Staying on top of the game

Posted on October 4, 2004 
Filed Under Julian, The Edge

HIGH PERFORMANCE AND THE CONNECTED CORPORATION
By Lim Beng Choon

Accenture’s country MD kicks off his monthly column by defining the concept of the connected corporation and embracing it to deliver high performance

What differentiates a company from its rivals and how does it sustain growth in the long-term? Accenture believes the answer is in enabling high-performance and continuously challenging the norms once you get there. Several findings from our nine-month research in this area have been applied to help companies and government agencies globally.

When Vijay Singh became the No 1 ranked player in Boston this month, his triumph was not without consequences. It will be hard to rest on one’s laurels with a tiger on one’s tail.

Tiger Woods held the position for 264 consecutive weeks –- more than five years. Given his ambition and passion for the game, how long can Woods stand being called the world’s No. 2?

It bears noting that David Duval, the last person to knock Woods from his lofty pedestal, for about three months in 1999, has slipped into oblivion and out of the top-500 ranking.

In business, as in golf, it takes extraordinary focus and commitment to stay on top of one’s game. There is a notoriously fine line between the one-time performer, and the person who sustains high-levels of consistent performance over long periods.

The Malaysian business horizon is dotted with corporations facing this very dilemma. Some have experienced exponential growth and are in rapid transition making the leap from local player to regional player and even to global player. They have reached the top by marketing their services and products well, by driving employees to strive for excellence, and by winning contracts — again and again.

Ironically, when performance measures are taken honestly and brutally, some of these corporations still find aspects of their enterprise are mired in mediocrity. Worse still, they discover that rising to the top comes with the ultimate handicap –- an affinity towards arrogance among employees. Mediocrity and arrogance are a lethal combination that can kill customer loyalty.

Like the golfer at the top of his game who decides to re-examine and re-engineer his swing, every corporation in arriving at a new, unfamiliar plateau needs to take stock and understand the mechanics of maintaining high-level performance.

SURVIVING THE 21ST CENTURY

It is a grim fact that only 15 of the top 100 U.S. corporations in the early years of the last century still exist today. Most high-profile corporations today will be defunct by 2100. One recent study suggests that the average “life expectancy” of European and Japanese firms is only 12.5 years.

In order to deliver significantly higher returns to their shareholders over sustained periods, corporations need to know the challenges ahead:

With such challenges, no company has the privilege of going it alone anymore. The only way to move forward and ensure survivability is to embrace the concept of the ‘connected corporation’. A connected corporation is one that recognizes it is a part of an ecosystem of inter-dependent organisations in a complex network of relationships.

Accenture research suggests that a quarter of corporations expect alliances to account for more than 40 percent of their market value in 2004.

EMBRACE THE MATRIX
To stay on top of the game, one needs to know how to make and nurture the right relationships to secure long-term survivability. Companies must increasingly build alliances with customers and partners to set and achieve high-performance goals.

This willingness to deepen capability in various services, build various new partnerships and embrace the permeability of the connected corporation, is indicative of the future. In our experience, there are five imperatives to become a high-performing connected corporation:

1. BEGIN WITH A STRONG CORE
In “Good To Great: Why Some Companies Make the Leap… and Others Don’t”, author Jim Collins concluded that the common dynamic of enduring, great companies is that they recognized their core ideology and never wavered from it.

Surprisingly, the leaders of the 11 great companies identified by Collins were not hard-charging, charismatic nor celebrities. They were ambitious — but humble — and had extraordinary professional will. They subjugated their egos in favour of their company’s performances.

These leaders first focused on getting the right people on board the bus and in the right seats — and the wrong people off the bus. Then, as a team, the organisation figured out where to go.

The connected corporation must articulate a clear common purpose based on the employees’ feedback. A company that operates purely as a money-making machine is soul-less. It cannot draw passion from its employees and add value to the community.
On the other hand, a company with great values draws passionate people like a magnet.

2. DO WHAT YOU DO BEST
Dutch insurance company Universal Leven, a subsidiary of Allianz Netherlands, is a radical example of how to concentrate on the essentials. It has only three employees that look after 23,000 customers. Or more precisely, they have them looked after by various partners, including Accenture.

Universal Leven has outsourced all its functions such as back-office, reinsurance, product design, distribution, marketing and selling. Set up in 1996, it was in the black in three short years, an unheard of achievement for a life insurance company.

By identifying its core assets and capabilities in the value chain, Universal Leven exemplifies how the connected corporation can compete in today’s environment.

Outsourcing is a ripe idea for high-growth companies in Malaysia facing the dual dilemma of rising labour costs and the crunch of global competition. Identify your core, then outsource the rest but be mindful of your core capability. In our experience, corporations looking to outsource, must understand that getting rid of the pain point is only the first hurdle in a long race.

Ensure you get as much performance improvements from your identified core competence as you do from the outsourced part of your business. The two are not mutually exclusive.

3. BRING CUSTOMERS EARLIER INTO THE PROCESS
Being customer-driven is a given in today’s high-performance business climate. Ignoring the customer can lead to dire consequences. The world’s cellphone leader Nokia is a case in point. After grabbing the lead, it ignored customer preference for lower-end and mid-range phones, especially clamshell or fliptop-styled phones. It paid the price and ceded marketshare to rivals Motorola and Samsung. Its share of the market has plunged below 30 percent this year from over 35 percent last year, according to industry estimates.

Your customers are powerful antenna for picking up information about your products, partners, suppliers, rivals, government and the community at large. Find out what they value most and make them part of your product design process. Involve them in designing and redesigning the supply chain. Develop early warning systems with them to predict emerging trends and be flexible enough to change often.

4. HARNESS THE TALENT WITHIN AND OUTSIDE THE CORPORATION
The average job tenure has dropped from 15 years to 30 months. More 30-year-olds have already worked for more employers than their parents’ entire careers. It is increasingly difficult to recruit and retain staff.

The nature of relationships between employer and employee is changing in tandem with the rise of the connected corporation. Corporations need to be more flexible and get more creative in retaining staff. Allow for mobility, rotate staff regularly, or let them bid for jobs as they open up internally or externally. Some corporations have taken the project-oriented approach in which employees work on a series of diverse, limited-term assignments instead of within a single department or function.

5. LEVERAGE ON TECHNOLOGY
High-performance corporations have an uncanny ability to sense and respond to new technology. They understand the need to integrate technology into planning and execution of long-term business goals, not just as a quick fix to save costs.

In a world of shortened business cycles and rapidly changing customer preferences and government policy, getting technology to maximize your potential is crucial to survival. Ultimately, attaining connected corporation status cannot guarantee “eternal life”. But if you plan to stay around a longer time than most, these five imperatives can reshape your destiny.

(Editorial services by Trinetizen Media for Accenture)

NEXT MONTH: Investing to capture value

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