Building Technology Organizations of Tomorrow

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Building “Technology Organizations of Tomorrow”3rd October, 2014

2

Zinnov is one of the world’s leading management consulting firms with a focus on helping organizations globalize their business

Started in 2002 with a focus on helping technology organizations globalize their operations

Operations in Silicon Valley, Houston, Bangalore, Beijing, Singapore and Delhi

120 consultants spread across these locations

Evolution

Service offering

Customer Type

Focus Areas R&D Innovation Talent

Global Business

Corporations

New Age Digital Firms

Government Associations

Balanced globalizati

on

Setup strategy

Growth strategy

GAPBusiness

Transformation

Technology

3

Zinnov’s consulting clientele has a heavy representation from the top 10 of each industry vertical (illustrative list)

ClienteleVertical

Semiconductor/CE

Manufacturing R&D

Enterprise software companies/ storage

Companies

Telecom and Networking

4

Zinnov is a globalization advisory firm with strong capabilities in defining the globalization roadmap for organizations

Engineering & IT

Excellence

Globalization Strategy Review & Definition

Location Analysis & Captive Set

Up

Sourcing Strategy, Vendor

Selection & Vendor

Management

Globalization

Accelerator Platform

Industry benchmarks and

frameworks

Networking opportunity with

peers

Thought leadership and

on demand insights

Branding opportunities

Business Strategy & Expansion

Business Strategy

Account Management

M&A/Operations

Optimization

Customer Connect

Emerging Markets

Direct Sales Maximization

Channel Design and Monitoring

Solution Ideation

Opportunity Assessment & Go to Market

Service Offerings

5

Legacy organizations are being disrupted and are failing to keep pace with the hyper-volatile business landscape

The competitive landscape for organisations has become more dynamic. 465 companies moved out of the Forbes list from 2011 to 2013 and were replaced by a set of new entrants. This is expected to increase to 550 by 2015

465

Companies moved out of Forbes 2000 list between

2009 and 2013

465

550

Companies are expected to move out of Forbes 2000 list

between 2013 and 2015

2000 1535 985

FY 2011 FY 2013 FY 2015

Forbes 2000

6

Top performers of the past have failed to maintain their growth trajectory

141.47There was a drop of

5.2% in the aggregate sales for the Forbes top 10 companies from 2009 to 2014

USD Bn12.56USD Bn

2/10Revenues plummeted

over 6% for these companies from 2009 to 2014

Only 2 out of the top 10 Forbes companies in 2009 still remain in the 2014 top 10 Forbes list

Top 10 (2009)

Decrease in Sales

Decrease in Profits

Retained in Top 10

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They are facing existential threat because of the dynamically evolving market landscape. There are three key propellers that are driving this disruption

Globalized Markets

Digital at Heart of Business

Hyper Agile Competitors

8

Traditional Enterprises are facing competition from a new breed of companies which are agile by DNA

Emerging Markets Competition

1 Startups2 Tech Mafias3

Adopted a multi-market growth strategy coupled with strategic acquisitions of IBM Peripheral divisions (‘05), Motorola Mobility (‘14) and IBM x86 server business (‘14)

Global leader in PC Sales Global PC

Market Share

16.7%

500M users

Effectively moved SMS from telecom networks to the Internet making it transport agnostic and disrupting the age old telecom industry

Technology diversified company

8%(2009) (2014

)

Loss in SMS Revenues of global telecom service

providers

USD7.5BN

Market Capitalisation share

USD1.5T

N

USD6.1TN

(2013)

G100 companies

Tech Mafias

Search, Google+, Android, Google Glass, self-driving cars – Google is evolving in almost every direction at once and disrupting newer verticals

9

Every industry is facing digital disruption and organisations are in a race to be the digital leaders

Using User Data for Product innovation

The Digital Age

A third of world’s population will be on social

media by 2017

Cloud & Analytics Social MediaCloud applications will account for 90% of total mobile data traffic by

2018

2 billion smart-phones by end of 2015

Mobility

Companies are adopting digital at the core of organization

• Harnessed data analytics to bring them back to the forefront of the industry in 2009 after reporting a loss of USD 12.6 B in 2006

• Leverages its data analytics lab in Silicon Valley to help with real-time analysis for the driver, future vehicle designs among others

Using User Data for Channel optimization• Engages with its customers and captures

the real-time data generated for providing information and alerts

Predictive Success Gauging• Ran social media analytics to assess the

buzz generated by the movie (Pitch Perfect) pre-release

• Data mining from Twitter helped them change their pre-release strategy for the movie

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USD 30 TNUSD12 TN

USD 26 TNUSD 34 TN

World Consumption( in USD Trillions)

Developed Markets

Emerging Markets

FY2013 FY 2025 ( E)

Rank Country2008-2012 Internet User

Adds (Mns)Y/Y

Growth1 China 264 102 India 88 263 Indonesia 39 564 Iran 35 2055 Russia 33 66 Nigeria 31 157 Philippine

s28 32

8 Brazil 27 69 Mexico 19 9

10 USA 18 3World 902 8

The majority of

the new internet

users between

2008-2012 was added

in India and China

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Rest of WorldEUUnited StatesRussiaBrazilIndiaChina

Eastward moving centre of world economy is putting further pressure on these organizations

Global Middle Class

Consumption, is

expected to majorly increase

from emerging

economies 2000-2020

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“Organizations of Yesterday” have failed to respond to these challenges and hence are struggling to survive

Organisations of

Yesterday

Hierarchical Decision Making

Solitary/Siloed organizations

Lateral focus on the international markets

Technology dictated product roadmaps

Accelerated growth in focussed verticals

Digital as a choice

Accelerated growth in focussed verticals

Technology dictated product roadmaps

Digital as a choice

Lateral focus on the international markets

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Organisations of

Tomorrow

Agile decision making

Hyper- Collaborative

Lateral focus on the international markets

Technology dictated product roadmaps

Accelerated growth in focussed verticals

Digital as a choice

Disruptive growth by entering new verticals

User experience dictated product roadmaps

Digital as a Priority

Core focus on international markets

To counter these challenges, there is a need for the organizations to revise their strategic vision and build “Organizations of Tomorrow”

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“It is not the strongest or the most intelligent who will survive but those who can best manage change.”

- Charles Darwin, Origin of the Species

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“Organizations of Tomorrow” should be built on three foundational pillars – Digital, Agile and Global which shall be enabled through 5 key levers

Three Foundational Pillars

5 Key Levers

Agile

“Organizations Of Tomorrow”

Global

Markets Talent

Innovation

Digital

Customer Engagement

Operational Excellence

Supply Chain Optimization

Digital Products and Services

1 2 3 4 5

Operations Hierarchy

WorkforceProduct Dev.

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Encode Digital in DNA

Increased investment in future technologies

Optimize costs in legacy products and redirect savings new products

Go Local for Global Markets

5 Key Levers

5 Key Levers

Explore outwards for rich talent

5 Key Levers to unlock “Organizations of Tomorrow”

Demand

Supply

The scarcity and the competition for talent is bound to increase for the G500 companies

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302421

336000

Digitally Native

G500 Spenders

D500 Organizations

Digitally Native

G500 Spenders

D500 Organizations

2013 2018

STEM talent

Demand and

Supply forecast

STEM talent

absorption Pyramid

33579Deficit

412401

368071

44330

Surplus Demand

Supply

The talent supply in the US will be inadequate and expensive to meet the future demand for emerging skillsets. The scarcity of STEM talent is expected to become acute by 2018. There will be a forecasted shortage of ~44000 STEM graduates

Going forward, the G500 spenders will face higher talent competition from the digitally native and the D500 organizations. The availability of STEM talent for G500 companies will be further restricted

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Organizations need to explore newer talent hotbeds to satiate their talent needs

India

178234

China

394535

Mexico

137

218

Finland

1418

Spain

75111

Australia

5680

Poland

112140

Czech

22

36

Annual STEM Graduates( in Thousands)

2013 2018

Russia

196

201

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Case Study – Google’s globalization strategy is focused on operational optimization and leveraging local talent to drive global innovations

HQ ; 67%

Global

Lo-cations; 33%

R&D Spend Share

Consolidates R&D leadership in the US to allow for quicker decision-making Creates Global CoEs based on Talent availability and access to local markets Optimizes the cost of product support operations by delivering support from

locations with abundant low cost talent Acquires start-ups for deep technology expertise and creates global technology

CoEs

BAY AREA

NEW YORK

KIRKLAND

ZURICH

BANGALORE

SHANGHAI

AND BEIJING LONDO

N

PARIS

TEL AVIV AND

HAIFAe.

LOS ANGEL

ES

BOULDER

Headquarters / Engineering HubSatelliteOutpost

Google’s follows a model of semi-autonomous engineering hubs to leverage global engineering talent

Bangalore / Hyderabad

Map Maker

Search Products

Hangouts for Google +

Google Talk

Video optimization technologies for YouTube

Kirkland

IsraelLive Results

Google Suggest

In-Page Analytics

Sydney Birthplace of Maps

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Encode Digital in DNA

Increased investment in future technologies

Optimize costs in legacy products and redirect savings new products

Go Local for Global Markets

5 Key Levers

5 Key Levers

Explore outwards for rich talent

5 Key Levers to unlock “Organizations of Tomorrow”

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Innovation Leaders are looking ahead of disruption curve by making bolder bets on future technologies

Market leaders are increasingly focussing on horizon 3 innovations which are keeping them abreast with the technology curve and ahead of the competition. Even traditional industry players such as automotive, Industrial products, medical devices are investing in technologies of tomorrow which may become core to their operations in the future

Mobile Auto HomeAutomation

Broadband

Horizon 1

Horizon 2

Horizon 3

Process Improvements, upgrades, variants and cost reduction

Google has grown and penetrated newer verticals by investing i`n the upcoming technology areas much

ahead of everyone

Consumer Devices

Building Automati

on

Cloud Services

Virtual Reality

Big Data &

Analytics

Haptic Touch

Ford is focussing on research in areas of Virtual Reality, Haptic touch etc. to

incorporate these technologies in its future programs

New Products serving existing or adjacent markets

Breakthrough Innovations, New Technologies, New Industries

Amazon through its “Lab 126” has focussed on coming up with

innovations in its non core fields

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Intrapreneurship

Hyper Collaboration

Global Startup Connect

Achieving Horizon 3 Innovations

To catch up with the innovation leaders, organizations need to build an entrepreneurial culture as well as partner externally

• Connect with startups across all your markets

• Create accelerator/incubation programs to identify future disruptors early

• Engage early and engage often• Focus on synergies while making

acquisitions

• Partner with external organizations for joint products

• Partner with academia, start ups and local R&D ecosystem

• Explore Crowdsourcing for innovative solutions

• Build an innovation culture• Build a structured intrapreneurship

program• Reward intraprenuers • Be bold in taking ideas to market

GE Flight QuestGE, used Kaggle, an analytics crowdsourcing platform, to build flight path optimization solution

Post It Notes was result of the 3M’s“Bootlegging Intrapreneurship Program” which allows the employee intrapreneur to spend up to 15 percent of their time at work developing their own creative ideas

Microsoft runs Microsoft accelerators in 7 global locations and has built partnerships with 200 startup-focused organizations around the world

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Encode Digital in DNA

Increased investment in future technologies

Optimize costs in legacy products and redirect savings new products

Build Products for Global Markets

5 Key Levers

5 Key Levers

Explore outwards for rich talent

5 Key Levers to unlock “Organizations of Tomorrow”

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Companies across industries are racing to migrate from "analog“ organizations to “digital” organizations

Customer Targeting

& Engageme

ntWorkforce & Partner Enableme

nt

Operational Excellence

Data Driven Product

Engineering

Assisting enterprises increase customer base, engagement, loyalty and advocacy

through targeted promotions and marketing, personalized in-store and online experience

Digital Transformati

on

Enhancing existing products/services or

creating new products/services through

digitization

Helping organizations in not only real-time fraud

& theft detection but also prevention

Building new products based on customer usage patterns and product performance

measurement

Digital Products &

Services

Risk Managemen

t

Enhancing workforce & partner productivity through ecosystem

integration and collaboration

Enabling enterprises optimize their business processes real-time within the organization (incl. support functions, supply chains etc.)

Digital Leaders are enhancing their digital maturity through focus on 6 key digitization areas spread across various business functions including product development, Operations and Marketing

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Traditional Enterprises need to adopt an incremental and iterative approach in helping enterprises in their digital journey

•Benchmark industry best practices •Determine key enabling technology•Understand internal and external data sources•Strategies, initiatives and activities of digitally native enterprises & start-ups

STEP 1

•Evaluate current state & desired state of business initiatives and prioritize them in terms of:• Business Impact: Benefits and Risk• Ease of Implementation: People, Structure & Technology

STEP 2

•Determine a step-by-step map for digital transformation with respect to:• People (Skills, Talent Acquisition & New Roles)• Processes (Change Management)• Infrastructure

• Part by part implementation of digital solutions incrementally and iteratively along with the required IT infrastructure for those solutions

STEP 4

Think Vision:

Build to a Roadmap

Digital Priority : Assess

business & digital

prioritiesOrganize Digital Team and leverage

Disruptive Technology

Incremental &

Iterative Developme

nt

1 2

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STEP 3

Partnered with technology vendor Analytic Partners to track how Acuvue Lens campaigns performed across all media by using dashboards that include features like digital sales

odometers, ad-spend waterfall charts & predictive revenue forecasts

Offers a mobile program to expectant mothers in

emerging countries that gives them information about

pregnancy

Created awareness on AIDS by creating a campaign whereby every time someone shared, tweeted or pinned a particular infographic, J&J would donate $1 to the

Global Fund to fight AIDS, up to $100,000

Channel Optimization Analytics

Customer Engagement Real-Time Data Monitoring & Customer Engagement

Challenge: Reinforce the brand image and value proposition of Acuvue Moist, which gives the user “All Day Comfort” due to rich moisture contentSolution: Interactive “Personalized Hydration Expert” mobile app that tracks moisture balance of the user

Real-Time Data Monitoring & Customer Engagement

Case Study: Johnson & Johnson has leveraged digitisation to create high business value

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Encode Digital in DNA

Increased investment in future technologies

Optimize costs in legacy products and redirect savings to new product innovations

Go Local for Global Markets

5 Key Levers

5 Key Levers

Explore outwards for rich talent

5 Key Levers to unlock “Organizations of Tomorrow”

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Frequent technological disruptions

Dynamic Customer Expectations

Accelerated Product development Lifecycles

New and Nimble competition

Due the dynamically changing market landscape, organizations are being forced to innovate faster and focus on newer products for growth

>30%Revenue from New

products for Industry Leaders across ISV,

automotive, semiconductor and

Consumer Electronics Verticals

Organizations are building products faster and more

often . The focus is on increasing revenues

through newer products and innovations rather than

growth of legacy product market share

Drivers

New Products were launched

in 2013

300,000+Increasing Focus on

new products

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To accommodate increased R&D spend on new products development organization need to optimize R&D cost by engaging with external partners

Str

ate

gic

Im

port

ance

Product Complexity

Compet

ency

read

ines

s

Organizations need to analyse their product portfolios based on 3 key parameter to identify

the outsourcing readiness for each product

External R&D

Partners

Offshore Service

Providers

Onshore Service

Providers

Global R&D Centres

Academia

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Encode Digital in DNA

Increased investment in future technologies

Optimize costs in legacy products and redirect savings new products

Go Local for Global Markets

5 Key Levers

5 Key Levers

Explore outwards for rich talent

5 Key Levers to unlock “Organizations of Tomorrow”

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Organizations are witnessing growth driven, primarily, from the emerging markets

302005 2007 2009 2011 2013 2015 2017 2019

S&P 500 Cos. Revenue growth by markets

Home Emerging

Primary growth markets

SluggishGrowth

Changing Growth

Paradigm

• The growth in home markets for US companies has been nearly static. On the other hand, the growth in emerging markets has been steadily increasing.

• Emerging markets are expected to drive growth in the near and the far future because of an increasing consumption class size

• A globally diverse consumer market is being created as middle class consumption in India and China is poised to overtake US.

• Asia will become a key market for enterprise software as 1/3rd of all large companies will be based there.

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To succeed in global markets, organization need to think local, and plan strategies and products locally for each market

1

Localise-> Adapt ->

Relocalise

2

Long term Commitment

3

Build Local channel

partnerships

4Embrace local and

newer business models

5

Empower local

leadership

Winning strategies for Global markets

Case Study: EMC generates ~50% of revenue from outside U.S.A and has set up local R&D centres to meet the local as well as global demands

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USA; 53%Europe, middle east,

& Africa; 27%

Asia Pacific; 14%

Latin America, Mexico, &

Cannada; 6%

Information Infrastructure

RSA Security

Ownership of Local and APAC products

India

Develop Platform and Layered Applications

Quality Assurance

Support

China

Oil and gas industry innovation hub worldwide.

It has 80 researchers, an Applied Research Center, Solution Development Laboratories

Brazil

EMC Israel Center of Excellence joins design partners (such as startups, mature companies in Israel and globally, and the IDF) to discover ‘the next best thing’ in IT

Israel

• EMC has ~47% revenues from foreign markets• ~45% of the R&D investment is directed towards foreign R&D

centers• Each R&D center has either focus on local markets or is the CoE for

certain technology areas• R&D centers are located in India, China, Russia, Brazil & Israel

outside USA

EMC Revenue Split by Geography

Cloud & Big Data

Information infrastructures

Virtual infrastructures

Russia

Region No Of R&D CentersPercentage contributio

n

USA 11 50-55%

EMEA 10 10-15%

APAC 10 20-25%

Rest of Americas

1 2-5%

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Texas21, Waterway AveSuite 300 The WoodlandsTX-77380 USAPhone:+1-281-362-2773 

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Thank You