading communica-

tions fi rm that enables high-speed and secure

communications networks for businesses

across a range of platforms. VP of the fi rm’s

Wireless Networking Business Unit, Ray Smet,

explains that the work place as we know it is

changing. “We are in the middle of a transition

to where work is really any place,” says Smet.

As a marketing strategy it seems to be working,

with the fi rm boasting better than predicted

growth last quarter and net income rising 63

percent from a year earlier. Smet highlights that

Cisco’s business customers are now conducting

their business on any device, on any network,

at any time, and moving from place to place in

order to do it. Th e traditional boundaries of the

workplace have been removed. Work is now

more an activity, says Smet, than a place to go.

Internet telephone company Skype, who

made itself a household name by providing a

free telecommunications service to consumers

via the internet, also enjoyed a boost in interest

aft er the disruption and took advantage of the

opportunity by releasing its new Skype Man-

ager tool. With businesses looking to improve

their mobile communications this is the ideal

time to raise the company’s profi le as a viable

business solutions tool and not simply a glori-

fi ed social media platform. “We looked at how

Skype was being used in the workplace,” ex-

plains David Gurle, VP and General Manager

of Skype for Business. “We specifi cally designed

Skype Manager to make it easier for businesses

to centrally manage how Skype is used, man-

aged and paid for by an organization.”

Th e new technology enables the admin-

istrator to analyze the soft ware usage and

assign features to users, as well as effi ciently

manage Skype for SIP. With 37 percent of all

Skype users today utilizing the technology

for business purposes, an increased focus in

this market is a shrewd move. “We want to

empower businesses to exploit the full power

and value of Skype, so they can receive all the

benefi ts of enhanced collaboration and cost

savings,” says Gurle.

With the business world reeling from

the eff ects of the volcano’s eruption, more

and more executives are caught between a

desire to go everywhere and nowhere without

compromising on business performance. Th e

disruption to air traffi c back in April served

as a stark reminder that reliance on air travel

can be risky. Th is factor, combined with the

expenses that business travel poses on a com-

pany and the personal cost involved in long

trips away from home, are all serving to en-

courage more companies to look to alternative

solutions. Technologies such virtual events

systems and video conferencing platforms are

becoming increasingly popular with business.

On the other hand, executives operating on

the move, whether that’s at a diff erent offi ce,

a separate global division or simply working

from home, need to be able to access the same

quality data systems from whichever platform

they have available.

Advances in communications platforms

are helping to enable the mobile workforce.

Apple and Blackberry continue to sit at the

forefront of this market with the recently

released iPhone 4 and iPad both becoming

increasingly popular with corporate clients.

Google’s Android technology, emerging on to

the market, looks set to overtake the brands,

however. In fact, Cisco’s recently revealed busi-

ness tablet utilizes the Goole operating system;

the Cisco Cius implements services including

video streaming, multi-party conferencing,

browsing as well as the ability to produce, share

and content. Tony Bates, a senior vice president

at Cisco, explains that this device represents

changes in the way that we work and live. “Th is

platform can transform how healthcare profes-

sionals advance patient care,” says Bates, “how

retailers deliver service experiences to con-

sumers, or how universities deliver world-class

education to their students.”


Ash cloud.indd 109Ash cloud.indd 109 09/07/2010 14:2909/07/2010 14:29

Despite the millions of dollars spent on documentmanagement systems, knowledge workers arestill spending too much time looking for infor-mation. The simple fact is that the information

they are looking for has not been captured. According to U.SBureau of Labor statistics, most knowledge in any organiza-tion is conveyed informally, in meetings and web confer-ences, making its capture and dissemination difficult. This isespecially evident at sales kick-offs or other events where at-tendees are fed a torrent of information to absorb. By thetime the information is needed, most people cannot recallenough of what was said to be useful. Thus starts the endlessprocess of employees searching through various systems forinformation that is no longer available.

The recent economic downturn has encouraged orga-nizations to use more on-line tools such as telepresence,video conferencing and web conferencing systems to shareknowledge across the organization. Yet, the content of thesemeetings is not being captured in a way that can be used bythe wider organization. In addition, the growth in the use ofMP4 video files in the Fortune 500 suggests that video is be-coming a mainstay for enterprise communications, supple-menting or even supplanting text as a tool for knowledgesharing. Between 2006 and 2009 there has been a dramaticgrowth of 739 percent in MP4 files downloaded for internaluse in fostering learning, training and sales enablement.

To address the problem of lost productivity from em-ployees searching for information, innovative organizationsare turning to media management systems to make contentrich media accessible to all employees. A leader in this spaceis Altus Learning Systems, which offers an SaaS-enabledvideo capture and management platform called vSearch.Altus notes the complexity of deriving value from the use ofvideo data. “Until recently,” says Altus CEO Ted Cocheu,“enterprise users had to wade through an entire video file,and in some cases find that the information they needed was-n’t there. Altus makes it possible to search video files downto the spoken word or phrase, helping users find the nuggetof information they need and eliminating the frustration offruitless searches.”

Altus serves over 20 Fortune 500 enterprises includingCisco Systems, NetApp and Oracle. Cisco joined forces withAltus to capture live events, web conferences and conference

calls and shares the knowledge from those events with itssales force of 16,000 personnel in 87 countries. Recently,NetApp was recognized by CIO Magazine for its deploymentof Altus vSearch in its sales and channel enablement efforts,earning praise as one of 100 innovative organizations that useIT effectively. In 2009, Oracle saved $10 million by hosting avirtual sales kickoff rather than bringing in employees andpartners from all over the world for a three-day onsite event.Oracle turned to Altus vSearch to capture and share all kick-off video presentations and sales tools. Paul Salinger, VicePresident of Marketing at Oracle, commented, “Altus ex-tends the shelf life of our content, making it easy to find in-formation and create new assets from it. That’s the advantagetheir tool provides to the Oracle sales force.”

With tens of millions of iPhones, Blackberrys, Androidand iPad devices being used in the enterprise, Altus recentlyintroduced vSearch Mobile, which gives mobile users thesame ability to browse, search, and play video and slide con-tent as the desktop version, providing continuous and seam-less access to corporate knowledge. n

Media, innovation and productivity


Tim Hughan of Altus Corp explains how simple, thorough and accurate file searching devicescan improve efficiency in today’s technology dependent business world.

INDUSTRYINSIGHT

Tim Hughan, Director ofMarketing at Altus LearningSystems, executes thecompany’s product, services andcompany vision in all customerand product communications.Hughan brings 15+ yearsexperience delivering successfulmarketing programs forcompanies such as Apple,Hyperion (now Oracle), andSchlumberger. Hughan earned adegree in Instructional Designfrom CSU Chico.

“Between 2006 and 2009 there has been a dramaticgrowth of 739 percent in MP4 files downloaded forinternal use in fostering learning, training and salesenablement”

ALTUS_june10 09/07/2010 15:15 Page 110

ALTUS AD.indd 1 28/06/2010 13:35

The promise of ubiquitous mobility has come fullcircle and corporations today are facing similarquestions to these they faced five to seven years ago.However, this time the questions are not just about

line of business applications such as field service or field sales,but also about the lion’s share of the work force. Accordingto IDC, the United States has the highest percentage of mo-bile workers today, and that workforce will grow to an esti-mated 75 percent of all workers by 2013. This has beencaused by two seemingly unrelated outcomes: first, compa-nies’ desire for reduced cost and therefore less physical in-frastructure and second, the advent of three key wirelesstechnology advances – faster and wider wireless networks,larger device displays and better technical platforms for ap-plications (capacity and operating systems). This is evidentin corporate changes, such as SAP’s purchase of Sybase andtheir mobility platform iAnywhere.

In the past, questions were focused on a specific workersegment. Today’s impending questions are broader andmore complex. Corporations are asking, “how do I meet thedemands of all my mobile workers, how do I maximize thevalue of mobility and is there a game changer for me with mycustomers.” Those questions are inevitably followed by ques-tions such as, “what architecture supports this wide spreadadoption, how do I support remote users and how do I con-trol and deliver applications efficiently in an environmentwhose very premise is to be an open system?”

If one accepts the fact that there is going to be a set of ap-plications that can exploit the value of the mobility environ-ment, a company must be prepared for four key approachesthat are essential to success.

1) A strategy to understand how to achieve the value frommobility. 2) A plan that gathers and prioritizes the mobile opportuni-ties that achieve core value, but does not stifle creativity.3) A common set of platforms that can address two or threekey scenarios, such as messaging, mobile web or native ap-plications on many different types of device.4) The ability to support those users who may be customersas well as employees.

One might say that these are questions that should beasked about all game changers, but the reality in mobility isthat those ideas, efforts, and opportunities are as wide and di-verse as the network and device choices from which theycome. But more importantly the device and application mar-ket is moving faster than it has at any another period of net-work evolution. The iPhone and Android achieved in twoyears what the first smart phones took many years to achieve.The rate of change is further complicated by the fact thatsome organizations are adopting an individual liable modelas opposed to a corporate liable model for devices and plans.

So the question that our clients are asking now and thatwe are asking our clients is how can a corporation get aheadof the curve with acceptable risk when a technology is evolv-ing so rapidly? There are several ways to embrace the ad-vances now to avoid being frozen by the rate of change. First,cultivate the underlying mobility ideas and people who arebringing them forward, then utilize the capabilities of inte-grators, software providers and the wireless carries for theirtools and knowledge and, finally, build a system that sup-ports open standards and plan for change over the next twoyears. The simple fact is that mobility is not a single initiative,but by its very nature it has become a strategic and inherentway of doing business. Companies that demonstrate leader-ship in adopting and leveraging mobile business models willbe the winners of their markets, much like those who prop-erly leveraged the last major technology inflection point,eCommerce. n

Mobile force


Lee Wagner, Vice President of inCode Telecom, explains how companies can utilize today’sadvances in mobile technologies to add value to the existing business model.

ASK THEEXPERT

Lee Wagner leads the wirelessand mobility business unit atinCode Telecom, a privatelyowned global wireless businessand technology systemsintegration and consultingfirm. He has developedenterprise solutions in mobility,new business process andmobile applicationimplementation for some ofthe largest mobilityimplementations in the US.Previously, Wagner wastechnology leader at DeloitteConsulting.

“The device andapplicationmarket ismoving fasterthan it has atany anotherperiod ofnetworkevolution”

INCODE_june10 09/07/2010 15:25 Page 112

Combining Business Insights with Technology Foresight to Help Enterprises Realize the Value of Mobility

The inCode Enterprise and Mobility Soluti ons group specializes in designing, deploying and supporti ng mobility soluti ons that deliver real business value to our clients and their customers.

With the accelerated pace of smart phone adopti on and the proliferati on of faster ubiquitous networks, there is no bett er ti me to leverage your mobile workers and your enterprise applicati ons to serve your customers bett er and increase your profi tability.

Contact Informati on;Lee WagnerPh: [email protected]

inCode provides the following services;• Mobility strategy & advisory services• Mobile applicati on development and

integrati on for consumer and enterprise apps• Device support for iPhone, Blackberry,

Windows Mobile, and Android• Mobile device management and security• Mobile soluti on support, helpdesk and device

lifecycle management

INCODE AD.indd 1 08/07/2010 08:57


With popular technology brands dominating the cell phonemarket, John Clarke, CIO of handset giant Nokia, facessome big challenges. The company is working to re-assertitself as the leader of this competitive and perpetually evolv-

ing market, so innovative technology is more important than ever. But forClarke, ensuring he has happy employees and an efficient production modelis just as conducive to success as the technology itself. He explains his HR fo-cused approach to his role as CIO. “My primary role is to enhance businessperformance,” he says, “so in some ways I’m like a coach. My job is to say,‘how can we work with you to increase your performance?’”

Unsurprisingly given his position, Clarke is keen to outline the impor-tance of technology to the business, describing it as the main weapon he hasat his disposal to increase productivity. He points out however that being thehead of IT at a firm that holds technology at its core isn’t as straight-forward

as it appears. “As a traditionally product-centric company,” he explains, “en-couraging people to think about the advantages that can be gained from tech-nology outside how we use it in a device has proved challenging. We’veexpanded our strategy now to say ‘it’s not only technology in a device, it’s howwe use technology ourselves that gives us a leading edge.’”

New NokiaThis shift in thinking about how the company uses technology is key to

Nokia’s new position in today’s market. As major players such as Appleusurp Nokia’s position at the forefront of the handset market, the firm hashad to alter its service in order to remain dominant in the increasingly com-petitive industry. Clarke explains how Nokia’s latest products have been de-veloped by the firm working with IT in different ways; in order to bring thecompany into its new era, Nokia are going beyond being a product compa-

CONNECTING

CIOSTORIES

John Clarke of Nokia talks to Business Management about the importanceof technology for the handset giant, and what it really means to be theCIO of such a progressive company.

PEOPLE

NOKIA_june10 09/07/2010 15:28 Page 114

ny and becoming more services and soft-ware centric, and all it comes down to theway technology is used. “A lot of my latestprojects,” he explains, “are collaborativebetween the devices division or the servicesdivisions.”

Naturally, one of the roles of technol-ogy in the business, outside how it is usedin a device, is its ability to run productionin a more cost and time effective way andthis all comes under Clarke’s jurisdiction.“We look at our entire operation, morethan just the cost of IT itself, and ask our-

selves, ‘What generates cost? How can we streamline that and make it moreeffective by automation?’ Look at our factories for example. They work atan incredible pace, producing 13 devices a second.”

Clarke is quick to ensure, however, that his department doesn’t just be-come a cost-cutting division. “We make sure that we never lose face of thefact around the service we’re offering or the quality of service or the opera-tional benefit,” he says. “We try not to have these ‘just talk about costs’ de-bates. We say, ‘what are we trying to offer here? What are the benefits? Andwhat could we have achieved if we’d enabled it better?’”

Asking these questions of his department seems to have been key toClarke’s success as a CIO; the firm has increasingly reduced its spending onIT due to the economic downturn, but through its strategic balance of usingtechnology to improve the production model and collaborating effectivelywith other divisions of the business, Nokia has generated the greatest re-turns on technology investment it has ever seen.

People powerThis focus on alignment within the firm is paramount to Clarke. “We’re

trying to encourage an open and collaborative style,” he says. “For innovationto occur, in my personal view, people must want to collaborate. You can’t


force it. We have a lot of very smart people, and getting agreement can some-times be challenging.

“There is an architectural dimension to my role, and as part of that I havebeen trying to create this kind of seamless eradication of the barriers [betweendivisions], so there’s far more integration. So, as you go through the life cycleof a project, there’s no need to stop and start.”

This HR centric approach is a signature of Clarke’s style as a leader; hedescribes himself as a warm person and puts strong emphasis on his employ-ees, knowing that in order for the technology upon which Nokia relies toflourish, the staff must be committed to their work. “We have a very engagedwork force,” he explains. “We have a lot of people who want to innovate, andbecause of that engagement with the company emotionally and rationally,they make time for that innovation.” Also, Clarke sees the importance of hav-ing a strong working environment that is conducive to technology innova-tion. “We’re giving our people a chance to step back and learn about otherindustries,” he explains. “We invest heavily in education, training, in bring-ing in academic speakers to present the universe from different angles. Thedesire to learn is a strong part of our culture.”

In addition to education about industries, Clarke encourages his em-ployees to learn more about the needs of customers they serve, so as to allowinnovation to flourish within the firm. “We have a diversity of input in a di-versity of fields,’ says Clarke, “From those fields we get the innovation. We getlots of innovation from Africa and the Middle East – places we see as emerg-ing markets. You’ll see our researchers on the ground in Nairobi, seeing howpeople communicate. That’s a key part of Nokia’s culture. We like to be in thefield with people, seeing what their problems are and bring that back in.”

For Clarke, the role of the CIO is about maintaining the effective and thor-ough integration of technology within the company, so the company is able torealize the extent of its ability. He explains how Nokia’s federated structure andhigh staff rotation levels ensure that quality IT personnel reach every corner ofthe business. Ultimately, Clarke says, it all comes down to realizing potential. “Ithink IT professionals have a lot more to give, actually, when they think aboutbusiness performance engineering, rather than just technology.” n

NOKIA_june10 09/07/2010 15:28 Page 115

THE LEAN SOLUTIONNovartis Pharma Technical Operations tells us about the company’s progress in implementing

these processes.

LEANSIX SIGMA


DORAN ED 2.indd 116DORAN ED 2.indd 116 09/07/2010 14:4509/07/2010 14:45


ologies and philosophies in the manufacturing area fi rst, and now the ideas are spreading to the rest of the business. In manufacturing it’s very easy to see the processes and to work on the processes because that’s what is right in front of your eyes. In other business areas, some of the work we do focuses on simply making the process transparent,” explains Doran.

As a Global IQP Champion at Novartis, Doran explains that she has a number of requests to provide Lean support; these come from people who have heard about Lean through their colleagues or through seeing the benefi ts themselves. In order to accommodate what Doran explains as a “pull system” for IQP support, Novartis has its IQP Champions across the world, operating diff erent skills in diff erent areas and match-ing the business needs with the company’s resources.

“We oft en use an external pair of eyes on a process. Th at external view may come from another internal function, another manufacturing site or a global function. Novartis has a strong network of people across the globe, all with diff erent backgrounds, but all working on Lean and Six Sigma in a rather unifi ed manner. Th ey are capable of implement-ing various problem-solving tools and methodologies in projects and of linking them together to create a culture leading towards operational excellence,” she explains.

As Global Operational Excellence Champion, Carmen Doran supports all 23 sites for Novartis Pharma’s Technical Opera-tions, as well as the global support functions, by providing a systematic training and certifi cation program across the

organization. Th is aims to foster a culture of operational excellence (in-ternally referred to as IQP: Innovation, Quality and Productivity). She comments that operational excellence in Novartis Pharma covers a wide range of topics, tools and techniques, which allow fl exibility in identify-ing the best approach for a specifi c problem or opportunity.

“Th e philosophies of Lean and Six Sigma represent a way of think-ing and looking at a problem, in order to understand the root cause(s) and then solve the problem in a sustainable manner,” she explains. “Th is approach is diff erent to the traditional management styles focusing on short-term ‘quick fi x’ solutions rather than on identifying the problem correctly and ensuring the solution is eff ective and sustainable long-term. We try to use this approach across all areas of the business.”

Initially set out as two diff erent methods, Lean and Six Sigma are very much interlinked and constantly evolving, a development that Doran notes to be present in Novartis Pharma Technical Operations. She explains how previously, projects would solely use Lean and focus on reducing waste, or would apply a Six Sigma approach to reducing vari-ability. “Th e Lean philosophy is to have fl ow through the process and to do this, you need to have processes you can rely on. A stable and reliable process is then the foundation for continuous improvement. So Lean and Six Sigma go hand in hand to achieve operational excellence.

“We look at the fl ow of value all the way through our processes down to the customer, whoever the customer may be; in our case, this is ultimately the patient. If we look at some of the supporting functions like human resources, we’ve been applying the Lean and Six Sigma way of thinking to these processes, going through the steps of identifying

the problem, understanding the customer needs and root causes of the problem and then fi nding the solution that matches to those. By doing so, we are for instance ensuring the improvement and sustainability for recruitment processes where the benefi ting customers are actually both the employee and the business.

“We apply the same approach in non-manufacturing environments as we do in production. It’s a natural progression that we need support functions aligned to the new way of working and thinking in manufac-turing. Like a lot of companies, Novartis started to apply these method-

Carmen Doran of Novartis Pharma Technical Operations explains how the unique combination of Lean and Six Sigma is bringing about signifi cant performance improvements through the work of the company’s global and local IQP Champions.

“We have a very clear strategic direction for operational excellence, which allows all of the sites to move in the same direction”

Carmen Doran is Global Operational Excellence Champion for Novartis Pharma Technical Operations



In 1995, Harvard Business School professor and change management guru John Kotter published a book entitled Leading Change, within which he outlined his now well-known eight-step change process:

1. Create a sense of urgencyOpen an honest dialog about what’s happening in the marketplace

2. Form a guiding coalitionSet up strong leadership by gaining support from key people

3. Create a visionHelp people see for themselves what you’re trying to achieve

4. Communicate the visionTalk often about and apply your vision as much as possible

5. Remove obstaclesCheck continually for barriers to change

6. Create short-term winsGive your people an early taste of victory

7. Build on changeKeep looking for improvements

8. Anchor change in your cultureMake sure change is embedded in every aspect of your organization

The Kotter model

Champion networks, ad hoc teleconferences and regular meetings focus on the challenges facing the site, the successes, their goals and what’s in store for the future.

“Although the sites are on the same journey, they’re all at diff erent stages, but they’re all looking for alignment through our Operational Excellence Scorecard. We have a very clear strategic direction for op-erational excellence in Novartis Pharma Technical Operations, which allows all of the sites to move in the same direction. Th at’s one of the reasons we’ve been successfully able to turn those challenges along the journey at a site into something that has been enjoyable and rewarding.”

Novartis Pharma is certainly not alone in facing these challenges. Th e pharmaceutical industry has been dogged by pressures to reduce costs in light of the recent economic crisis. “We could focus on cost, but the better way is to focus on the speed and the agility of the processes,” explains Doran.

“One of the biggest concerns for all pharmaceutical companies is the speed at which they are able to adapt to change. A lot of our processes can be improved, and maybe we haven’t had the challenge that some of the faster-moving consumer industries have had in terms of reaction to market requirements. Th ose companies who can respond quickly to the market needs by being fl exible and reducing their cycle times, both in manufacturing and in development, will be the ones who can overcome these challenges.”

Added pressures come from the highly regulated nature of the industry. “None of us would want to take medicine if it wasn't highly regulated,” says Doran. However, she notes that the pharma industry must also recognize that it is not alone in terms of the level of regula-tion it must undergo, pointing to the aerospace industry as facing similar challenges.

“At the end of the day, what I feel has made the Lean and Six Sigma thinking successful for us is the combination of the technical process improvements, cultural aspects and a clear strategic direction that fos-ters, for all involved, a passion to strive for operational excellence,” she concludes.

Pharma Technical Operations has successfully handled some natu-ral resistance to change and to the use of these new processes thanks to strong leadership endorsement, although Doran admits that there are still some people who are coming round to the idea. Enthusiasm for a new project, she points out, is oft en created upon seeing the results. If a person working on a project has enjoyed it and demonstrated good results, then others can judge for themselves.

ExpansionAs a global company, Novartis Pharma Technical Operations has

sites located across the US, Europe, the Middle East, Latin America and Asia. Prior to taking up her current role, Doran worked in the company’s recently opened Pharmaceutical Operations site in Singapore. She ex-plains that there are variarions in the take-up of Lean Six Sigma across diff erent locations, but not always in the way you might think. “Th e dif-ference for us in terms of adoption is not necessarily the culture but the maturity of the site. When you have a site that has been around for 50 years where you have people with a lot of history at that site, then it takes a diff erent approach for them to change their way of thinking than if you have a brand new site like Singapore. For them, everything is new.

“We can show them results from other sites, and there isn’t that resistance to change because they understand how it works together in the overall business model. So rather than people’s cultural diff erences, adoption depends on the lifecycle of the site,” says Doran.

In order to meet the challenges that oft en accompany such implemen-tations, she calls upon the company’s network of IQP Champions: each site has a single point of contact for all best practice sharing. “If I have a site in China that needs some input from a site in the US, they can directly contact the local IQP Champion and ask about the results and learnings.”

Communication between the multiple sites is essential. Doran places most emphasis on the power of speech and interactions between people, and explains that although Novartis publishes its IQP project results on the internal website and in newsletters, most results are seen from the eff ects of a strong network. Monthly teleconferences with IQP


UNIVERSITY OF MICHIGAN AD.indd 1 06/07/2010 15:17

World leaderleader

Like it’s products, Coca-Cola’s employees are found all over the globe. Huw Thomas speaks to Chief People Offi cer Ceree Eberly about the challenges of directing a truly international workforce.


Coke LEAD.indd 120Coke LEAD.indd 120 09/07/2010 14:3109/07/2010 14:31

www.ngpharma.com 121 www.busmanagement.com 121


Despite its domestic image as an

American icon on a par with Uncle

Sam and apple pie, Coca-Cola is

truly an international phenomenon.

Walk into a shop or café just about

anywhere on Earth – from Azerbai-

jan to Zambia – and there is a high likelihood that you’ll

fi nd a Coke in the fridge. An estimated 94 percent of the

world’s population recognize the famous red and white

logo, elevating it to the very top tier of global products.

In addition to its fl agship off ering, the company also

produces more than 500 other brands, sold in 20 million

outlets and consumed by around six billion people.

In eff ect, Coca-Cola is almost as ubiquitous as water,

with a consumer base of staggering international di-

versity. Th e company’s people are a mirror image of its

customers, working in markets and communities dis-

persed across the globe. It might be reasonable to expect

that managing such a varied workforce would be a major

headache for the person in charge. Cannily though, Co-

ca-Cola have got around this potential stumbling block

by appointing a HR leader whose international creden-

tials are above reproach.

Ceree Eberly took up the role of Senior Vice Presi-

dent and Chief People Offi cer in January 2010, the latest

upward move in a 20-year career with the fi rm that has

seen her working everywhere from Latin America to Asia

to Africa. When we manage to grab a few minutes out of

her busy schedule, she is in the process of completing the

move back to the US from the UK, where she has been

living and working for the past three years.

It was the possibility of such a varied and wide-rang-

ing professional life that was one of the key attractors

for Eberly when she joined Coca-Cola two decades ago.

“When I came to Coke I was actually looking for diver-

sity of experience and an opportunity to build my career,

and I’ve always wanted to work and live abroad,” she says.

“I saw that as a wonderful opportunity. My fi rst boss

with Coke said to me, ‘If you just put your head down

and focus on adding value and really contributing to the

business, you’re always going to have an opportunity and

you’ll never have to want for a job’.

“My focus has been really learning about our busi-

ness, being a contributor to the business, but also, when

opportunities came my way, being willing to grab those.

As result, I’ve had just a fantastic experience learning our

global business. Living and working on three continents,

seeing the world in a very diverse and diff erent way I

think has really helped prepare me well for this job.”

In Eberly, Coca-Cola have a people specialist with

an unusually strong devotion to the corporate entity she

represents. “It comes naturally because I love our brands

and I love our business,” she says. “When I’m in the UK I

spend weekends going into stores like Sainsbury, Tesco,

Waitrose and McDonald’s. I go and just look at our con-

sumer purchasing patterns, I look at what’s in the aisle at

the grocery store, what people buy, what they drink. I go

into the competition and look at that as well.”

It’s unlikely that many executives of Eberly’s stature

spend their spare time conducting independent market

research, but it is all part of her background in the com-

pany’s business activities. Unlike some HR professionals

who have spent their entire careers in the people func-

tion, Eberly’s wider range of business experience has


An employee boxes bottles at the Coca-Cola plant in Atlanta, Georgia


124

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www.ngpharma.com 123www.ngpharma.com 123

92,80

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emplo

yees

world

wide

1.6 billionservings sold daily

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given her a much more comprehensive view of the orga-

nization. Th is in turn allows her to run the company’s

people function in a manner that more directly benefi ts

the business. “It’s not just a nice thing, it’s actually essen-

tial and crucial to be successful,” she says. “I think that

my experience being business focused is kind of the fi rst

order of business and really using that as a lens to do the

work that I do is probably the greatest enabler for me.”

Business senseEberly sees this hard business experience as a vital

component of any eff ective people function. “I’m not

talking about just Coca-Cola,” she continues. “I think

if you really look at successful HR professionals, they’re

not what we call personnel administrators. Th ey’re really

fully engaged in the business, they truly understand what

drives business performance, they work with leadership

teams in how to make the business more eff ective and

effi cient. Th ey’re looking at building a strong leadership

capability and talent for the future. So yes, I would say

it’s probably missing in some industries and in some

functions, but I would say with Coca-Cola that’s actually

been one of the key focuses that we’ve had in building

our capabilities.”

Eberly gives the example of a recent trip to Tokyo

where she recorded a video with the head of the Japa-

nese business giving an overview of the company’s

work in the territory. Th e video covered topics such as

the importance of people, what’s being done to build the

pipeline of talent and what’s happening around culture

and work environment.

“Th e next day, that was fed live by WebEx to our

whole global community,” Eberly explains. “It’s part of

one of our ongoing initiatives to continue to build up

what we call our business muscle. Th is involves learning

about the business, but also being more eff ective as pro-

fessionals in the businesses that we’re engaging with.”

Eberly’s recent activities in Japan are just one facet

in the ongoing challenge of instilling a coherent com-

pany culture in an organization as globally dispersed as

“It’s part of one of our ongoing

initiatives to continue to build up

what we call our business muscle.

Th is involves learning about the

business, but also being more eff ective

as professionals in the businesses that

we’re engaging with”


Coca-Cola. How do you go about connecting employees

who might be separated by massive geographic, cul-

tural and linguistic barriers? “We use the opportunity

in the markets that we serve around the world,” Eberly

responds. “We’re a diverse culture because we’re global

and I think what we’re doing is a better job of build-

ing global networks, sharing best practices, using the

diversity and experiences in the market really to build

a more collaborative and eff ective result in the market.

“As we build culture, I think one of the ways that

we’re learning is to take advantage of the things that

we’re doing around the world. Knowledge management

or knowledge sharing, if you will, is helping to build


that culture because we’ve got great things going on in

our local markets, but if you don’t share that and you

don’t share the learning, it’s very hard to actually be

successful in the marketplace.”

But it is the subject of diversity that provokes per-

haps the biggest reaction from Eberly. It is a term that

has become increasingly ubiquitous in the corporate

lexicon, so much so that there is sometimes the tempta-

tion to dismiss it as little more than a checklist item,

a piece of business world window dressing. Unsur-

prisingly, this is not a view supported by Coke’s Chief

People Offi cer.

“Oh, my goodness,” she exclaims. “Diversity is at

the center of everything we do. And it’s one of our seven

core values and basically it’s a very simple defi nition,

it’s to be as inclusive as our brand. If you look at that,

the defi nition goes across gender, race, it’s how do we

actually have inclusion in the workplace and inclusion

in our outlets and in our markets that we serve? So by

focusing on diversity as a business advantage, I actually

think that we are benefi ting everyone. It’s really just a

core theme of how we do business. If you look at our

suppliers and partners, they refl ect our diversity initia-

tives as well. How you see this in the marketplace is

really relevant to me – I’m a mom – and 70 percent of

the shoppers out there who go into a grocery store or a

retail store are women.

“Th ey’re the ones that make the purchasing deci-

sions, so if we don’t have women considered in our

marketing, considered in the way that we advertise and

the way that we go to market we’re going to miss a key

opportunity and being a mom, I want someone to talk

to me about what’s important to me. So if I just make it

very simple in those kind of terms, diversity is refl ected

in every aspect of what we do.”

Troubled timesTh ough the situation is slowly improving, the last

few years have been particularly tricky for businesses

everywhere. For many organizations, the hostile condi-

tions have had major implications on the way staffi ng

was approached, implications that were not always wel-

come. Th ough Coke hasn’t been completely immune to

the eff ects of the downturn, Eberly insists the impact on

hiring policies haven’t necessarily been negative.

“We’ve been thoughtful in terms of our hiring,” she

says. “Where we need to build capability we’ve used it

actually as an opportunity to step back and look at the

next fi ve to 10 years of growth. If there are capabilities

and skills we need, diff erent than what we have today,

now is the time to step back and say, ‘Okay, now what

are we going to do about that and how do we go about

fi nding those?’”

94 percentof the world’s

population recognize the

Coca-Cola logo

Coca-Cola’s products are consumed by

around 6 billion people

In addition to Coke, the

company produces 500 other brands


One thing is for certain though; when it comes to

a company’s people, even the most diffi cult conditions

are no excuse for retrenchment. “In times of economic

turmoil you can’t stop focusing on your talent,” states

Eberly. “You still have to continue to build your talent,

you also have to continue to look at what is happening

in the marketplace and it’s changing faster than most of

us can keep up with. We’ve actually used it quite stra-

tegically to look at really focusing on development of

talent and skills that over the next fi ve to 10 years are

going to be really important for our business.”

For someone who has only been in position for six

months, Eberly seems to have an excellent handle on the

challenges she faces. In truth though, the role of Chief

People Offi cer is one she has been building towards for

quite some time. “It’s interesting because the person who

left the role actually was my mentor,” she explains. “She’s

been training me for many, many years, and she actually

gave me my fi rst international trip overseas and to Europe.

I’ve been preparing myself through a variety of experi-

ences, and the European experience has probably been the

best experience for me to prepare me for this role.”

It all keeps coming back to that global perspec-

tive. An organization like Coca-Cola could very easily

become some modern Tower of Babel, a clamor of noise

and confusion as disparate elements struggle to com-

municate. Ensuring this doesn’t happen requires keep-

ing a fi nger on the pulse of all the company’s people and

acting quickly to head off any potential problems. As

part of Coke’s vision for the year 2020, the company is

pursuing what Eberly describes as a ‘best place to work’

strategy, building an engaged and happy workforce in

its operations all over the globe. “We’ve been embark-

ing on a journey,” she says. “We measure this through

our annual employee insights score; it’s a survey we do

globally that we basically use as a temperature gauge to

measure the health of the organization.”

So what are Eberly’s key priorities as she moves for-

ward in her new role? “We’ve put in a number of initia-

tives, workplace policies around fl exibility for women

so that we provide fl exible benefi ts for our associates,

that we engage our associates in the workplace,” she

replies. “We’ve been enhancing things in the areas of

career development, tools and processes. We’ve been

continuing to focus on training, more learning and

those opportunities to continue to accelerate people’s

growth and learning in the workplace.”

What’s good for Coca-Cola’s global workforce is

also good for the company itself. Employees get oppor-

tunities to develop their careers and Coke benefi ts from

more capable and more engaged people. “We’re fi nding

that that’s probably the best talent retention tool that

you can use,” concludes Eberly. ■


ADP AD.indd 1 28/06/2010 16:53

It’s been a confi dence-sapping couple of years for the average arm-chair investor. Th e fi nancial nightmare on Wall Street not only knocked the self-belief of the big banks; it also dented investor confi dence in the ability of traditional brokerage houses to ac-

curately read the markets. Th e near-collapse of our modern fi nancial system, a severe worldwide recession, unprecedented government stim-uli and a historic rebound in fi nancial asset prices from panic-inducing lows was fi nally capped off by the 995-point freefall in the Dow Jones Industrial Average on May 6; all contributed to a sea change in the in-vesting habits of the man on the street. Self-empowerment became the new investing mantra, and while the faint-hearted retreated from the market in search of safety, the canny investor recognized that there were some great opportunities out there – provided you know where to look.

“It’s certainly been a wild two years,” acknowledges Dan Green-shields, President of ShareBuilder from ING DIRECT USA, with a wry grin. He’s being disingenuous: the Seattle-based online brokerage ser-vice has seen explosive growth in the use of its services over the past 18 months, not least because its user demographic – largely made up of 20 to 40-year-olds with an average balance of between $5000-6000 per account – is both younger and less risk averse than that of many of the fi rm’s competitors.

“A 20-year-old or 30-year-old reacts very diff er-ently to a downturn than a 50 or 60-year-old does,” Greenshields explains. “Th ey are very aggressive in their trading habits and are not scared of buying in volatile times. For example, normally our buy-to-sell ratio runs right

around 50/50; but the day aft er that big 1000-point drop in May we saw that ratio go up by 10 percent. So instead of 50/50 it was more like 62/38 buy-to-sell that next day. What that tells us is that our customers reacted to the volatility in the market by saying, ‘You know what, this is a great time to buy’.” Older investors, he says, typically don’t have that same level of aggression. “Th e downturn was much more punishing to them because they had more in the market, and it showed up in the transac-tions we witnessed and the survey work we did.”

Greenshields believes the company has also benefi ted from a change in the way people interact and engage with the investment experience. “Around 50 percent of the people we interviewed for a recent survey told us that they were going to rely less on their advisors in the future and more on their own ability to read the news and pay atten-tion to what’s going on,” he says. “Th e tools have gotten so much better, it’s really changed the game. Th e ability for a retail investor to buy stock on the same terms as an institution is better than it ever has been in the last 100 years.”

And providing such tools – along with the added transparency

INVESTING

MONEY MAKERDan Greenshields has a vision: to make the often-complicated world of stocks, bonds and other investment vehicles accessible to everyone.


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and empowerment they off er – is what ShareBuilder is all about. Th e company promises to make investing easy, aff ordable and accessible for both new and experienced investors, off ering a range of services such as automatic investing, real-time trading, options trading and margin borrowing. All transactions occur online and are entirely at the discre-tion of the account holder, making it an execution only service. And the fi rm does not have brokerage sales representatives or advisors; instead, account holders can either do their own research or use ShareBuilder’s online research tools to investigate stocks. “Customers are increasingly going to want access to their account on their own terms,” says Green-shields. “Th ey want to access information wherever they are; they don’t want to have to go into an offi ce or a branch, and that’s what’s really important to them.”

A prime example of this is the current revolution in mobile devices, with Greenshields citing the emergence of the digital native over the

digital immigrant – along with advances being made in mobile technology itself – as the catalyst for the coming transformation in the way investments are made. “I think the mobile revolution and how people transact with their institutions is something that’s going to be pretty interesting over the next few years,” he says. “Th ose that have grown up with computers and mobile phones and the internet are just coming into their peak earning years, so we think it’s a real positive opportunity for us.”

Such a move will demand that fi nancial institutions cater to this changing clientele – or risk extinction. “People are going to want to transact with institutions from their

phone, be it their bank or their brokerage, and be able to move money around whenever and however they

want to,” continues Greenshields. “And the great thing about the internet is that

it allows you to really monitor and get much better real time information about what customers really want. Custom-ers will drive the terms of how they

want to interact with a fi nancial provider. And as a fi nancial service provider, if you don’t meet them on those terms you’re going to lose.”

Such a fast-moving environment presents something of a manage-ment challenge for Greenshields and his team. For one thing, the market volatility combined with changing patterns of investment from a young-er and more aggressive client base meant the company had to add more resources in order to cope. “Th ere was a huge spike in volumes for online players like us,” he says. “We had a big increase in both new customers and general trading, and that forced us to add resources to make sure we were able to meet those needs. It was a big challenge for us.”

Th e other issue has been around providing users with the right tools. “We’re really trying to improve the usability experience,” says Green-shields. “Technology allows us to monitor real time what they want. We can actually ask them what they want and then we can watch how they use the interface and try to improve that. So we’re always trying to make that better.”

Ultimately, ShareBuilder is about taking complex fi nancial concepts and making them simple. So what advice does Greenshields have for those looking to get started on an investment strategy? “As an investor you’ve got to be really careful not to get whipsawed; you should have a solid strategy, and what you’re looking to do is just post up solid returns,” he says. “It’s not about hitting the home run. Here in the United States we suff er from a little bit too much of the superstar mentality; everybody wants to be number one. But in investing sometimes it’s okay to be right in the middle of the pack. If you have super-high returns, chances are you’re taking too much risk.”

Th e ability for a retail investor to buy stock on the same terms as an

institution is better than it ever has been in the last 100 years”

DAN GREENSHIELDS ED P126-127.indd 127DAN GREENSHIELDS ED P126-127.indd 127 09/07/2010 14:2609/07/2010 14:26


CIOs Without Borders aims to redress that imbalance. Th e organization is a global non-profi t that uses technology to provide education, healthcare and infrastructure ser-vices to underserved areas around the world. Formed by two friends and fellow IT profes-sionals – Atti Riazi, CIO of the New York City Housing Authority and former CIO of global advertising agency Ogilvy & Mather, and

Sunil Verma, CIO of retailer Th e Children’s Place – the organization hopes to encourage an increasing number of CIOs to use their knowledge and experience of technology to help solve everyday human challenges.

“Just as technology can help provide auto-mated business processes cheaper, better, faster, it can also operate services in a non-profi t con-text cheaper, better and faster,” suggests Verma.

TECHNOLOGICALPHILANTHROPY

Following in the wake of the worst re-cession in decades, corporate giving in the United States endured mixed results. Some companies pared back

philanthropic eff orts in the face of tough times, while a few increased their budgets; practically all predicted a steady 2010. “Companies con-tinue to examine their priorities,” says Charles Moore, Executive Director of the non-profi t Committee Encouraging Corporate Philan-thropy. “Very few are taking on new kinds of causes, and they are tending to reallocate the funds they do have.”

Th e economic downturn has certainly sparked changes in giving priorities, with sever-

al companies placing more importance on basic needs such as fi ghting hunger and homelessness and others focusing more on work within their local communities. “Th ere’s great expectation on the part of communities and employees on companies – they expect more,” says Moore. “Th is is not just giving money anymore. It’s solving problems. Th ese are social issues that we’re addressing.”

Of course, corporate giving is nothing new. Bill Gates and Warren Buff et are just two high-profi le executive philanthropists of modern times, and with the rise of corporate social responsibility programs there are currently very few big businesses without some form of charitable foundation or community-based project on their books. But what has been lack-ing in recent years has been active involvement by the IT community itself. Technology helps organizations to achieve business objectives, reduce ineffi ciencies and solve organizational challenges every single day; what we’ve seen less of is the potential for technology to solve huge societal challenges.

Who says techno-geeks have no heart? Business Management reports on how philanthropy is entering the IT shop through a new initiative.

PUSHING BACK THE BOUNDARIES

“We are always talking about the transformational power of IT”

CIOs Without Borders.indd 128CIOs Without Borders.indd 128 09/07/2010 14:4409/07/2010 14:44


es to modify this system to work in Rwanda, build relationships with the government of Rwanda and put together the infrastructure to open 10 mobile rural healthcare clinics within the next year,” she says. “But we need help with fi nancing this project and mobilizing commit-ted volunteers to help make it self sustaining.”

Verma agrees. “Once we get the project in Rwanda up and running, I think – based on what happened in India – it’ll be something that we can very quickly grow to the point where other countries and areas will want to implement it as well,” he says. “And once it gets to that size, then folks at the major foundations and other charitable organizations will want to get involved too. But they really need to see a project that’s well underway before they will commit any resources.”

Ultimately, both Riazi and Verma hope that once word gets out about what CIOs Without Borders is doing, the project will not only attract more volunteers, but also serve as a model for other similar eff orts. “In business, we are always talking about the transformational power of IT,” says Verma. “We’d like to extend that to address issues of real human concern.” As he is keen to point out, it’s a power that goes far beyond bottom-line business impact. It’s the power to make lives better.

a nurse practitioner or someone who can dis-pense antibiotics,” says Verma. “So in the long run, a system like this could really be useful all over the world.”

Th e computer-assisted diagnostic solution was originally developed by Abraham George of the George Foundation, and has been in use for eight years in rural India, where it has enabled people without extensive medical training to help diagnose illness – resulting in more people being cared for, prioritization of the most seri-ous cases, getting patients most in need to the doctor more quickly and the establishment of an electronic, portable medical record.

Th e group has government approval to deploy such e-health systems at hospitals and clinics throughout the country, essentially training nurses to perform triage and dispense medications for up to 75 percent of the cases that currently go untreated. But making this happen requires money – and that, Riazi says, is proving to be the hardest part. CIOs Without Borders hopes to raise $750,000 for its Rwan-dan eff ort during 2010, with a long-term goal of $2.5 million that would allow it to set up the e-health system in 25 villages. Ultimately, Riazi estimates, that investment could save millions of lives over the ensuing decades.

“Our partners are helping us focus resourc-

“Th e traditional philanthropic methodology has been to throw money at problems such as poverty, hunger, disease and education in order to get as much food, aid and workers there as possible; that’s very admirable, but it’s not that effi cient. Th e idea for CIOs Without Borders was to provide the same kind of service, but leverage the effi ciencies that you get out of tech-nology to provide them cheaper, better, faster and more effi ciently.”

Th e fl edgling group already boasts a mem-bership of 250 that’s ready to volunteer wher-ever needed, and is overseen by a three-person advisory board and a 12-person volunteer staff of directors. According to Riazi, a little tech-nology can go a long way. “IT people should take on a cause because technology truly has an immense power,” she says. “However, our goal is not to give technology; our goal is to give knowledge.”

Indeed, it is this focus on the enabling power of technology that goes to the heart of what the early-stage non-profi t is trying to achieve – working to reduce the incidence of preventable disease by sharing medical knowl-edge with technologically disenfranchised communities around the world. “Many of us routinely use publicly available knowledge – from the internet or elsewhere – to inform our medical decisions, and our actions are oft en infl uenced by what we know is harmful to our health,” says Riazi. CIOs Without Borders’ mission is to use technology to make medical knowledge available to communities in which people routinely suff er from preventable or easily curable diseases.

Th e organization is currently focused on its fi rst program in Rwanda, where one of the world’s highest infant mortality rates and the fact that common diseases such as diarrhoea oft en go undiagnosed combine to take a huge toll on the local population and overwhelm medical resources. Rwanda has just one doctor for every 25,000 people, and medical care in most rural areas is non-existent. But by imple-menting a revolutionary computerized medi-cal diagnostic system, CIOs Without Borders working in partnership with Stevens Institute and the champion of the program, Edward Friedman – can enable one technican and one nurse to quickly fi gure out what’s wrong with almost any patient and determine a treatment plan. “Seven out of 10 cases can be handled by

DOCTORS PER POPULATION RATIOSRwanda 1 per 25,000 people

Afghanistan 1 per 5263 peopleVietnam 1 per 1886 people

US 1 per 435 peopleCuba 1 per 169 people

Source: Nationmaster.com

CIOs Without Borders.indd 129CIOs Without Borders.indd 129 09/07/2010 14:4409/07/2010 14:44

iStrategy USA 15-16 September 2010Chicago, Il The Hotel AllegroTransforming the Enterprise with Digital Expertise

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media• How to deliver a response-driven, relevant message

The simple truth is that there is no magic one-size-fi ts-all marketing mix. iStrategy will arm you with the deep understanding of aligning social media and digital strategy according to your organization’s processes and operations to achieve the objectives you’re after. Join us to network, share ideas, and most importantly fi nd out how to build your marketing strategy to its fullest potential.

Participation in Social Media and Interactive Marketing is no longer

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iStrategy USA ad MAG SIZE.indd 1 17/6/10 13:15:37

TRAVEL & GADGETS & BOOKS & LEISURE & MONEY & TRAVEL & GADGETS & BOOKS & LEISURE & MONEY 131

P.s. Travel 36 hours in Chicago

Gadgets Technology for today’s executive

Books The best business reads of Q3

Events What not to miss this summer

Final Word Capgemini’s Jeremy Roffe Vidal

Major League ChallengeHas the 2010 World Cup solved soccer’s image problem?

BACK SECTION CS5.indd 131BACK SECTION CS5.indd 131 09/07/2010 14:4509/07/2010 14:45

P.S. LUXURY TRAVEL132

Th e 2010 World Cup has once again brought the spectacle of soccer into millions of

US homes. Business Management asks: can the MLS ride this wave of interest, or will

Americans’ innate aversion to the sport continue to hinder its expansion? By Ian Clover

It’s an American marketer’s dream scenario: young, good-looking, ethnically diverse friends attend a sporting event together, dressed in denim and Hilfi ger, slurping Coke and chowing down on hotdogs as the pre-game entertainment pumps out the latest US

chart blockbuster. Then the whistle blows, and the crowd goes wild.

This scenario could happen pretty much anywhere in the world, yet one major difference sets the US apart – the sport the rest of the world will be watching is soccer, while in the States it is most likely to be ameri-can football, basketball, baseball or ice hockey.

Soccer has never been big business in the USA. For a nation born on a belief that its ‘Manifest Destiny’ has been to expand its boundaries over vast areas, Americans have been quick to capitalize on their post-war political and economic dominance to spread their cultural infl uence throughout the world. Yet soccer is the only worldwide phenomenon that has remained immune to the threat of an American rival and has,

US Star Landon Donovan is mobbed by team mates as his dramatic last minute goal puts his team through to the inal 16 of this year’s World Cup; the crowd goes wild


P.S. LUXURY TRAVEL 133

in fact, shown signs of pushing against the grain and gaining a stronger foothold in the States.

There are a number of reasons for this. With much of America’s cultural dominance coming post-WWII, the US was able to exercise its greater economic strength and more refi ned marketing techniques in order to gain an ascendant market share in a range of industries, particularly popular music, fi lm and snack food. The world was happy to accept, too; these excit-ing new products augmented their own lifestyles and, if never fully usurped, often complemented other cul-tures’ own products, diets and artistic output.

However, in a sporting sense, America missed the boat. Soccer was already well established as the world’s most popular sport long before WWII. The fi rst World Cup took place in Uruguay in 1930. Before that, British missionaries were spreading the mes-sage of ‘the beautiful game’ to South America, Africa, Australia and the Asian subcontinent before the turn of the 20th century. In effect, the British got there – both culturally and physically – fi rst.

“If you look at soccer in the USA, just a mere matter of 20 years ago there really wasn’t any in-frastructure around the game,” says Kathryn Carter, Executive Vice President for Soccer United Marketing, a subsidiary of Major League Soccer (MLS) that is re-sponsible for the league’s marketing and promotion. “If you reference Europe, South America and even Mexico, there’s a tradition around the sport that’s generations and generations old.”

Soccer’s image problemAmerican society draws its strength and innate

confi dence from a level of insularity that is uncom-mon elsewhere. As the most infl uential and powerful nation in the world, America is not used to being told what to do, or what to like. But as the iconic silhouette of Michael Jordan grabbing some ‘air’ fades into the memory to be replaced by David Beckham’s tattooed torso, has the US fi nally faced up to the fact that soccer is never going to be bowed or beaten?

“We don’t have to teach people about soccer today,” says Carter. “20 years ago you probably did, but today people understand what offside is; they understand what a great play is. So many people over many generations have played the game, yet before there was no product, other than kids playing the game at school.”

Ah yes, those fabled ‘Soccer Moms’ have come to characterize the sport more than any other fi gure, and perhaps stigmatize it too. Sporting fandom in the US is a very macho, blue-collar realm, so the image of middle-class, SUV-driving moms carting their pre-

Th e New Messiah?Landon Donovan was the undoubted hero of the World Cup. But does the MLS need an American superstar on which to hang its hook? If so, here are the potential frontrunners.

Jozy Altidore

Currently playing in the English Premiere League for the less-than-glamorous (and recently demoted) Hull City, Altidore actually belongs to the Spanish team Villarreal. A powerful forward, the 20-year old will be hoping for a raised profi le after a positive World Cup.

Michael Bradley

This 22-year old midfi elder is the son of the national coach (Bob Bradley) yet it is his dynamism, not nepotism, which has made him the beating heart of the US team. He plays in Germany, but could be headed to the EPL after an impressive World Cup.

Brad Guzan

Following in the footsteps of a proud line of US goalkeepers, Guzan is a promising young player who plies his trade for Aston Villa of the EPL, where he is understudy to his compatriot Brad Friedel. Yet to displace Tim Howard, but great potential.

And the one that got away…

Freddy Adu

Highly-touted at the turn of the Millennium as the player that would put the US fi rmly on the soccer map, Freddy’s nascent excellence was all but burnt out by his early 20s, prompting plenty of observers to scoff: ‘much Adu about nothing’.

Jozy Altidore celebrates victory over Algeria with US fans in South Africa


P.S. LUXURY TRAVEL134

cious brood off to soccer practice does not sit easily with the traditional sensibilities of the American sports fan. American kids play soccer at school through to college level, at which point it is dropped for one of the traditional ‘Big Four’ – basketball, ice hockey, american football and baseball. This cultural anomaly will take time to evolve, but Carter is confi -dent the MLS can play a big part in changing attitudes.

“We work with a number of youth organizations but, in order to make the MLS work, we recognize that you have to really cater to the soccer fan who proba-bly did play [as a child] and sees fandom as something different to participation. This is our best opportunity for success,” says Carter.

The MLS franchise is certainly growing in strength, particularly since the arrival of David Beckham at LA Galaxy in 2007. “There are now 16 MLS teams play-ing in 15 different markets with billionaire ownership and nine, purpose-built soccer stadiums,” says Carter. “From our perspective, the buzz factor that we see going on right now around MLS, around our teams, around our clubs in their local markets…is at a level that is, quite frankly, at an all-time high.”

We have been here before, of course. The ill-fated North American Soccer League (NASL) was fi rst con-ceived in 1968, yet it was not until the mid-1970s that it attracted global recognition, thanks in no small part to the arrival of three aging superstars of the game – Pele, Franz Beckenbauer and George Best. Interest in these alien sporting ‘stars’ peaked at 40,000 fans per game, yet overexpansion of the league and a wither-ing interest in the sport ultimately sounded its death knell in 1984.

How, then, is the MLS any different? While it has its aging superstar in David Beckham, it also has a much more sophisticated marketing arm, and instant media beaming the game to a greater number of viewers. But it is also lacking an American hero, and overseas competition from the English Premier League (EPL) and Spain’s La Liga is strong. In such a tough market, how can the MLS be expected to compete?

A new kind of fanSoccer is a simple sport based upon two equal

halves of play. It is low scoring, often tense and deeply tribal. Feverish support adds atmosphere to the cauldrons of Europe’s fi nest stadiums. There is no need for pre-, mid- or post-game entertainment, the drama is there on the pitch and in the stands, which is something Carter recognizes. “We’ve been looking at how our core fans are consuming the product. They’re really engaging with us at a level that they never did before.

Th e MLS in numbers:

110 Price in dollars of a Beckham LA Galaxy jersey

77 Average ticket price for an MLS game

3 The number of ‘overpaid’ players each MLS team can recruit that contravene strict wage caps

10 million Beckham’s annual salary, the high-est in the MLS

20,100 The lowest annual salary for a player in the MLS

15,894 Average at-tendance in 2009

16 Years the MLS has been in existence

“Whether that means they’re coming to the sta-diums and painting their faces, or they’re coming up with the chants and cheers you see around the rest of the world, it’s a different type of consumption than what we saw previously; we’re really starting to recognize avid fans that live and die by their team’s performance on Saturday.”

This improved relationship between the MLS and the local soccer communities is key to its continued growth and strength. For all the millions of soccer lovers in the States, if they do not believe in and sup-port their own league, there can never be wider accep-tance of the sport. “If you’re willing to paint your face and you’re willing to learn the songs to sing on behalf of your team,” concludes Carter, “if you’re willing to be that 12th man, then you’re much more likely to buy a shirt, to buy a season ticket, to come on to the web-site and read more articles – this is something we can monetize.”

The timing could not be better. At the World Cup in South Africa this summer, there were more ticket buyers from the US than any other country, and America paid more for broadcasting rights than any other nation. The US also has more registered soccer players than any other country. The scene is set. The desire and appetite for the sport is there. The MLS just needs to take advantage of this unprecedented oppor-tunity.

Founded in 2002, Soccer United Marketing (SUM) is the preeminent commercial soccer company in the United States. SUM holds the exclusive rights to the most important soccer properties in the nation, including: all commercial rights to Major League Soccer; the United States Soccer Federation and all men’s and women’s national teams; promotional and marketing rights to Mexican National Team games on U.S. soil; and marketing, promotional and broadcast rights to the prestigious eight-team Mexican club tournament - InterLiga. In addition, SUM holds the English-language broadcast rights in the U.S. to the 2006 FIFA World Cup. SUM managed the marketing and promotion of the CONCACAF Gold Cup, the region’s premier soccer tournament for national teams, and the highly successfully Real Madrid American Tour in July, 2005.

Fans of the Chicago Fire light fl ares to engourage the team at an MLS game last season


FROST & SULLIVAN.indd 1 08/07/2010 13:32

P.S. CITY GUIDE136

36 hours in... Chicago

In the knowMade famous worldwide by the eponymous musi-cal, Chicago is a city of energy and character, with a rich nightlife and a distinctive architecture. ‘The Windy City’ is the third most populous in the US and home to 11 Fortune 500 companies. However, the downturn in 2008 took its toll on this once thriving city and today Chicago is focused on re-stabilizing its economy and returning to growth. Despite economic disaster, Chicago remains one of the more popular tourist destinations. Known as something of a cultural melting pot, Chicago boasts a plethora of fi ne restaurants, diverse neighborhoods and classic museums.

EconomyUntil the recession set in 2008, Chicago had the third largest gross metropolitan product in the US and was widely considered to be one of the most affl uent cities, playing host to a number of fi nancial centres and future ex-changes. Today Chicago still stands as one of the richest cities in America, and is predicted to enjoy familiar levels of growth by the second half of this year.

DrinkThe Green Mill lounge offers an enchanting taste of Chicago’s timeless jazz culture. Once frequented by Al Capone, this remains one of the city’s fi nest jazz clubs and is an ideal spot to unwind with a classic cocktail listening to lazy sax rhythms late into the evening. Alternatively, Second City is a gem in the Chicago entertainment scene, showcasing quick, sketch-based comedy. The sharp and witty gags make up for the club’s cosy size and exhibits its best line-ups in the middle of the week.

Time: +6hrs GMT | State: Illinois | Area code: 312, 277 and 872 | Population: 2,853,114 (2009)


P.S. CITY GUIDE 137

SleepTrump International Hotel and TowerLavish and elegant, the Trump certainly satisfi es visitors’ expectations. Unsurprisingly given its name, this hotel is centered towards its business clientele, offering excellent corporate rates and charming extras such as complimentary business card and personalized stationary upon request.

Sofi tel Chicago Water TowerA popular business hotel, the Sofi tel is a stylish and chic spot set amid a quaint neighborhood but within easy proximity to Chicago’s retail center and Rush Street’s myriad restaurants. The hotel’s own eateries offer quality French style cuisine and there is a complimentary 24-hour fi tness center where guests can unwind after the stresses of the day.

EatFor classic American cuisine, Morton’s Steakhouse is tucked away on Sate Street, offering high quality steaks with attentive service. The discreet location allows visitors to get a table without too much trouble, and the staff are always on hand to assist. For a cheap and cheerful option on a night off, try the charming Irazu, a tiny Costa Rican eatery that boasts some of the best value for money in Chicago. The more socially responsible diner might enjoy hit Mexican restaurant, Chilam Balam, a vibrant spot that aims to support local and sustainable farmers and ranchers. The shared platters make it ideal for group dining and the richness of the fl avors have established a well deserved reputation as one of Chicago’s fi nest new restaurants.

Time off Chicago is home to some of America’s fi nest museums and galleries, providing the ideal way to while away a lazy afternoon. The Art Institute of Chicago is one of the fi nest art collections in the US, with over 250,000 exhibits from across the world. For a more in depth cultural experience, make a visit to the Chicago Cultural Center to enjoy one of the lunchtime concerts or arts lectures. Alternatively, Chicago is well known as one of the most sport fanatic spots in the country. The city is home to the White Sox baseball team and ice hockey season champions the Blackhawks, not to mention to infamous Chicago Bulls basketball team. Anyone who takes the time to catch a game will not be disappointed.

Chicago-headquartered fi rmsBoeingExelonUnited AirlinesTribune CompanyJone slang LaSalle

Chicago Metropolitan Area headquartered fi rmsFortune BrandsMcDonald’sTennecoSara Lee Corporation

Art Institute of Chicago, Chicago, Illinois, USA

Morton’s Steakhouse


P.S. GADGETS138

Technology for today’s executive

Apple iPad

After months of waiting, Apple has fi nally unveiled its latest piece of shiny new tech outside of the US – the unimagina-tively named iPad. Apple believes its new tablet-style device will occupy a gap in the market between an iPhone and a MacBook. For the critics (of which there are many), therein lies the problem; it’s too big to fi t in your pocket and too impractical to replace a laptop. There’s no denying the iPad’s seductive curves and glorious 9.7-inch screen will have Apple fans’ palms perspiring, but its ability to garner mass-market appeal looks unlikely. For starters, it cannot run Flash and it won’t even allow you to multi-task. It also has no USB port, no SD slot, no camera and no GPS. In essence its an iPhone on steroids.

Nokia Netbook 3G

With a new netbook seemingly rolling out onto our selves every month, you could be excused for not paying attention to Nokia’s latest addition. However, if you’re in the market for a new netbook then sit up and listen to this. Having taken the netbook concept one step further, Nokia has added memory card and SIM card slots, alongside a 10.1-inch glass-fronted screen – that is fully capable of leashing out HD fi lms – and an in-built webcam and microphone. While you’re unlikely to be playing the latest PC games on its Windows 7 operating system, you can be assured that the $750 you’ll spend will be worth every cent.

Sony Ericsson Xperia X10

The past year or so, Sony Ericsson has found itself losing ground to its rivals, particularly in the smartphone market. To redress the balance, the Japanese-Swedish manufacturer has released the all singing all dancing Xperia X10 running on Android. The unavoidable selling point is the massive VGA high-res-olution screen – it dominates the front of the device. The generous four-inch screen size means the X10 is slightly on the porky side at 13mm thick and 135g in weight but this phone is packing a lot of kit, including an 8.1 MP camera, GPS, 348MB of RAM and 1GB of on board storage. It also has a 3.5mm headphone jack. Can the X1 dis-lodge Apple’s crown? It’s unlikely but Sony-Ericsson have made a fi ne stab with this handset.

Flip Mino HD 8GB

It’s amazing to think how much camcorders have shrunk in size from the days when you needed to put on a back brace before hauling a breeze block-like piece of kit up on your shoulder. The pocket size Flip Mino is about the same size as a chunky mobile phone and records in HD, capable of capturing 120 minutes on 8GB of built-in memory. A convenient USB arm fl ips out from the side of the unit for transferring video to a PC or Mac, doing away with the need to scrabble around for a USB cable. The easy-to-use FlipShare software allows you to edit, email or upload video to YouTube or MySpace. This is a point and shoot camcorder that even the biggest of technophobes would not have any trouble getting to grips with.


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P.S. BOOK REVIEWS140

Change: Bring it on! By Keely Nugent

Change is a tricky concept in business. It is inevitable yet, we are often reluctant to get on board. Nugent has recognized the same resistance to change in international racing horses; in her book she applies the tried and test techniques of the equestrian world to business. Change: Bring it on! clearly and concisely explains how to establish a winning team by managing change and the chal-lenges it brings.

BM SAYS: Simplicity is key with this book. With brief sections making it manageable even for the busiest among us. A light and refreshing read while still insightful.

Buying Professional Services: How to get value for money from consultants and other professional services providersBy Fiona Czerniawska and Peter Smith

It times of economic uncertainty, when markets are competitive and money is tight, value for money and return on investment are primary concerns for businesses. This book looks at the amount of money organizations across both private and public sectors are spending on professional services, and how those services are actually benefi ting businesses today. Buying Professional Services takes real life examples from the public and private sector as well as profes-sional services themselves to explain how business can effectively utilize this market.

BMUS SAYS: Thorough and detailed yet remains accessible and useful. This book provides some excellent insight into a subject has been largely unexamined.

Seven Keys to Imagination: Creating the future by imagining the unthinkable and delivering itBy Piero MorosiniCave

Morosini’s book examines the power of

the imagination as taught throughout history, and how that can be applied to generate a successful future. An intelligent and complex book, Seven Keys to Imagination unravels the various elements of an innovative and creative mind, and applies them to real world, industry-leading examples. This book offers an alternative way of thinking about how to develop your own future, however the parallels that Morosini draws between magic and business become somewhat gratuitous and irksome.

BMUS SAYS: Lengthy and dense and most likely futile to anyone who currently holds a creative position. However those who do not consider themselves natural innovators would benefi t from this book’s insight.

The Reluctant NetworkerBy Neil Munz-Jones

No matter how much we don’t want to admit it, network-ing is the way to get ahead in business, whatever industry you’re in. According to the author, around

75 percent of executives got their jobs through networking, a statistic that is hard ignore, in today’s competitive climate. The Reluctant Networker not only highlights the potential benefi ts of network-ing, but explains how to make the daunting task of building a network of contacts more manageable to those who fi nd it unnatural.

BMUS SAYS: Munz Jones is a reluctant networker himself, which makes his book both constructive and refreshingly not patronizing. Thoroughly recom-

Why Women Don’t AskThe High Cost of Avoiding Negotiation – and Positive Strategies for Change, by Linda Babcock and Sara Laschever.

According to this new book, by neglecting to negotiate the starting salary of her fi rst job, a woman may sacrifi ce over US$400,000 in earnings by the end of her career. From career promotions to help with child care, studies show that time and time again women don’t ask. Babcock and Laschever draw on research in psychology, sociology, economics and organisational behaviour to explore why women seldom ask for what they need, want and deserve at work and at home.

BMUS SAYS: This book will strike a chord with modern women and will encourage them to pluck up the courage to ask for more.

mended for anybody looking to take that next step up the career ladder.

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Next Generation PharmaceuticalApproximately 50% of new drug development fails in the late stages of phase 3 – while the cost of getting a drug to market continues to rise. NGP is written by pharmaceutical experts from the discovery, technology, business, outsourcing, and manufacturing sectors. Available for: US, EU

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Next Generation Power & EnergyA poll of 4000 utility executives posed the simple question: what keeps you up at night? The answers were costs, new technologies, ageing infrastructure, congested transmission and distribution, viable renewables and inadequate generation capacity. Available for: US

Find out more: www.nextgenpe.com

Financial Services TechnologyProviding for its customer’s needs and demands is the goal of fi nancial institutions now more than ever. But it is a tricky remit to fulfi ll. Your customers want it all – security, cost-effi ciency, speed, added functionality and, most of all, convenience. Can it be done? Read FST to fi nd out…Available for: US, Europe

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CATALOGUE PAGE.indd 141 09/07/2010 15:17

What’s On... Q3 2010

From surf to serves, pitches to putts, your guide to the big events of the coming quarter.

P.S. AGENDA142

07.24-5Waikiki Offshore Series, HawaiiThere are sailing regattas all over the coun-try this quarter, so boat lovers need not be concerned if they can’t make this one. But the Waikiki Offshore Series at Honolulu provides the perfect excuse for a weekend break, to escape the heat of the summer in the city and relax.

09.09-16 New York Fashion Week, NYThe world’s most glamorous business minds meet to see the latest innovation in fashion design. This season the event moves to the Damrosch Park at the Lincoln Center complex, allowing designers more space to showcase their collections. Last year the event welcomed 232,000 people and generated $466 million in visitor spending.

08.30-09.12US Open, NYThe toughest competition in the world of tennis, the US Open grand slam brings the fi nest players from across the globe to our shores. Champion for fi ve years running, Roger Federer lost out last year to Juan Martin del Potro. Can he return to form for this year’s competition after early exits from grand slams in France and Britain?


P.S. AGENDA 143

09.11-12Harvest Wine Festival at the Plains, VirginiaBringing together the fi nest wines in the south east and international polo, this festival is the idea’ way to round off your summer. A weekend ticket will get you unlimited tastings of the 275 artisan wines and there are various culinary seminars avail-able, as well as world class polo matches.

09.12Opening NFL Game at New Meadowlands StadiumAt $1.7 billion dollars, the New York Giants/Jets’ new stadium is the most expensive in history. This month sees the opening game of the season in their lavish new home. Corporate guests can enjoy the premium lounge suites, featuring a post-game interview room, a martini lounge and celebrity chef cooking areas.

09.24Release of Wall Street: Money Never SleepsWith Wall Street still very much under the watchful gaze of the public since the economic crisis, September sees the release of the sequel to the 1987 Oscar winner star-ring Michael Douglas as ruthless villain Gordan Gecko.

10.01-03The Ryder Cup, Wales, UKThis year the competition takes place at the Celtic Manor Resort, in the heart of the Welsh rolling coun-tryside. Corey Pavin and his team look to once again conquer Europe and retain their crown as champions of this prestigious event.

09.28Important Jewels auction, Sotheby’s, NYA regular feature on the Sotheby’s calen-dar, the Important Jewels Auction showcases some of the fi nest precious stones money can buy.


P.S. FINAL WORD144

Jeremy Roff e Vidal, Group Human Resources Director for Capgemini, reveals the

secret to managing a global workforce: technology.

Five-minute interview

Local offi ces need to understand local markets. It’s absolutely fundamental. That means we have nation-als running the offi ces in various countries. They have to understand the local economic and commercial dynamics, as well as how to manage people culturally.

Dialog is absolutely fundamental. We have put more focus on using technology like conference calls or videoconferences and this has brought people closer to one another. I also think that interactions have become faster, simply because you don’t have to wait for somebody to travel somewhere, you just pick up the phone. However, technology must never replace the dialog between manager and employee.

I’m a big fan of e-learning. It has allowed us to in-crease training participation by 160 percent in 2009 – the equivalent of 2.9 million hours of training across the world. While most companies have reduced their training budgets, we were able to actually increase it in 2009, mainly by using e-learning. Wherever the employee is in the world they can access content through the internet, and that type of training will enhance performance within the organization.

It has to be accessible to everybody across the com-pany. This is essential when you are a global fi rm, because our clients appreciate having knowledge-able people on the other side of the line. We have to ensure we constantly train people. This is especially important in a fast-moving technology environment; we have to keep up with that. E-learning puts the em-ployee at the center of the training.

We are also testing a social networking platform. We have more than 3000 consultants around the world and getting knowledge, feedback and client input is key to us being able to offer the right advice. The idea is to see if such a platform can bring people closer to one another, and so we are testing that in order to measure the potential benefi ts.

We’ve shown resilience through the recession. Of course, we were impacted by the crisis, but probably not as much as other types of industries. As an indus-try that is founded on having knowledgeable employ-ees, there were still job openings. And we’ve built a more loyal workforce as we have continued to invest in our people. People come into our company because they want to develop a career.

Our workforce understands the new technology environment. The economic crisis has changed the game for everyone, and we need to train our people in order to help them through this evolution.


SAVVIS AD.indd 1 01/07/2010 13:33

EMERSON AD.indd 1 28/06/2010 13:45

BMUS 19

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