Emerging Business Opportunities

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27 Νοε 2013 (πριν από 3 χρόνια και 6 μήνες)

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© 2006 IBM Corporation

Emerging Business Opportunities

Discussion with RPI



Mike Giersch

Vice President, Strategic Planning

IBM Corporate Strategy

© 2006 IBM Corporation

2

IBM Experience
-

Three Attempts


Circa 92. A Process Centered Approach


Organization was going through some major process re
-
engineering.


New business opportunity process added.


Groups were to implement process, corporate sponsors, facilitates best practice sharing, etc,


Corporate white space focus rejected by senior leadership


Process aborted


company faced very serious financial challenges, CEO change.



Circa 95. A Funding Centered Approach


Post major expense cutbacks, concern that some new things were cut, needed a life
-
line.


Created new business fund


groups nominate projects, corporate team evaluate and
recommends funding. Funding provided, no on
-
going oversight or support


Funded mostly things that we would want groups to decide to fund … gaming the system to
get extra funding … ‘bowling for dollars’… serving up ‘hearts and lungs’. Reinforced
WRONG behavior.


Projects turned over to groups to manage. Funding process ended.


Ongoing, low profile, staff focus in corporate strategy on new business opportunities.



Circa 99. A Change Management Approach


The EBO System

© 2006 IBM Corporation

3

Call to Action

9/12/99

Self Assessment

4Q99

Start
-
up

1Q2000

Management System

2001

First Graduation

Summer 2003

Next Phase

2006

Benchmarks

Cisco

Intel

Microsoft

Consultant / VC Input

Academic Literature

Case Studies

Akamai

ISP Market

Life Sciences

PvC

Caselets

Business Intelligence

RFID

RS/6000 SP

SSD Microdrive

Recommendations for

CEC, Staff, Line

EBO Work Sessions

P&G

Sun

1
-
on
-
1 CEC

Interviews

Major Root Causes

HORIZON 1

Core business

Extend, defend,
increase
productivity and
profit contribution

HORIZON 2

Growth business

Scale proven
business models,
increase market
share, & grow to
opportunity

HORIZON 3

Emerging
Opportunities

Test business
models,

prove viability,
capabilities and value

Seed growth
opportunities

Time and Level of Uncertainty


Profit


ROIC


Costs


Productivity or
efficiency


High revenue growth


Market share gains


New customer acquisitions


Profit


Project
-
based milestones


Creating the Business
Design


In market pilots

Measures

EBO Idea Sources Enterprise
-
Wide

EBO Selection Criteria


Strategic alignment


Cross IBM leverage


New source of customer value

New

Markets

New Business

Models

New/Disruptive

Technologies

EBO Categories

Research

External
S
o
u
r
c
e
s

(Customer, VC)


Business Units

Sales & Distribution


$1B+ revenue potential


Market leadership


Sustained profit
potential

Selection

SELECTION

CRITERIA

GRADUATION

CRITERIA

US $1 Billion

Cultivation

Graduation


Strategic
alignment


Cross IBM
leverage


New source of
customer value


$1B+ revenue
potential


Market
leadership


Sustained profit


Strong leadership
team in place


Clearly articulated
strategy for profit
contribution


Early market
success


Proven customer
value proposition

Phase 3

Iterative/Starburst

Clusters of opportunities

Working on a portfolio $3
-
5B Market Potential


Phase 1

Identification

“Looking for Churn”

Within an Industry

or Across

Industries

Phase 2

Nurture an Opportunity

$1B Market Potential

Extrapolate Commonality for use in other Industries / Domains

-
Common Business needs

-

Emerging or Disruptive Business models

-
Technology Disruption

Phase 4

Scale and transition all or part of the nurtured businesses

The Portfolio

2006

2000


Autonomic
Computing


Business
Trans.
Outsourcing


Engineering &
Tech. Services


Learning
Solutions


Grid
Computing


WebFountain


Retail on
Demand


Sensors &
Actuators


Info
-
based
Medicine


Blade Servers


Bus Process
Integration


Dynamic
Workplace


Flexible Hosting
Services


Storage Software


STI Cell
Processor


Product Lifecycle
Mgmt


Life Sciences


Linux


Pervasive
Computing


Digital Media


Network
Processor


e
-
Markets

© 2006 IBM Corporation

4

A Few Words of Context …

EMEA

Asia/

Pacific

Americas

Hardware

Software

Services


IBM Today


Revenue $103B, Profit $12B, R&D $6B


4 Product/Service Groups plus Sales/Distribution Unit










IBM in 1999

© 2006 IBM Corporation

5

A Snapshot of the Past

1985

1993

1999

2000

2001

-
$20 B

$20 B

$60 B

$100 B

$140 B

$180 B

$220 B

0

100

200

300

400

K Employees

Profit

Revenue

Employees

Market Value

© 2006 IBM Corporation

6

1984

1992

A Few Fortune Views of IBM

© 2006 IBM Corporation

7

And another ….

© 2006 IBM Corporation

8

A Problem in September 1999

“One issue looms larger and larger in our
company: Why do we consistently miss the
emergence of new industries?”

What should IBM do to improve its ability to successfully identify,

select and pursue emerging business opportunities in a
timely fashion
?


Understand root causes


Recommend actions to address these issues

© 2006 IBM Corporation

9

EBO Start
-
up Approach

The Project Team did significant outside research, wrote 4 in
-
depth case studies,
and developed over 25 mini
-
case studies focused on IBM’s EBO efforts.

Benchmarks


Leading companies


Academic literature


VC Input

Case Studies

Caselets

Recommendations for

CEC, Staff, Line

EBO Work Sessions

1
-
on
-
1 CEC

Interviews

Major Root Causes


Akamai


ISP Market


Life Sciences


PvC


Business Intelligence


RFID


RS/6000 SP


SSD Microdrive

© 2006 IBM Corporation

10

The Underlying Root Causes

1.
Our management system rewarded execution directed at short
-
term results
and did not place enough value on strategic business building.

2.
We were preoccupied with our current served markets and existing offerings.

3.
Our business model emphasized sustained profit and EPS improvement
rather than actions to drive higher P/E's.

4.
Our approach to gathering and using market insights was inadequate for
embryonic markets.

5.
We lacked established disciplines for selecting, experimenting, funding, and
terminating new growth businesses.

6.
Once selected, many ventures failed in execution.

7.
Senior management didn’t spend time on new growth opportunities

© 2006 IBM Corporation

11

Recommended Actions


Corporate Level


Adopt 3 Horizon model as overall IBM business construct


Define Horizon 3 cross
-
business domains


Appoint Senior Executive Leadership


Appoint Silicon Valley ambassador


Build IBM EBO management and measurement system



Group Level


Define group and business unit specific domains


Build appropriate EBO management system for each group


Lead selected Emerging Business Opportunities


Decide appropriate investment balance by Horizon

© 2006 IBM Corporation

12

Emerging Business Opportunity

HORIZON 1

Core business

Extend, defend,
increase productivity
and profit contribution

HORIZON 2

Growth business

Scale proven business
models, increase
market share, & grow
to opportunity

HORIZON 3

Emerging
Opportunities

Test business models,

prove viability, capabilities
and value

Seed growth opportunities

Time and Level of Uncertainty


Profit


ROIC


Costs


Productivity or efficiency


High revenue growth


Market share gains


New customer acquisitions


Profit


Project
-
based milestones


Creating the Business Design


In market pilots

Measures

Source: Alchemy of Growth

Adopted from
The Alchemy of Growth
, Baghai, Coley, White

© 2006 IBM Corporation

13

The EBO Approach, at a Glance, the Essentials


Declare/communicate strategic intent to pursue new growth
opportunities


Identify highly visible short list of emerging business initiatives


House them in the appropriate group/business unit, but give them
special treatment ... gold badges


Dedicated A
-
team leadership for each opportunity


Active sponsorship for each by a SVP


Special support structure


Protected funding


Disciplined mechanisms for cross company alignment


Measured differently, strategic milestones


Regular review and oversight


Nurture and graduate or kill this short list, and continuously identify
new candidates

© 2006 IBM Corporation

14

Global

Services

EBO


Research


Sales &
Distribution

Software

Systems &

Technology

Business Unit
Ownership

Oversight,
Collaboration and
Issue Resolution

Unique, Hybrid Organizational Model

© 2006 IBM Corporation

15

EBO Results

“In

2000
,

IBM

established

its

Emerging

Business

Opportunities

program

to

identify

and

nurture

new

lines

of

business
.

An

EBO

focuses

on

‘white

space’

opportunities

that

can

become

profitable,

billion

dollar

businesses

within

five

to

seven

years
.

EBOs

are

typically

assigned

an

experienced

IBM

executive

‘champion’

to

manage

the

venture

during

its

startup

phase

...

Once

an

EBO

has

grown

to

sufficient

size,

it

becomes

part

of

an

existing

business

unit

...


2004 Annual Report


25 EBO’s launched since 2000


5 EBO’s achieved $1B+ rev in 2003 and 2003


4 additional EBO’s doubled revenue in 2004


2 new emerging businesses launched in 2004

2006 Analyst Briefing

New Markets


Retail on Demand


Sensors & Actuators


Info Based Medicine

FY05

~$1B

>100% YTY

Business Performance Transformation


Business Transformation


Strategy & Change


Engineering & Technology


Bus Performance Mgmt Software

FY05

$4B

+28% YTY

Emerging Countries


China


India


Russia


Brazil

FY05

$4B

+14% YTY

© 2006 IBM Corporation

16


Active senior level sponsorship


Dedicated A
-
team leadership for each opportunity


Disciplined mechanisms for cross company alignment


Actions linked to critical milestones


Resources fenced


and watched


to avoid premature cuts


Quick starts, quick stops


Continued evolution


Communications and connection to the business


Need a burning bridge … top level support


Thorough internal assessment of root causes


Broad senior level buy
-
in


Start small

Call to Action, Start
-
up

Operating, Sustaining

EBO Lessons

© 2006 IBM Corporation

17

Call to Action

9/12/99

Self Assessment

4Q99

Start
-
up

1Q2000

Management System

2001

First Graduation

Summer 2003

Next Phase

2006

Benchmarks

Cisco

Intel

Microsoft

Consultant / VC Input

Academic Literature

Case Studies

Akamai

ISP Market

Life Sciences

PvC

Caselets

Business Intelligence

RFID

RS/6000 SP

SSD Microdrive

Recommendations for

CEC, Staff, Line

EBO Work Sessions

P&G

Sun

1
-
on
-
1 CEC

Interviews

Major Root Causes

HORIZON 1

Core business

Extend, defend,
increase
productivity and
profit contribution

HORIZON 2

Growth business

Scale proven
business models,
increase market
share, & grow to
opportunity

HORIZON 3

Emerging
Opportunities

Test business
models,

prove viability,
capabilities and value

Seed growth
opportunities

Time and Level of Uncertainty


Profit


ROIC


Costs


Productivity or
efficiency


High revenue growth


Market share gains


New customer acquisitions


Profit


Project
-
based milestones


Creating the Business
Design


In market pilots

Measures

EBO Idea Sources Enterprise
-
Wide

EBO Selection Criteria


Strategic alignment


Cross IBM leverage


New source of customer value

New

Markets

New Business

Models

New/Disruptive

Technologies

EBO Categories

Research

External
S
o
u
r
c
e
s

(Customer, VC)


Business Units

Sales & Distribution


$1B+ revenue potential


Market leadership


Sustained profit
potential

Selection

SELECTION

CRITERIA

GRADUATION

CRITERIA

US $1 Billion

Cultivation

Graduation


Strategic
alignment


Cross IBM
leverage


New source of
customer value


$1B+ revenue
potential


Market
leadership


Sustained profit


Strong leadership
team in place


Clearly articulated
strategy for profit
contribution


Early market
success


Proven customer
value proposition

Phase 3

Iterative/Starburst

Clusters of opportunities

Working on a portfolio $3
-
5B Market Potential


Phase 1

Identification

“Looking for Churn”

Within an Industry

or Across

Industries

Phase 2

Nurture an Opportunity

$1B Market Potential

Extrapolate Commonality for use in other Industries / Domains

-
Common Business needs

-

Emerging or Disruptive Business models

-
Technology Disruption

Phase 4

Scale and transition all or part of the nurtured businesses

The Portfolio

2006

2000


Autonomic
Computing


Business
Trans.
Outsourcing


Engineering &
Tech. Services


Learning
Solutions


Grid
Computing


WebFountain


Retail on
Demand


Sensors &
Actuators


Info
-
based
Medicine


Blade Servers


Bus Process
Integration


Dynamic
Workplace


Flexible Hosting
Services


Storage Software


STI Cell
Processor


Product Lifecycle
Mgmt


Life Sciences


Linux


Pervasive
Computing


Digital Media


Network
Processor


e
-
Markets

© 2006 IBM Corporation

18

Some external examples …

In this article, we first describe the management issues facing
companies that pursue new business creation, as well as the
usual problematic responses. We then explore a number of the
most critical balancing acts companies must perform, the
choices they entail, and the risks corporations face when they
fail to get the balance right. We conclude with a look at the
hybrid systems that are often needed to support these
balancing acts, focusing in particular on IBM

s Emerging
Business Opportunity management system because of its
success in mastering several of them simultaneously.
© 2006 IBM Corporation

19

Mike Giersch

Vice President, Strategic Planning

IBM Corporate Strategy

giersch@us.ibm.com


Thank You

© 2006 IBM Corporation

20

EBO Idea Sources Enterprise
-
Wide

EBO Selection Criteria


Strategic alignment


Cross IBM leverage


New source of customer value

New

Markets

New Business

Models

New/Disruptive

Technologies

EBO Categories

Research

External Sources

(Customer, VC)


Business Units

Sales &
Distribution


$1B+ revenue potential


Market leadership


Sustained profit potential

Criteria and Selection of EBO’s