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Business Innovation in a Global Economy

Business Innovation in a Global Economy. Srikanth Kannapan, PhD May 5, 2005. Outline. Some Working Definitions Industry Domains Business Drivers Enablers & Challenges Value Chains Value Chain Evolution Patterns of Business Innovation Dimensions of Complexity Examples - Discussion.

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Business Innovation in a Global Economy

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  1. Business Innovation in a Global Economy Srikanth Kannapan, PhD May 5, 2005

  2. Outline • Some Working Definitions • Industry Domains • Business Drivers • Enablers & Challenges • Value Chains • Value Chain Evolution • Patterns of Business Innovation • Dimensions of Complexity • Examples - Discussion

  3. Some Working Definitions • Globalization • 17 million hits with a search engine • Economic integration/interdependence of countries • Trade liberalization (increased circulation of goods) • Financial liberalization (expanded circulation of capital) • Expansion of travel patterns • Business Innovation • 0.5 million hits with a search engine • A socio-techno-economic business evolution • Internet Commerce • Outsourcing

  4. Industry Domains • Major Domains • IT/Software: Enterprise Software, Embedded Software • Manufacturing: Electronics, Automotive, Aerospace • Telecom: Wireless, Data/Video • Financial Services: Banking, Insurance, Asset Management • Emerging Domains • Retail: CPG, Durables, Apparel • Media / Entertainment: Publishing, TV, Animation • Boundaries of Influence • Onsite physical action • Emotional connection • Cultural affinity

  5. Business Drivers • Financial Imperatives • Profitability & growth expectations • Increasing global purchasing power • Highly diverse global cost bases • Growing Competition

  6. Enablers & Challenges • Enablers • Trade and finance liberalization • High speed communication links • Spreading competence • Expanding partnerships • Challenges • Bridging language and culture • Transcending physical, political, social factors • Managing global partnerships • Building and operating distributed infrastructure • Attracting and retaining talent

  7. Value Chains • Value chains: A valuable conceptual tool to understand the effects of business innovation and globalization • Map flow and dependencies of value-added activities in businesses • Track flow of “parts”/products from source to consumption • Identify activities performed/to-be performed within/outside the enterprise • Explore build/buy/expand options for enterprise components in different global locations • Value chains have different patterns for different industries • The Manufacturing Industry (Electronics, Automotive, Aerospace) • The Service Industry (Telecom, Financial, Retail) • The Information Industry (IT/Software, Media)

  8. Value Chains:Manufacturing Industry • Buy-Side • Direct, Indirect • Sell-Side • Market, Customer, Product • In-Side • Development, Production, Infrastructure Offering/Process Development Supply Chain (Indirect) CustomerRelationship Production Market Insight Supply Chain (Direct) Distribution Chain InfrastructureManagement

  9. Value Chains:Services Industry • Buy-Side • Information, Indirect • Sell-Side • Market, Customer, Offering • In-Side • Development, Operations, Infrastructure Offering/Process Development Supply Chain (Indirect) CustomerRelationship Service Provisioning &Operations Market Insight InformationSources Distribution Chain InfrastructureManagement

  10. Value Chains:Information Industry • Buy-Side • Information, Indirect • Sell-Side • Market, Customer, Offering • In-Side • Development, Services, Infrastructure Offering/IP Development Supply Chain (Indirect) CustomerRelationship Professional Services Market Insight InformationSources Distribution Chain InfrastructureManagement

  11. Manufacturing IndustryValue Chain Evolution - I • Sell-Side Globalization • Assess addressable market size and maturity • Identify target segments and develop business plans • Build global partnerships and distribution channels • Expand sales in new geographies Offering/Process Development Supply Chain (Indirect) CustomerRelationship Production Market Insight Supply Chain (Direct) Distribution Chain InfrastructureManagement

  12. Manufacturing IndustryValue Chain Evolution - II • Buy-Side Globalization • Identify “best” sourcing strategy from global suppliers • Build supplier partnerships and logistics • Consolidate/Integrate supply chains into production system • Continuously explore further sourcing optimization Offering/Process Development Supply Chain (Indirect) CustomerRelationship Production Market Insight Supply Chain (Direct) Distribution Chain InfrastructureManagement

  13. Manufacturing IndustryValue Chain Evolution - III • In-Side Globalization • Locate production infrastructure close to markets • Optimize product-mix & production capacity to local markets • Decentralize production operations, infrastructure management • Localize indirect supply chain within global standards Offering/Process Development Supply Chain (Indirect) CustomerRelationship Production Market Insight Supply Chain (Direct) Distribution Chain InfrastructureManagement

  14. Manufacturing IndustryValue Chain Evolution - IV • Integrated Globalization • Develop technology/products aggregating global experience • Locate centers for R&D closest to concentrations of competence • Develop shared platforms for global markets • Customize platforms to local markets Offering/Process Development Supply Chain (Indirect) CustomerRelationship Production Market Insight Supply Chain (Direct) Distribution Chain InfrastructureManagement

  15. Patterns of Business Innovation ~1980’s …

  16. Services IndustryValue Chain Evolution - I • Sell-Side Globalization • Assess market size and maturity • Establish market presence and brand • Establish sell-side partnerships and establish business plans • Monitor market trends, calibrate expansion Offering/Process Development Supply Chain (Indirect) CustomerRelationship Service Provisioning &Operations Market Insight InformationSources Distribution Chain InfrastructureManagement

  17. Services IndustryValue Chain Evolution - II • In-Side Globalization • Leverage global centers of competence for services delivery • Develop outsourcing partnerships for infrastructure management • Implement global standards for indirect supply chain – esp. HR Offering/Process Development Supply Chain (Indirect) CustomerRelationship Service Provisioning &Operations Market Insight InformationSources Distribution Chain InfrastructureManagement

  18. Services IndustryValue Chain Evolution - III • In-Side Globalization • Develop offerings/processes aggregating global experience Offering/Process Development Supply Chain (Indirect) CustomerRelationship Service Provisioning &Operations Market Insight InformationSources Distribution Chain InfrastructureManagement

  19. Patterns of Business Innovation ~1980’s … ~1990’s …

  20. Information IndustryValue Chain Evolution - I • Sell-Side Globalization • Assess market size and maturity, establish market presence and brand • Establish sell-side partnerships, establish business plans, monitor & expansion • In-Side Globalization • Leverage global centers of competence (on-site & remote) • Professional Services, Infrastructure Management, Support Offering/IP Development Supply Chain (Indirect) CustomerRelationship Professional Services Market Insight InformationSources Distribution Chain InfrastructureManagement

  21. Information IndustryValue Chain Evolution - II • In-Side Globalization • Expand scope to collaborative offering/IP development • R&D • Product/Services Development, Product/Services Management Offering/IP Development Supply Chain (Indirect) CustomerRelationship Professional Services Market Insight InformationSources Distribution Chain InfrastructureManagement

  22. Patterns of Business Innovation ~1980’s … ~1990’s … ~2000’s …

  23. Globalized Business Innovation Dimensions of Complexity • People • Communication – language, idiom, accent • Coordination – ownership, time zones, hand-offs, shifts • Competency – technical, product, process, proprietary • Training – Classroom, OJT, Experiential – onsite/remote • Culture – Work, Play – Individual, Group People

  24. Globalized Business Innovation Dimensions of Complexity • Process • Data Flow – Access, Integration • Work Flow – Correct, Complete, Timely • Travel – Set-up, Operations, Revitalize • Organizational Practices – Career Paths • Communication • Coordination • Competency • Training • Culture People Process

  25. Globalized Business Innovation Dimensions of Complexity • Technology • Data Connectivity, Hardware • Applications/Tools Architecture • Software Licensing Technology • Communication • Coordination • Competency • Training • Culture People Process • Data Flow • Work Flow • Travel • Practices

  26. Globalized Business Innovation: Dimensions of Complexity • Financials • Costs, Revenues • ROI, Payback Periods Financials Technology • Communication • Coordination • Competency • Training • Culture People Process • Data Connectivity, Hardware • Applications/Tools Architecture • Software Licensing • Data Flow • Work Flow • Travel • Practices

  27. Globalized Business Innovation: Dimensions of Complexity • Costs, Revenues • ROI, Payback Periods Financials • Strategy & Change Management • Leadership & Management • Process Owners and Task Owners Strategy/ Change Management Technology • Communication • Coordination • Competency • Training • Culture People Process • Data Connectivity, Hardware • Applications/Tools Architecture • Software Licensing • Data Flow • Work Flow • Travel • Practices

  28. Globalized Business Innovation:Dimensions of Complexity • Costs, Revenues • ROI, Payback Periods Financials • Leadership & Management • Process Ownersand Task Owners Strategy/ Change Management Technology • Communication • Coordination • Competency • Training • Culture People Process • Data Connectivity, Hardware • Applications/Tools Architecture • Software Licensing • Data Flow • Work Flow • Travel • Practices

  29. Case in Point: Toyota Innova New Product - 01/09/2004 Toyota Launches Kijang Innova in Indonesia  Kijang  Jakarta PT TOYOTA MOTOR MANUFACTURING INDONESIA (TMMIN) and PT TOYOTA‑ASTRA MOTOR (TAM) unveil in Indonesia today a new Innovative International Multipurpose Vehicle (IMV) called Kijang Innova. Kijang Innova will be produced at Toyota’s Karawang plant in West Java, with annual production of 80,000 units a year. In addition to Kijang Innova production, TMMIN will also produce more than 180,000 gasoline engines per year. Aside of being sold in Indonesia, Kijang Innova and its gasoline engines will be also exported to other countries worldwide soon starting this year with total export volume of 10,000 and about 130,000 units a year respectively. Kijang Innova launching is aimed even to further contribute to Indonesian economies through investment, employment and export. … contd

  30. Case in Point: Toyota Innova Kijang Innova is the output of Global Quality Project (GQ Project) ‑ a business revolution that involves breakthrough improvements in the areas of development, production, technology and services. This is a part of Toyota’s efforts to provide customers a global qualified MPV, which can meet customers’ expectation both in Indonesia and global market. Kijang Innova is one of five IMV models developed by Toyota. IMV models will be produced mainly in Indonesia, Thailand, Argentina and South Africa. Kijang Innova will become a new generation of Toyota’s legendary multipurpose vehicle (MPV), Toyota Kijang, in Indonesia. The new global MPV brings revolution in styling, comfort, performance, safety, value for money as well as production quality at the most beautiful appearance. Powered by latest 2.OL VVT‑i (Variable Valve Timing with Intelligent) engine for gasoline types and the newly developed 2.5L D‑4D (Direct 4‑Stroke Diesel Turbo Commonrail) engine for diesel types, Kijang Innova will provide sophisticated power. good fuel efficiency, as well as excellence in maneuverability and high level of riding comfort. As one of Toyota’s concern to a greener environment, Kijang Innova is ready to comply with European Emission Standard Step 2. … contd

  31. Case in Point: Toyota Innova Toyota Innova launched in India Related stories:Innova launch in Philippines 24 Feb 2005 The Toyota Innova was launched in India by Toyota Kirloskar Motors today.The MPV will be available in both petrol and diesel versions. There will be a total of 5 versions in seven colours. The company has said that the Toyota Innova will compete against the Chevrolet Tavera and the Mahindra Scorpio.That is yet to be seen. The Chevrolet Tavera and the Mahindra Scorpio are both priced much below the new Innova, and both may slash their prices further if it proves that the Innova will be a threat to them. Toyota officials said that the Innova is one of five models that have been designed as part of the IMV (innovative international multi-purpose vehicle) project, launched in September 2002. Innova would be produced at Toyota Kirloskar Motor's plants in India.

  32. Other Industry ExamplesDiscussion • IT/Software • Enterprise Software, Embedded Software • Manufacturing • Electronics, Automotive, Aerospace • Telecom • Wireless, Data/Video • Financial Services • Banking, Insurance, Asset Management • Retail • CPG, Durables, Apparel • Media / Entertainment • Publishing, TV, Animation

  33. Summary • Business innovation now has global context • Value chains help us understand dynamics • Innovation patterns provide perspective • Complexity dimensions enables informed response

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