Accenture From Global Connection To Global Orchestration

From global connection
to global orchestration
Future business models for high performance
where technology and the multi-polar world meet

Contents
Foreword ................................................................... 1
Executive summary................................................ 2
Methodology............................................................ 5
The multi-polar world ........................................... 6
After the storm:
Two defining trends of the next era ................. 8
The new market-making forces ......................... 12
Mastering orchestration ....................................... 17
Implications for government .............................. 22
Last word .................................................................. 24
Case studies ............................................................. 25
Sources ...................................................................... 30

Foreword Ten years ago, the world entered a
period in which globalization would
come of age. It was to be an evolution
the new market-making forces at
work. For companies and markets,
the implications of these forces, even
in both substance and form. The in embryonic form, are profound.
rise of emerging markets planted
new economic flags, diffusing and Organizations have a great
rebalancing economic power across opportunity to harness these forces
ever more countries and regions. to their advantage to optimize, extend
At the same time, globalization or even transform their business
morphed from being a chiefly one- models. Locating and orchestrating
way phenomenon—with exports and the right global connections outside
labor flowing from East to West— the organization become, perhaps
into an indisputably multidirectional paradoxically, the key to achieving an
and interdependent contest for ever closer focus on the competitive
consumers, resources, capital, talent essence of the business. Excellence
and innovation. The economic map in networks, relationships and data-
became truly multi-polar, the world driven insight will be required. Some
larger in geographic scope yet smaller of the necessary responses may seem
in economic distance. counterintuitive. Throwing open
Mark Foster the doors of the company will not
The past two years, though, will be come naturally. Broadening the field
Group Chief Executive remembered less for trends than for of dialogue takes time and effort;
events. The attention of business customer insight requires work. Yet
Global Markets and
and political leaders everywhere was these investments will help define
Management Consulting rightly absorbed by combating the competitive advantage for the future.
worst effects of the financial crisis
and economic downturn. Now, as Accenture’s multi-polar world research
the dust thrown up by the global program was launched in 2006 to
downturn begins to settle, business help companies and public-sector
leaders and policymakers are starting organizations striving to achieve
to focus once more on the longer- high performance respond to the
term influences shaping tomorrow’s changes in the world’s economies.
economy. The advent of a new decade Our aspiration for this report, the
is a natural time to take stock of fourth in the series, is that it will
the interplay of the forces in global spur organizations to move beyond
economics and their implications for straightforward connectedness toward
business and government. an effective global orchestration of
powerful new economic possibilities
Two trends that feature prominently that increasingly lie beyond the
in my conversations with business traditional frontiers of the enterprise
and government leaders are and fully harness the potential of
the acceleration of multi-polar pervasive new technology waves.
globalization and the transformative
potential of newly mature information
technologies—including cloud, mobile
and collaborative computing. These
two trends have not only continued
apace during the downturn, but have
drawn added strength and speed from
it, spurred by the intensifying quest for Mark Foster
efficiency, competitiveness and new
Group Chief Executive
customers across the world.
Global Markets and
Less well known is how IT and the Management Consulting
multi-polar world are also enabling
individuals and enterprises to connect
and communicate in order to create
value in new and different ways. Our
research has sought to look beyond
the daily headlines about social
networking, blogging and crowd-
sourcing to reveal and understand

1

Executive summary

After the storm: two of emerging-market companies in the By reducing barriers—such as access
Fortune Global 500—a leading ranking to markets, upfront investment,
defining trends for the of the world’s largest companies—has and economies of scale—IT and the
next era risen from 20 in 1995 to 91 in 2009. multi-polar world are intensifying
competition. New entrants from
As the world emerges from a period At the same time, a number of emerging markets, free of legacy
of economic torpor, attention is information technologies are maturing. systems and processes, can access
refocusing on two long-term trends The levels of access, cost, standards, pay-per-use business infrastructure.
whose continued rise has been openness, reliability and ease of use Niche players anywhere in the world
obscured by the recent turmoil: of both hardware and communication can build competitive cost bases
the changing shape of globalization capabilities have developed to the and cut new paths to market. New
and the maturing of information point at which software can be readily consumers, better connected and
technology (IT). used to combine them to newly better informed than ever, are entering
powerful effect in business and social the global marketplace.
The rise of a multi-polar world
settings. The coming together of cloud
economy—in which economic power
services, collaborative computing,
and activity are increasingly diffused
mobile communications and other
across geographic borders—continues
technologies creates new options for
apace. The recovery now under
businesses in all regions. In particular,
way is demonstrating the resilience
in responding to and reinforcing
of emerging markets. Developing
growth in emerging markets, IT adds
economies already account for more
weight to the shift toward economic
than half of world output. They
multi-polarity.
have not only weathered the crisis
better than developed economies,
but they are also helping to power
the global recovery, generating the
bulk of expected growth in the global
economy in 2010. The confident rise of
emerging economies is mirrored in the
corporate arena. Indeed, the number

2

Six new market-making • New businesses that use IT • Technology is unleashing consumer-
to build new bridges between to-consumer content as like-minded
forces producers and customers are individuals share information and
Yet it is not simply a story of emerging. From rural banking to opinion about products and services—
competition becoming more intense: collaborative apps platforms, these often in an open and global forum
competition itself is changing. The intermediary players are harnessing where the objective is not profit,
intertwining of IT and the multi-polar new technology to make markets but an increase in the knowledge or
world has made a number of new in places where geographic or economic welfare of participants.
economic relationships possible for the economic distance had previously Shifting market power away from
first time. This sets the stage for doing held supply and demand apart. producers toward consumers, this
business in completely new ways—not force has implications for reputation,
• Changes in the capability, reach
by simply connecting across the multi- quality, the meaning of brand and,
and cost of IT are enabling new forms
polar world but by orchestrating the where content can be digitized, for the
of business-to-business commerce.
six new market-making forces that survival of entire industries.
Thanks to cloud computing and the
Accenture's research identified: myriad business models it and other • IT is allowing consumers to
• Co-production between companies technologies make possible, even participate in peer-to-peer markets
and their customers or suppliers is for niche providers, companies have for the cooperative production of
blurring traditional boundaries within greater access—fast, across borders, goods and services in tandem with
industry value chains. Innovation and and often at variable cost—to efficient other consumers. Often driven by a
product design are two areas in which and industrialized functions to support desire to unlock new efficiency or
enterprises are using new technologies a more focused core. effectiveness in a product or service,
to tap into the collaborative input peer-to-peer players can quickly
of a growing number of stakeholders open up new market space while also
around the world. reducing the power of alternative
providers. For example, international
peer-to-peer microfinance platforms
are challenging assumptions about
lending to small entrepreneurs in high-
growth economies.

3

• Individuals are collaborating Optimization: Achieving operational Second, they develop deep and
electronically to engage in cooperative excellence in current business wide networks with consumers,
consumption. Social computing can activities. New information entrepreneurs and other businesses.
make it easy for consumers to signal and collaboration tools can By opening themselves up to the
their group buying intentions—and also enhance the quality of products ecosystem, high-performance
to increase that collective bargaining and services, improve customer businesses will draw strength beyond
power by advertising the offer and service and reduce costs. the sum of their parts. By connecting
enlarging the cluster of committed to consumers through social
Extension: Developing current
customers. This “team buying” alters computing and advanced analytics,
business in new areas. Companies
the dynamics of discounting and of they will undertake an open dialogue
can harness new technologies
product tailoring. that directs product and service
to extend existing business
enhancement while building loyalty. By
These new market-making forces, models into additional, or
opening up to external entrepreneurs
and the full range of IT developments completely new, industries.
and businesses, they can co-opt the
they draw on, have big implications. Transformation: Growing new experience and capabilities of others
Businesses will have to operate in a business in new areas. Companies can to develop new, innovative solutions
much more complex ecosystem, where deploy IT to build new business models at low cost. And by divesting some
customers, suppliers, competitors for entry into previously unreachable— in-house functions to external service
and other producers are increasingly or even unimagined—markets. providers, such as cloud owners and
interconnected and interdependent. horizontal service providers, they can
The new forces heighten a number The instruments of increase efficiency and reduce costs.
of business challenges, including
the management of networks of orchestration
third parties, competition from new Orchestrating market-making forces
market entrants, and the protection of is a complex undertaking. It requires
proprietary information and data. They an understanding of how these forces
also present significant opportunities are spawning new business models.
that were not previously available, For the majority of businesses, the
including working more efficiently, question will be: where to start?
collaborating in new ways with Our research has identified two
business partners, and reaching new hallmarks of success that will be
markets or customer groups. increasingly important to underpinning
a company’s competitive performance.
In the government sphere, too, the Understanding these practices offers a
market-making forces offer an guide to businesses seeking to emulate
opportunity to improve public-service and excel against the competition.
value and policy effectiveness, as well
as the prospect of innovative solutions First, they actively seek greater
to social challenges—ranging from insight. Tomorrow’s high-performance
energy usage to security—within and businesses will exhibit unusually high
across national borders. levels of business intelligence, putting
in place infrastructure with which they
Mastering orchestration can constantly amass and analyze
data to glean valuable insight. Their
Strikingly, only 11 percent of business
leaders will regularly communicate
leaders we surveyed believe that
the importance of round-the-clock
their companies are significantly
alertness, displaying advanced
advanced in their strategic response
levels of awareness themselves
to the disruptive business environment
and gearing their organizations’
brought about by the intersection
talent-development programs
of the multi-polar world and
accordingly. In an age when open-
developments in IT. For businesses
source information services have
looking to harness the changed
made everyone an "expert," there is
ecosystem to their advantage, the
enormous potential for competitive
imperative is to move beyond global
advantage by employing advanced
connectedness toward a more
tools for capturing data and analyzing
proactive, continuously managed
it to produce rich, timely, actionable
global orchestration of the new
insights. A passion for data-driven
market-making forces that are now
continuous improvement will become
available. A number of businesses,
a fundamental tenet of a high-
both traditional and new, are already
performance organization’s culture.
doing so to unlock core business
improvement in three areas:

4

Methodology
This report is based on two major The 420 survey participants are all The respondents’ companies represent
strands of research. First, we analyzed senior business leaders. Close to one- a wide range of annual revenues,
the interaction between information third (32 percent) are chief executives, from less than US$50 million
technologies and globalization, drawing presidents or managing directors; (32 percent of respondents) to
on a range of secondary data sources, 30 percent are other C-level more than US$10 billion (18 percent
our extensive experience working executives; and 30 percent are senior of respondents). More than half of
with clients in each of these areas vice presidents, vice presidents the respondents (54 percent) work
and the groundbreaking work of the or directors. Respondents are for companies that have been in
Accenture Technology Labs. Second, distributed across 30 industry business for more than 20 years.
we commissioned the Economist sectors, including financial services,
Intelligence Unit (EIU) to conduct a electronics, high technology,
survey to identify how companies consumer goods, professional
are evaluating and responding services, chemicals, energy, utilities,
to developments in information telecommunications, automotive,
technology and globalization. retail, and media & entertainment.

The fieldwork for the EIU survey was Thirty-one percent of respondents are
conducted in October and November from companies primarily based in the
2009. The survey asked respondents Asia-Pacific region: 30 percent are
which global developments and IT- from North America; and 26 percent
related trends would have the greatest are from Western Europe. Other
impact on the business environment, respondents come from the Middle
which IT-related opportunities and East, Africa, Latin America and Eastern
threats their companies faced and Europe. Approximately one-third of
what strategies they were planning companies have physical operations
to implement in response to those in more than 20 countries, while 18
opportunities and threats. percent have physical operations only
in their home markets.

5

The multi-polar world
Accenture uses the term “multi-polar world—new consumers, talent, Talent
world” to describe the diffusion innovation, resource sustainability, While many Western economies
of global economic power across and capital—that multinational are grappling with the effects of
a widening range of regions and businesses can harness for short-term contracting workforces and shortages
countries, with that diffusion flexibility and long-term growth. of specialized skills, emerging-
accelerated by information technology, These dimensions, which span market workforces are set to expand
greater economic openness, and emerging and developed economies, dramatically. In the decade to 2020,
the growing size and reach of constitute the arena in which the working-age population of
multinational companies. companies now need to compete. emerging economies is expected to
increase by more than 500 million,
While many of the new poles of New consumers compared with an increase of only
economic activity are in the “Big 6” Many emerging markets continue 3.7 million in developed economies.1
emerging economies—Brazil, China, to enjoy impressive growth in
India, Mexico, Russia and South consumer spending, bolstered by Innovation
Korea—increasingly they include long-term fundamentals such as Innovation is no longer the exclusive
next-wave locations such as Egypt, population growth, rising incomes province of developed markets.
Nigeria and Turkey. Together with the and an emerging middle class of A combination of investment,
more-established centers of economic consumers who aspire to developed- education and a strategic policy
activity, these rapidly emerging world standards of living. IT offers focus on new technologies has
economies are radically reshaping businesses new ways to reach and spurred the development of new
the economic geography in which serve these emerging customers clusters of innovation in emerging
businesses must operate. and to craft innovative business economies. Witness the rise of
models that uncover otherwise nanotechnologies and biotech in
Accenture first explored the latent pools of demand. Beijing, digital media and genomics
characteristics and drivers of in Seoul, biofuels in Brazil and
this new phase of globalization automotive technologies in Poland.
in its 2007 study, The Rise of the
Multi-Polar World. In that study
Accenture identified five increasingly
competitive and interdependent
dimensions to the multi-polar

6

Resource sustainability The canvas of the multi-polar world and consistently different ways. In
Because of global commodity also features a large and increasingly particular, the findings showed that
markets and optimized supply chains, diverse cast of public and private companies need to:
companies feel the effects of volatility players operating alongside and
Create geographic options—
in prices or supply movements more competing with traditional, developed-
proactively and continually look
quickly than ever. At the same time, market multinationals. Chief among
outward to sense their environment
they face the prospect of a world with these are the emerging-market
and make focused choices about where
dwindling fossil-fuel resources—and multinationals, which have become
to compete and whom to engage.
increasing obligations to preserve increasingly prominent as they
natural resources. The challenge is expand their international activities. Be authentically local—embed
to find the right balance of supply These companies were the subject of themselves with full commitment in
security, price stability, efficiency Accenture’s second multi-polar world their chosen markets, weaving their
gains and environmental sustainability. study, in 2008, titled The Rise of the operations into the fabric of local
Emerging-Market Multinational. business and society.
Capital
In the third multi-polar world study, Network the organization—create
Pools of capital are increasingly visible
in 2009, titled Strategies for achieving organizations that are permeable, both
in the emerging world—not only in
high performance in a multi-polar internally and externally, enabling
nascent capital markets but also
world: Global choices for global flows of ideas, people and industry
via new players such as emerging-
challenges, Accenture studied how leading practices to the right places at
market multinationals and sovereign
high-performance businesses had the right time.
wealth funds. With approximately
US$3.9 trillion in assets under been evolving their strategies in
management in 2008, sovereign response to the multi-polar world.
wealth funds—state-backed entities The research found that high-
that invest surplus foreign reserves performance businesses conceive of
overseas—dwarf private equity and and execute their strategies in new
could reach US$8 trillion by 2015,
according to some estimates.2

7

After the storm:
Two defining trends of the next era

When the dust created by the The shift to a multi-polar • Emerging markets are expected to
recession has settled, it may not be generate the bulk of the growth in the
an exaggeration to view multi-polar world is accelerating world economy in 2010;4
globalization and new information For some time now, businesses have • Emerging markets attract a larger
technology developments as the two found themselves operating in a share of foreign direct investment
defining trends of the era ahead. world where economic power and than developed markets, and drive
Powerful individually, each augments possibility are increasingly diffused an increasing share of outward
and enhances the other. Their interplay across geographic borders, especially investment flows;5 and
is setting the stage for substantial to emerging markets—a process that
changes in how businesses see and Accenture terms the rise of the multi- • The six largest emerging economies
interact with the world around polar world (see “The multi-polar (the “B6”)—Brazil, China, India, Mexico,
them—in how they orchestrate their world”). In the depths of the downturn, Russia and South Korea—are on a path
interactions with other entities rather it was easy to wonder whether this to grow by 5.1 percent in 2010.6
than simply connecting with them. shift to emerging markets had stalled.
Levels of risk aversion rose sharply and This rebalancing of economic activity
Among business leaders worldwide, investors and businesses withdrew features not only the B6; it is evident
there is a palpable sense that capital, often to shore up core also in the next wave of emerging
significant change is afoot. Forty-one businesses at home. But the nascent economies, among them Indonesia,
percent of executives believe new recovery is now demonstrating the Malaysia, Nigeria, Thailand and Turkey.
players from emerging markets to be resilience of emerging markets. Much of this growth results from
one of the two developments that Developing economies have not only emerging-market businesses that have
will have the most impact on business weathered the crisis better than continued their onward march amid
over the next five years, according to developed economies, but they are also global recession. Indeed, the number
Accenture’s survey; 35 percent pointed helping to power the global recovery: of emerging-market companies in the
to new technology capabilities Fortune Global 500—a leading ranking
(see Figure 1). • In 2009, for the first time, emerging of the world’s largest companies—has
markets accounted for half of the more than quadrupled in less than
global economy;3 15 years, from 20 in 1995 to 91
in 2009.7

8

Figure 1: Trends in emerging markets and new information technologies are the most-
cited developments impacting businesses over the next five years

In your view, which two of the following developments will have the most significant impact on
your business over the next five years? (Select two)

Growth in size and reach of new players from 41%
emerging markets

Increase in the capabilities of new information 35%
technologies

Slower economic growth in developed markets 27%

Emergence of a changed corporate finance
24%
landscape

Greater involvement of government in 23%
markets/business

Greater access to customers globally 20%

Greater access to inputs (resources, talent, ideas)
12%
from international markets

Climate change and the policy/regulatory 12%
responses to it

Rising security threats 5%

Emerging-market companies have While the multi-polar world increases Software has been the essential
tended to fare well during the the scale of the business landscape catalyst in this revolution. It has
recession, partly owing to strong local and introduces new competitors, brought together hardware and
growth but also to highly competitive developments in IT are creating new connective infrastructure to apply
cost structures and a long history of connections and new possibilities technologies to real-world problems,
serving customers at low (or multiple) for businesses to achieve high needs and wants—both in business
price points. For example, Indian performance around the globe. and social spheres. Businesses
conglomerate Godrej has created are now increasingly using a wide
a new type of refrigerator priced The continuing IT revolution variety of newer technologies
between US$65 and US$75; using to meet their objectives. These
solid-state technology instead of a While the attention of policymakers range from pure hardware such
compressor, the unit is lightweight and business leaders has been focused as cloud-based servers or remote
and can cool 30 liters of food.8 on the biggest economic upheaval of sensors, and communications
Similarly, China’s Zhongxing Medical the past 50 years, the rapid march of technologies such as mobile and
has transformed the domestic information technologies has gone broadband, to complex software-
radiography market in the past largely unnoticed. During this time, driven technologies such as social
decade by creating a technology that information technologies have reached computing and advanced analytics.
renders X-ray images in digital form, new levels of maturation in terms of
bypassing the traditional lengthy access, cost, openness, standards, Yet IT can be only as relevant as the
and expensive chemical process. By reliability and usability. This is true content it holds, transmits or serves
2009, the company had a 50 percent both of IT hardware—including servers, up. This period of IT maturation
share of the Chinese market—despite PCs, smartphones and sensors—and coincides with increasing levels
40 percent price cuts by developed- of communication technologies, with of digitization—the availability of
market competitors.9 mobile and broadband connectivity content in electronic form. Not only
nearly ubiquitous in the developed are books, music and news all online,
world and increasingly common across but increasingly so are taxes, medical
much of the developing world. records and bank deposits. And in the
future, remote sensors will allow a raft
of physical objects to interact with
people—and each other.

9

Figure 2: New developments and capabilities in IT Remote sensors—These create
new ways to track goods across
the supply chain and to obtain
information about product usage.
Predicting They are an important element in
information the development of “smart grids”
that integrate households and power
grids in ways that increase energy
efficiency and reduce energy use.
Analytics
Advanced analytics—This is the
Moving Analyzing
information information
extensive use of data, statistical
Collaborative analysis, explanatory and predictive
computing models, and fact-based management
Mobile
tools to drive decisions and
actions.10 Businesses can harvest
Cloud
computing greater insight and competitive
advantage from the mass of data
Sensors
accumulated in the course of
IT developments producing and selling to customers
or operating plants and equipment.
Sensing Processing
information IT capabilities information
These developments in IT are not only
changing the options available to
businesses, but are also accelerating
the move toward a multi-polar world.

IT-powered multi-polarity
IT continues to make the world
feel smaller to organizations. As
the availability, affordability and
The business impact of a client process clouds. The emergence power of IT continue to increase,
selection of current technologies of cloud providers serving many geographic distance becomes less
different companies will promote relevant for today’s multinationals.
So what will the transformation in the greater standardization and Bangalore can be as convenient
power of information technologies industrialization of business processes, as Boston, Seoul as accessible as
mean for business? Earlier phases yielding significant scale efficiencies Seattle. Cost-effective and powerful
of the IT revolution enabled us to and allowing the optimization of IT IT makes it possible to closely monitor
move and process information, functions across the entire cloud. a manufacturing plant in Vietnam or
powered by computer processing to track components across a global
cycles, dependable and sophisticated Collaborative (social) computing— supply chain. The Internet instantly
software, and networking capabilities. This encompasses a wide variety of links suppliers directly to billions of
Recent developments are enabling IT technology tools that allow real-time potential customers across the world.
to sense, analyze and even predict networking and collaboration among The growing global middle class,
information, creating new capabilities users, both at home and increasingly more and more reachable through
in the generation and application of in the workplace. It facilitates the the Internet and mobile phones,
business insight (see Figure 2). creation of online communities of offers businesses the prospect of
interest that companies can tap into reaching millions of new consumers
Cloud computing—This provides to source ideas, test products and with greater discretionary spending
businesses with access to computing services, and market new offerings. power (see Figures 3, 4 and 5).
power, software and process Mobile technology, in particular, has
management functions from a remote Advances in mobile technologies— been crucial in increasing access
third-party provider, enabling them These technologies are now coming to markets, particularly among the
to pay “per use” and avoid the need into their own, not just for personal world’s poorest. Mobile phones, for
to own significant infrastructure communication, but also for remote example, allow farmers to access
themselves. Types of cloud services telemetry. Mobile technologies allow live market prices for their produce,
include IT infrastructure (access to businesses to reach customers at any and they bring banking services to
hardware and servers), platforms time wherever they are, tailor services remote areas for the first time. A
(development environments for to the customer’s exact location and recent Accenture survey of consumers
applications), applications (accessed sell to previously unreachable markets. revealed that those in emerging
through Web browsers) and multi- markets are more than twice as

10

likely as those in developed markets Figure 3: Growth in Internet connectivity
to buy and use consumer IT—such Percentage of the population using the Internet
as Web-enabled mobile phones, 80
smartphones and netbooks—in
2010.11 Advances in IT also allow 70
companies to access the increasingly 60
sophisticated workforces of the
50
emerging world, meaning that ever-
more-complex tasks can be carried 40
out across virtual global networks.
30

The new capabilities of IT have 20
the potential to benefit the
10
competitiveness of emerging-market
multinationals. Using IT, they can 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
leapfrog to create cheaper, more
Developed economies Emerging economies
flexible business processes without
the concerns of legacy IT that confront Source: International Telecommunications Union, 2009; Accenture analysis
their developed-market counterparts.
It is no wonder that, between 2010
and 2013, IT spending is forecast to Figure 4: Growth in use of mobile telephones
grow 5.8 percent per year in emerging Total number of mobile cellular subscriptions in the world (in billions)
markets compared with 3.6 percent in 4.5
developed markets.12
4.0

IT and the multi-polar world 3.5

have enlarged the business 3.0

ecosystem 2.5
77%
2.0 74%
Taken together, the rise of the multi- 71%
polar world and the maturation of IT 1.5
67%
are changing the nature of competition 62%
1.0 57%
53%
and the nature of stakeholder 41%
47%
0.5 36% 33% 29% 26% 23%
interactions. The ecosystem in which 59% 53% 47% 43% 38%
64%
businesses have traditionally operated 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
has enlarged and become more
complex: more competition, more
stakeholders, more customers, spread Source: International Telecommunications Union, 2009
across more geographic boundaries.
As the following chapter explains,
the two trends are also combining to Figure 5: Growth of the middle class
generate new ways of creating value
Number of households (in millions) with annual incomes greater than US$5,000
among stakeholders—with important (at constant prices and at purchasing power parity)
consequences for businesses.
800

700

600

500

400

300

200

100

0
1999 2004 2009 2014f

Source: EIU

11

The new market-making forces

The business ecosystem is now Figure 6: A perspective of ecosystem disruption
populated by more stakeholders and
competitors, complicating the terrain 6a. Traditional view of the business ecosystem
for companies around the world.
However, a further reality is dawning:
the nature of competition itself is B2B B2C End-consumers
changing. Accenture has identified companies companies

how the intertwining of IT maturation
and the rise of the multi-polar world
are generating six forces that are
creating new market potential
6b. New market-making forces are creating a more complex business ecosystem
(see Figure 6). These forces are leading
to novel configurations of capital,
talent and resources that open up
1 1 4
B2B B2C
more efficient forms of production; companies companies
End-consumers
unlock new products and services;
introduce new business models; and 3 6 5
open more components of the value
2 2 2
chain to collaborative execution.

Intermediaries

Co-production between firms and Consumer-to-consumer content sharing
1 their customers and suppliers
4
Using IT to create new bridges Peer-to-peer markets operating outside
2 between producers and customers
5 the traditional value chain

New forms of B2B commerce, Cooperative consumption by groups of
3 including the emergence of specialist 6 end-consumers
“horizontal” players

12

Here is a review of the six new market- Some new companies take this idea
making forces: to its logical extreme and have
built their business models entirely
Co-production on harnessing the experience of
external individuals. Marketocracy, an
More and more companies are investment-management and research
harnessing their customers’ ideas, firm, manages mutual funds based
tastes and productive powers. Danish on the top performers from more
toy maker Lego has launched an online than 100,000 model portfolios run by
customization platform—its Design amateur investors.17
byME site—where enthusiasts assemble
components for their own designs, There are strong indications that
which Lego then makes available to business leaders are starting to take
other customers.13 Dell launched its customer co-production seriously.
IdeaStorm site to tap into the ideas of Half of the business leaders responding
the global community of Dell users; to to Accenture’s survey think that
date, the company has implemented greater collaboration with customers
hundreds of the 12,000-plus ideas (for example, crowdsourcing of design
suggested at the site.14 Companies can or innovation) will have a significant or
also use such communities as tools very significant impact on competition
to reach out into the marketplace. in their industries over the next five
Lancashire Tea generated publicity, years (see Figure 7).
as well as useful input, when it asked
its fans on Facebook to help choose
its new packaging designs.15 Estée
Lauder invites bloggers to its perfume
launches to help generate online buzz
around new fragrances.16

Figure 7: Impact on competition of long-term IT-related trends

What impact will each of the following long-term IT-related trends have on competition in your industry over the next five years?

Emergence of new, faster or more flexible business
15% 47% 25% 11% 2%
processes

Greater consumer connectivity (e.g. via mobile, 20% 39% 25% 11% 4%
broadband)

Greater returns from applying insights about
12% 46% 27% 12% 2%
customer behavior/preferences

Growth in the bargaining power of more knowledgeable
16% 41% 29% 10% 3%
consumers

Greater collaboration with customers
13% 37% 29% 17% 3%
(e.g. crowdsourcing design or innovation)

Increased ease, or lower cost, of expansion into new
9% 35% 34% 19% 3%
markets or regions

Emergence of new business models (e.g. "freemium" 13% 30% 27% 22% 6%
online news, open-source software)

Increased ease, or lower cost, of market entry for new
11% 30% 30% 23% 5%
players

Declining time advantage of being first to market 9% 24% 39% 21% 6%

0 10 20 30 40 50 60 70 80 90 100

Very significant Significant Moderate Limited None Don’t know

13

New bridges between Other examples include Apple’s iPhone These developments present
apps, which provide a new revenue particular opportunities for small
producers and customers stream for Apple and a creative and companies, which can now take
Information technologies are being entrepreneurial outlet for others, advantage of the benefits of scale
used to enlarge markets. Two and Amazon’s “Marketplace,” which previously enjoyed only by large
examples: selling mobile phone offers small businesses the chance to businesses. Larger businesses are
banking services in rural areas of reach large audiences while increasing under further pressure as smaller
emerging markets, as Kuwait-based the variety of products for sale on rivals are increasingly able to source
mobile telecommunications company Amazon’s site. standardized business services
Zain does in partnership with Citibank from third-party cloud providers
in East Africa, and providing higher Information technologies also allow (such as Salesforce.com) with little
education online to students across companies to serve a much wider upfront investment and without
the world, a model that the University variety of tastes and needs. The having to manage an IT legacy.
of Massachusetts uses to reach most well-known example is how
students in China. e-commerce is helping businesses Consumer-to-consumer
reach the “long tail” of niche
Most senior executives grasp the markets.19 At Apple’s iTunes Store, content
potential for disruption—and sense for instance, consumers can purchase Information technology has helped
the opportunity. Nearly sixty percent more than 10 million songs across overcome the asymmetry in knowledge
of respondents overall said that every genre of music. Similarly, that has traditionally given sellers
greater consumer connectivity retailers and individuals can find large the upper hand. In this new phase
would have a significant or very international audiences for their often of consumer-to-consumer (C2C)
significant impact on competition niche wares using eBay’s marketplace. activity, participants are sharing
in their industries over the next five information in open, global online
years (see Figure 7). Interestingly, New forms of business-to- forums. Initially taking the form of
the response was more emphatic reviews of products and services, this
among executives at companies
business commerce
activity now increasingly encompasses
based primarily in emerging markets, Historically, business-to-business (B2B) the mobilization of communities
with 68 percent of respondents companies supplied raw materials, to support, discuss or take action
in those markets, compared with semi-finished and wholesale goods and about a product, service or project.
56 percent in developed markets, services and, more recently, B2B grew
saying that greater consumer to include outsourcing as companies For example, on TripAdvisor’s
connectivity would significantly realized the cost advantage of using website, individuals rate and talk
affect competition in their industries specialists to undertake more of their about their experiences in hotels
over the next five years. non-core activities. Now, outsourcing and restaurants around the world,
is moving deeper into activities shifting the balance of market
Companies can also harness value by once considered core as technology power from the hospitality sector
acting as intermediaries and offering changes the cost basis of those toward the traveler.20 The Now Smell
services that facilitate the productive activities—and the ease and exactness This blog brings together perfume
activities of others. InnoCentive was with which companies can interact enthusiasts to review scents and is
the first global Internet-based hub with their outsourcing providers. an opinion former in the industry.21
designed to help connect “seekers”— This is creating a fundamental change
those with challenging research New specialized services are becoming in the way consumers choose what
problems—with “solvers”—individuals possible as cloud computing and to buy as they rely increasingly
who devise creative solutions to related technologies enable the on information written by peers
these problems. InnoCentive itself aggregation of small, individually online rather than on brand history,
does not generate solutions; rather, uneconomic pockets of demand marketing or published specialists,
it brings together individuals, for business services in areas such for example in consumer reports.
companies, academic institutions as procurement, human resources
and public-sector and non-profit and data analysis. Amazon, known At the same time, new IT efficiencies
organizations that collectively for its online retail presence, and price points are enabling
represent more than 200,000 of now offers e-commerce and consumers to share more ideas and
the world's brightest minds.18 warehousing services. Li & Fung, information. Some of this is just for
previously a trading company, now recreation or entertainment: tweets
provides sophisticated procurement of news articles or YouTube videos
solutions (for more detail, see are typical. Often, sharing takes the
"Case studies: Li & Fung"). form of blogs, many of which provide
insight into a particular topic. They
range from the mainstream to the
niche, such as The London Review of
Breakfasts. These tools help individuals

14

keep their networks up to date with Peer-to-peer markets Cooperative consumption
the latest trends in their areas of
interest, and can provide companies IT has enabled the creation of Social networking tools and other
with opportunities to tap into groups models of international production technology developments allow
of interested customers. However, the based on cooperative interactions customers to increase their bargaining
speed of dissemination of information among individuals rather than power further through “team buying,”
has a downside: bad news can spread traditional sources of experience where a group comes together online
very quickly, and there are real risks of and trust. Witness the ascendancy to negotiate a discount on a product
companies facing serious brand issues of Wikipedia, or the success of or service.
from one bad review—which might peer-to-peer lending, especially
in providing credit to areas of the Historically, consumer cooperatives
even be written by a competitor.
developing world where conventional were organized to keep prices fair
PatientsLikeMe shows how the model banking services are scarce. and reduce monopolistic behavior.
of C2C dialogue has the potential As markets became broader-based
to transform the health care and The new capabilities of IT and the and better regulated, there was less
pharmaceutical industries. Patients rise of the multi-polar world give need for such models of consumption.
with complicated medical problems more power to groups of individual Recently, thanks to IT, the trend has
share information with others with producers; in some cases, they remove taken off again. Shanghai-based
similar conditions at PatientsLikeMe’s the need for traditional intermediaries Liba.com, founded in 2003 and selling
site, arming each other with the or guardians of trust. Groups of like- everything from paint to ceiling lamps,
information needed to engage in minded individuals can now easily had 1.6 million members within five
informed dialogue with their doctors “cluster” to reduce their reliance on years, with 300,000 unique visitors
and creating samples to test new established companies and have more a day on its site and some 30,000
therapies in large self-organized choice over how goods and services transactions a month during group-
standardized trials.22 are produced. These communities are buying events in Beijing, Shanghai,
not necessarily driven by pure profit Guangzhou and elsewhere.27
Individuals’ ability and appetite to motives; one example is the Linux
generate and distribute their outputs, operating system, which was created In North America, Groupon is a young
often seemingly without a profit and is sustained by developers working US company performing the same
motive, is in turn rendering that output for free using open-source software.23 function.28 It brings together offers
free at the point of consumption. of discounts from local businesses
Music, news, opinion, food recipes: Increasingly, peer-to-peer networks and invites members to register their
in all these areas, content sharing provide services outside the interest; if enough people register
threatens established business models, boundaries of the established on a given day, the offer comes into
as demonstrated by the growth of corporation. For example, in online effect. The advantages of this model
unsigned bands sharing music on groups such as TechArena Community, are that it focuses customers’ minds,
MySpace, the pressures faced by the individuals seek and offer each other lets them know exactly what they
newspaper industry, and the closure of experience on how to operate and are getting, and then encourages
Gourmet and other magazines. upgrade their computers.24 Zopa.com, interested individuals to advertise the
a marketplace where individuals lend deal to their networks. Earlier team-
Overall, C2C communities can money to other individuals, creates buying models were less effective
heighten consumers’ expectations of an alternative to banks for borrowers because they relied on waiting for a
companies, potentially reducing their and a new form of investment for critical mass of customers to express
ability to create or control their market individual lenders.25 Peer-to-peer an interest in a product before
and investor messages and changing production is likely to extend beyond negotiation on discounts could begin.
pricing models in a number of the intangible world of ideas, money
industries. Many business leaders are and information to communities that Opportunities and
aware of the challenge: Accenture’s produce products. Access to low-
survey reveals that 57 percent cost production in emerging markets challenges in the changed
of executives think the growing continues to broaden; producing ecosystem
bargaining power of knowledgeable physical goods at home will be
While some of the new market-
consumers will significantly affect increasingly possible with the arrival
making forces may still be embryonic,
competition in their industries over the of affordable 3-D “printers”.26
each has substantive implications
next five years (see Figure 7). Leaders for businesses. Most dramatically,
of businesses based in emerging competitors or new entrants—
markets are especially concerned, sometimes not driven by a profit
with 67 percent expressing this view, motive—can harness the new forces
compared with 52 percent from in ways that risk subverting existing
developed markets. business models, and potentially
transforming whole industries. For
example, insurance risk assessment
could be upended by the combination

15

of location-based technologies, Figure 8: Businesses see management of complex networks as the most significant
freely available neighborhood data challenge raised by future developments in IT
and analytics software. In health For your company, which of these business challenges will be most heightened by the impact
care, social computing may create of IT developments over the next five years? (Select two)
new options for drug trials—as well
Managing complex networks of suppliers, 37%
as a growing reliance by patients business partners and customers
on the Internet for medical advice.
Nor will government and regulation Protecting proprietary information and data 28%
be immune from these forces (see
Competition for technologically and analytically
“Implications for government”). skilled employees
27%

Executives expect new IT-driven Competition from new market entrants 25%
business capabilities to have a major
impact on competition in their Ability of data-rich large players to dominate
23%
the market
industries over the next five years. For
Diminished ability of the company to protect its
example, 62 percent of respondents brand(s) (e.g. due to such developments as online 18%
to Accenture’s survey thought the consumer ratings, blogs, recommendation engines)
emergence of new, faster or more Increasingly complex regulations for the
12%
flexible business processes would have management of data
a significant impact on competition
Increasing consumer concern over data privacy 10%
(see Figure 7). Nearly sixty percent of
business leaders thought the same of
greater consumer connectivity, and Insufficient Internet connectivity 9%
58 percent pointed to the greater
returns resulting from applying Increasing levels of cybercrime 7%
insights about customer preferences.
Other 1%
The changed ecosystem will create
challenges, but also opportunities for Don't know 1%
achieving high performance. Among
the challenges, companies will need
to manage more complex networks
of suppliers, business partners and Figure 9: Business leaders see IT-related opportunities to improve company performance
in multiple areas
customers; protect proprietary
information and data; compete for Which of the following IT-related opportunities do you see as most relevant to improving
technologically and analytically your company’s performance over the next five years? (Select two)
skilled employees; and respond to More efficient ways of working (e.g. online training,
competition from new market entrants team collaboration across borders, office-less 32%
companies)
(the four challenges most cited by
New possibilities to collaborate with other players in
executives in our survey; see Figure 8). the value chain
26%

On opportunities, the business leaders Reaching new customer groups 24%
we surveyed saw potential to drive
performance across many parts of Entering new markets 24%
the enterprise, from creating more
efficient ways of global working, and Better sourcing and analyzing of data 21%
collaborating internally and externally,
to reaching new customer groups Involvement of customers in innovation or
20%
and entering new markets (the four production processes
opportunities most cited by executives Customizing products and services more easily 18%
in our survey; see Figure 9).
Sourcing of ideas through "open" or collaborative
In short, companies have the innovation with third parties (e.g. online communities, 15%
universities, "open source" communities)
opportunity to do things differently,
harnessing the new market-making Integrating more complex supply chains 12%
forces to drive high performance.
Greater competition among suppliers 8%

Other 1%

Don’t know 0%

16

Mastering orchestration

New information technologies and Figure 10: Few businesses are advanced in their responses to new, technology-enabled
the multi-polar world have combined opportunities and challenges
to create turbulence in industry
To what extent do you feel your company is prepared to deal with the opportunities
structures. Although business leaders and challenges you identified?
see many opportunities and challenges
ahead, few are well prepared: We are significantly advanced in our strategic
11%
response
Accenture’s research has found that
only 11 percent of business executives We have taken a number of steps in our strategic 49%
believe that their companies are response, but still have some way to go

significantly advanced in their We understand the implications and risks, but
30%
strategic response (see Figure 10). have not made significant changes to strategy yet

We have yet to prepare for these issues in a
The challenge for businesses seeking systematic way 8%
to achieve high performance is to
We do not feel the need to change our strategy in
move from a period of building global response—the company is sufficiently prepared
1%
connections to one in which those
connections are actively managed Don’t know 1%
in new and different ways. In the
changed ecosystem, a broader suite
of technological and geographic
options is available. Orchestrating
those connections and relationships
requires harnessing the six market-
making forces in order to realize the
potential for growth and value creation.
Public-sector organizations have similar
opportunities to deliver policy and
services more efficiently and effectively
(see “Implications for government”).

17

Figure 11: IT is seen as critical in helping business orchestrate global operations previously, it would have taken seven
and a half weeks to deploy them
When it comes to managing a global business, to which of the following challenges will IT most help you to internally.31 (For more detail on Lilly’s
respond over the next five years? (Select two) strategy, see “Case studies: Eli Lilly
and Company.”) In realizing these
Reaching customers globally/entering new markets 50% benefits, Lilly’s experience reflects
the results of our business leader
Encouraging collaboration between employees in
different countries
44% survey: 44 percent of respondents
saw IT as helping them most with
Managing an international workforce 30% encouraging collaboration between
employees; 30 percent, managing an
Harnessing innovation from overseas sources 22% international workforce (see Figure 11).

In order to reach customers
Improving access to lower-cost suppliers 18%
globally—the most common challenge
Improving the environmental sustainability of identified by business leaders (see
11%
global operations Figure 11)—computer giant Dell began
using Twitter. Users can sign up to
Sourcing capital globally 10% follow Dell, receiving messages about
discounted products as well as links
Improving access to natural-resource inputs 4% to purchase products or to forward
the information on to others. Because
Other 3% of its choice to open up to consumers
on Twitter, Dell saw US$3 million in
Don't know 4% additional sales in 2007 and 2008.
In 2009, the cumulative sales figure
rose to US$6.5 million, as the number
of users following Dell on Twitter
climbed to 1.5 million. Dell has seen
some of the strongest growth in
Twitter-related sales come from
emerging markets, where broadband
What are the opportunities the quality of products and services
penetration is rising and adoption
(for example, by acting upon customer
for high performance? feedback on blogs), deepening
of social media is strong among
consumers. Dell’s Brazil operation, for
Accenture’s research has identified existing revenue streams (using social
example, has generated US$800,000
three principal ways in which networks), improving collaboration
in just eight months of activity
organizations are realizing between employees (through more
through its local Twitter account.32
opportunities for achieving high efficient communication tools) and
performance in the changed reducing overhead costs (using
Extension: Developing current
ecosystem: optimization, extension cloud computing). Moreover, the
and transformation. maturation and near-ubiquity business in new areas
of information technologies
Companies can also harness IT to
Optimization: Achieving means that most businesses can
extend their business models into
operational excellence in current very easily harness them.
adjacent industries or markets. Google
business activities Eli Lilly and Company, for example, offers a good example. The company
is using cloud computing to optimize earns the bulk of its revenues from
For most businesses, achieving
its business. With pressure growing Internet advertising, which made
excellence in execution is a perennial
to cut fixed IT costs without up 97 percent of its 2008 revenues
priority. In times of recession, it is
compromising IT service levels during of US$22 billion.33 But now, to tap
a key differentiator.29 Optimization
the recession, the pharmaceuticals into a new market of Web users, the
affords businesses the potential
company began working with an company has developed Google Wave,
to continue doing what they do,
application cloud provider to grant a social computing platform that
just better—with lower costs and
computing capabilities to its global will allow users to collaborate and
increased revenues. IT’s role in
network of scientists. As a result, its communicate using richly formatted
enabling this is not in question, but
scientists can conduct more effective text, photos, videos, maps and
cloud computing, mobile computing
and efficient molecular modeling more.34 Although free at the point of
and other technologies, separately
or risk-analysis calculations across consumption, this product extends
and in combination, can push that
countries and regions.30 Lilly can the company’s business model by
contribution to another level. They
now have new computer servers getting more people to navigate its
afford new players a range of
up and running in three minutes; Web pages. Similarly, Google’s free
opportunities, including enhancing
mobile-phone navigation service,

18

which streams live traffic updates revenues from Safaricom’s data- They continuously seek greater
to handsets running on its Android services business segment (which insight
operating system, is also envisaged includes M-PESA, text messaging
as a future ad-supported service.35 and Internet services). Data services To better understand their global
accounted for 18 percent of communities of consumers and
ICICI Bank in India has used Safaricom’s total revenues in 2008—an stay ahead of the competition,
technology to extend its business into increase of more than 50 percent from companies can use analytics
adjacent geographic and IT-enabled 2007—and are likely to contribute an technologies to drive decisions
markets—markets that were previously even higher proportion in the future.38 and actions. Good data analysis
unreachable. In 2001, the company can help businesses understand
launched its Non Resident Indian Smaller companies are also using IT to and manage their performance.
(NRI) banking service, which uses disrupt industry dynamics, developing
Web-based and wireless platforms business models that could become Collect the right data—with the right
to provide the Indian diaspora the industry standards. For example, infrastructure
community with e-banking services. prior to Zipcar’s arrival, the choices Forty-two percent of company
Money transfers are its core offering for those who needed a vehicle were executives told Accenture that
to NRIs, but the product range has to buy, lease or rent. But Zipcar has obtaining more and better data
evolved to include savings and deposit established a new model: an IT- will be a strategic priority for their
products, structured investment enabled car-sharing service. Zipcar organizations over the next five years
options, mortgages, insurance and provides on-demand access to vehicles (see Figure 12). A key to achieving
equity-linked products. ICICI has using high-speed Internet, mobile this is to establish the right analytical
also introduced a number of product broadband and GPS technology. Users infrastructure. Many companies,
variations which appeal to different register online to reserve vehicles, such as online DVD rental service
market segments. For example, its and with the use of a “Zipcard,” they Netflix, have incorporated business
“NRI Edge” is targeted at affluent can access, unlock and lock, and intelligence technologies from the
NRIs seeking a range of priority return their vehicles.39 Alternatively, outset.43 Netflix uses recommendation
services and exclusive privileges, while customers can use a mobile app algorithms to predict the movies its
a card-based remittance account to find, reserve, access—or even customers will be interested in seeing.
allows its customers to draw down sound the horn of—a Zipcar vehicle. Consumers’ movie recommendations
NRI money transfers at ATMs in Customers can purchase services in are a key to understanding their
India.36 With the NRI service serving increments of as little as an hour.40 preferences—and ultimately a pointer
its clients as far apart as Canada and Since the US-based company was to the number of films they will
the Middle East, ICICI has extended founded in 2000, it has opened offices purchase. Netflix regularly upgrades
its business model into entirely new in Canada and the United Kingdom. its technology infrastructure through
geographic—and virtual—territory While it is still relatively small, Zipcar open-source channels.44 A recent
(for more on ICICI’s strategy, see has 80 percent of the car-sharing improvement to its algorithm came
“Case studies: ICICI Bank”). market, has grown its user base to from a dispersed team of global
270,000 and expects to have 2 million researchers based in Austria, Canada,
Transformation: Growing new users by 2014.41 By using technology Israel and the United States.45
business in new areas to work globally, this company is
transforming industries: in 2009, Create insight from the data
IT can help develop entirely car-rental company Hertz launched its
new business models that serve Simply collecting data is not enough.
own car-sharing service in Europe and Deriving actionable insight from
markets that had previously been North America.42
unreachable—or even unimagined. the data is the critical next step.
It can also help reshape industry Indeed, Accenture’s research shows
dynamics by setting new standards
The instruments of that it is becoming more important
that others have to follow. orchestration to develop better data-analysis
capabilities. Thirty-nine percent of
How can businesses set about the business leaders we surveyed
Safaricom, a mobile network operator
realizing the opportunities presented expect that investing in better data-
in Kenya, is using IT to develop a
by the changed ecosystem? What analysis capabilities will form a part
new business model and tap into a
are the capabilities they can develop of their strategies for responding to
new market. The company’s M-PESA
to position themselves for effective the emerging challenges—such as
service, launched in 2007, offers
global orchestration and high greater competition from data-rich
customers a way to transfer money
performance? Accenture’s research companies—over the next five years
anywhere in the country or to make
has identified two broad hallmarks (see Figure 12).
payments—for instance, school fees
of success that will be increasingly
and taxi fares.37 Essentially, Safaricom
important to underpinning a
has transformed its business model
company’s competitive performance:
by serving an entirely new market
first, relentlessly gathering, analyzing
in Kenya: mobile banking. In 2008,
and using data; and second, developing
the increase in demand for M-PESA
a broader network of relationships
contributed to a 94 percent rise in
with stakeholders.
19

Figure 12: Businesses are showing a broad range of responses to IT opportunities bringing new levels of customization
and challenges to marketing, sales and manufacturing
Which of the following are likely to form part of your strategic response to the identified opportunities and efforts. Tommy Hilfiger shares its data
challenges over the next five years? (Select all that apply) with Art Technology Group, which uses
Lowering costs through new technologies algorithms to mimic the in-person
54%
(e.g. cloud-computing services, digitization) feedback loop in a physical store. The
result is an online retail experience
Finding ways to share information and data 42%
with external customers and innovators
that changes with the time of the
week: customers get quickly to the
Obtaining more and better data 42% online checkout on Monday mornings,
just as they would at the store, but
Exploring forms of customer-driven 42% they experience a more relaxed
marketing (e.g. social networks, blogs)
approach on Saturday afternoons, with
39% more detours and extra sales pitches.47
Investing in better data-analysis capabilities

Adopting new revenue models (e.g. advertising,
Another company putting insights
33%
premium subscribers, leasing) to work is Wal-Mart, the global
retailer, which operates one of the
Creating processes/platforms for feeding external
ideas directly into your innovation process
27% world’s most sophisticated supply
chain analytics systems. The company
Doing business over other companies’ business 25% aggregates sales and inventory data
platforms into a single technology platform,
Adopting/promoting open industry standards
20% which store managers use to optimize
(e.g. for interoperability)
product ranges, tailoring assortments
Creating a business platform on which other
16%
to local community preferences.48 By
producers can operate (e.g. "Amazon
Marketplace," Apple’s "App" platform)
mining US customer data, the company
has learned that certain food products
Don't know 1%
(for example, Spam and Pop-Tarts) are
more popular during hurricane season
because consumers stock up on non-
perishable goods in preparation for
bad weather.49 In addition, Wal-Mart
An example: India-based YES Bank is Overall, Accenture’s research shows
has issued a mandate to its top 100
using analytics to better understand that customer service is becoming a
suppliers to tag merchandise with
its customers. The company previously target area for generating data-driven
RFID technology. All of this has led
managed customer relations with insight: Asked which business practice
to significant efficiency gains for the
static, manually updated databases. areas would be most affected by IT
company: its leaders estimate that the
As a result, tracking sales leads over the next five years, 42 percent
data collected have cut the incidence
was challenging; cross-selling of business leaders cited customer
of out-of-stock products by 30 percent
opportunities were being overlooked; services first or second.
and improved the efficiency of moving
and turnaround time on customer
Put the insights to work products in-store by 60 percent.50 By
complaints was substandard. The bank
building the ability to generate insight
then implemented a collaborative Having collected data and created into its business practices, Wal-Mart
customer relationship management insight, the essential next step is is better able to orchestrate its
tool, which captures customer to convert that knowledge into operations globally—knowing precisely
queries and grievances, storing them tangible business impact. Doing when, where and why certain products
in a centralized system. In order so, however, requires a strong must be supplied in its stores.
to generate insight from this data, commitment to act on feedback and
employees can now make blog-like a culture that rewards this passion. They develop wide and deep
entries on customers—including Business leaders will need to regularly
ideas and suggestions for potential networks
communicate the importance of
sales. The sales and product teams alertness as well as gear talent- While creating and using insight can
then analyze all of this information development programs accordingly. help companies drive performance,
and propose new offerings, such as a willingness to open the doors to
customizing existing products or Companies with a wealth of data new participants will also determine
offering entirely new ones. YES Bank can use it to make their products a business’s ability to identify
has reported significant benefits and services much more attractive and attract value. More and more
as a result. Turnaround time for to consumers. Businesses with rich companies are drawing strength
processes is down by 70 percent, seams of accumulated data on from beyond their walls through
and the overall customer service customer preferences, such as large new interactions with others in
experience—the processing of sales retailers, can drive greater returns by their networks, allowing them,
leads and service requests—has applying (or reselling) insights about paradoxically, to focus on their
improved by 60 percent.46 customer behavior and preferences,

20

competitive essence. In our survey, other businesses—to design and sell Farm out more functions
42 percent of business executives said apps and software for its iPhone and Today, we are witnessing the next
that finding ways to share information iPod Touch devices. In fact, according stage of the outsourcing movement.
and data with external customers to Apple, its future performance Information technology is enabling
and innovators will form part of “depends on support from third-party businesses to divest even more of
their strategies for responding to software developers.”55 While the the activities that have traditionally
emerging IT-enabled opportunities and likes of Apple and Facebook may be been performed in-house. Businesses
challenges (see Figure 12). Doing so best-known for opening up to other are now providing standardized B2B
will not be straightforward for some businesses in the app development services across multiple industry
organizations, because it requires space, others are catching on fast. sectors, effectively becoming
a culture of openness that may be For example, China Mobile recently “horizontal players” (for an example,
at odds with traditional notions of opened its own online software and see “Case studies: Li & Fung”).
competitiveness. However, businesses app store, Mobile Market, before
that are ready and willing to take steps launching its “Ophone” platform—the Cloud computing is becoming a
such as these will be well-placed to world’s first mobile operating system major catalyst for this trend.
marshal a global network of players to developed by a telecommunications Fifty-four percent of those responding
their advantage. provider.56 With the scale that China to Accenture’s survey indicated that
Mobile has—it is the world’s largest they would adopt new technologies,
Connect to consumers mobile phone operator by number of such as cloud computing, to lower
Companies are already engaging in subscribers —app services are likely to costs over the next five years (see
dialogue with consumers across the feature prominently in the company’s Figure 12). The cloud can provide IT
world using technologies such as social future competitiveness. resources on tap, enabling companies
computing and advanced analytics. to shed many more facets of their
For example, MyStarbucksIdea.com, The multi-polar world and information data management and other activities.
a social network and comment box technologies are widening the Companies such as China Mobile—
launched in 2008 by Starbucks, allows boundaries of innovation—allowing which became China’s first company
consumers from as far apart as Ghana, firms to source ideas from anywhere to engage in cloud computing with the
Mexico and South Korea to share in the world. For example, Procter launch of its BigCloud in 2009—will
ideas about how the company can & Gamble (P&G) operates an online provide other businesses with various
improve its performance—for example, portal to facilitate an exchange of cloud services, including infrastructure
what new products and services the technology, trademarks, packaging, and platform clouds.58
company should launch, or what music marketing models, engineering and
its customers prefer to listen to in business services with external Nasdaq, the securities trading market
its coffee shops.51 Starbucks allows parties. It has also helped launch that lists nearly 4,000 companies,
users to examine others’ ideas, discuss three separate entities that have uses cloud infrastructure (access
them openly and cast votes on the digitized—and globalized—the to hardware and servers) for data
ones they like most.52 The company innovation process. One of these, warehousing, providing instant
then analyzes customer feedback to NineSigma, connects businesses data access, with the added benefit
identify the most popular ideas. It that have science and technology that Nasdaq pays for no more than
considers a range of factors, such as problems to companies, universities, it consumes. The costs to Nasdaq
the number and timing of votes cast governments and private labs to of building the data warehousing
or the volume of comments that a develop innovative solutions. With capacity in-house would have
single idea has generated. Starbucks offices in North America, Europe been prohibitive. By farming out
has assigned a team of specialists to and Asia, NineSigma has access to these IT capabilities, Nasdaq has
monitor the network and bring the solution providers in more than 135 converted its data storage activities
best ideas into the product or service countries and gives solution providers from fixed to variable costs.59
development pipeline.53 By March the chance to work with its Global
2009—MyStarbucksIdea.com’s first 1000 network of clients “to help New technologies are also allowing
anniversary—the social computing enhance their innovation capacity.”57 companies to outsource more business
platform had generated roughly Not only does this create opportunities functions to horizontal B2B service
70,000 ideas.54 for P&G to source ideas globally, but providers. Convergys Corporation
it gives others the chance to drive works across industry sectors to
Open up to entrepreneurs and other business performance in a world where help companies and governments
businesses talent is dispersed geographically. improve the value they derive from
(For more on P&G’s strategy, see relationships with their customers
Some companies are exchanging ideas
“Case studies: Procter & Gamble.”) and employees. T-Mobile USA used
and knowledge capital with individual
Convergys’s advanced speech self-
entrepreneurs and other businesses—
service solutions, and Honeywell hired
and, in some cases, engaging with
Convergys to implement strategies to
competitors. Apple is already very
improve employee retention.60
active in this way. The company invites
third-party developers—individuals or

21

Implications for government

Citizen demands on governments are Potential opportunities Co-production
intensifying. Greater personalization of It has long been understood that
services is becoming the norm, creating The rise of the multi-polar world, the
maturation of IT and the new market- families and communities constitute
the need for significant investment to a second economy that parallels the
tailor transactional channels to the making forces that they unleash may
help governments find new solutions to formal economy. The scale of the
needs of the citizen. Furthermore, global resources that individuals contribute in
challenges such as climate change these persistent problems. We may be
only on the cusp of understanding fully this way is enormous, but this informal
and international terrorism continue economic value is generally untapped,
to preoccupy policymakers, requiring the promise the changed ecosystem
holds—but we can envisage a future in unmeasured and unrecognized by public
coordinated responses on a scale that authorities. However, by using new
demands high levels of collaboration which new technologies change the way
governments operate, both in terms of technologies such as social computing,
and investment. The fallout of the governments can enroll, educate
economic downturn has presented delivery of public services and achieving
broader policy objectives. and engage citizens as co-producers
governments with additional challenges. of public value in ways that were
With public borrowing reaching record previously unimaginable. This can take
levels, an age of fiscal austerity faces Delivering public value
many forms: citizens providing real-time
many economies as they attempt to At a time when governments have to feedback on services, with government
rebalance the books. While the demands meet increased demand with reduced agencies using the feedback to improve
being placed on them are increasing, resources, the intersection of new delivery; citizens using networking
governments are now less equipped to technologies and the multi-polar technologies to get together to improve
meet those demands using traditional, world provides new ways of delivering social and economic conditions
publicly funded mechanisms. services to improve the social and through local community action; or
economic conditions of citizens. There governments using new information
are two principal ways in which these channels to educate citizens and
opportunities could be manifested. empower them to take individual
actions to improve their circumstances.

22

For example, the District of which aims to become the world’s Market structures
Columbia has developed a digital first smart-grid city.63 More of the
public square that enables citizens progress in moving to a low-carbon New technologies offer the potential
to access government and public society is occurring at the urban level. to reduce barriers to entry by lowering
policy information and engage By using virtual platforms to create sunk costs for businesses. At the same
with government and each other networks and share best practices at time, there is a possibility that market
through social networking and other the city level, new technologies offer influence will be perceived to have
technologies to develop and influence governments the potential to capitalize tilted toward the enterprises that own
responses to policy issues.61 Very often, on this trend. Similarly, they offer or control the most information. The
locally led activities are already taking the potential for intergovernmental challenge for policymakers will be
place—such as continuous or occasional cooperation on issues such as border finding a balance between the more
home-care for an elderly person. But management and security, where permissive environment facilitated
by harnessing and coordinating activity proactive collaboration between the by globalization and IT and the need
through the use of IT, not only can the agencies of different countries is to ensure a level playing field for
impact of such services be improved, essential to the effective management incumbents and new entrants alike.
but governments can also recognize of a complex global issue.64
more clearly these services’ contribution
We are only just beginning to
to the formal economy. The key for Potential challenges understand the potential afforded by
governments is to regard citizens
not just as recipients of services but Many of the policy challenges with the two trends of IT maturation and
as cooperators in the production of which governments will have to grapple the rise of the multi-polar world. But
public value. By doing so, government stem from the inherent tension between already it appears that they could
agencies and the community at new technologies that transcend present governments with tools and
large can draw from a much larger national borders and governments that mechanisms to help overcome a number
reservoir of motivated talent. are accustomed to operating within of challenges in today’s global economy.
those borders. Three of the most While they may also present some
Cross-sector working pressing policy areas are privacy and far-reaching questions about future
data protection, consumer regulation policy and the role of government itself,
As public spending is reduced, greater
and market structure. understanding their potential is the first
responsibility will fall to the third sector
step toward harnessing them.
(such as charities and voluntary groups)
and to businesses to provide services Privacy and data protection policy
that traditionally have been provided With new technologies so easily able
by governments. In Australia, the to move and store data virtually, there
“Communities for Children” initiative are myriad questions about the control
is delivered by community groups and that citizens have over their personal
voluntary organizations to improve information. Societal concerns about
education outcomes for children the safety and security of data could
younger than 5. Appropriate governance be heightened as governments seek
structures have been put in place that to exploit operational efficiencies.
balance the need for accountability to Furthermore, differences between
central government with the flexibility national standards governing the use
to respond to local conditions and and sharing of information are likely
circumstances.62 In the future, cross- to mean that governments will have to
sector working will become even more find new ways to accommodate both
important, as collaborative technologies privacy and national security concerns.
increasingly offer a low-cost, efficient
means of coordinating action. Consumer regulation
Delivering policy solutions Consumers’ ability to collaborate and
exert greater pressure on businesses
IT could also provide governments with will present challenges to traditional
alternative tools and approaches to thinking on consumer policy. Consumers
deliver orchestrated solutions to local, and consumer groups can now form
regional, national and international and act in highly effective ways—often
policy challenges. For example, new transcending national boundaries.
technologies are likely to become This raises questions about whether
one of the key elements in combating legislators need to reassess elements
climate change. The potential of existing consumer regulation,
afforded by smart-grid technologies designed originally to correct perceived
in developing the smart cities of the imbalances in bargaining power This section was prepared in conjunction
future is already being witnessed in between purchasers and producers. with the Accenture Institute for Health &
places such as Boulder, Colorado, Public Service Value.

23

Last word
The economic landscape that There is no doubt that the next five
lies ahead will seem foreign and years will be turbulent, characterized
forbidding to many business leaders. by high levels of uncertainty and
Those who cling to old notions of plenty of experimentation. Businesses,
competition, who think in terms individuals and governments will rush
of linear value chains and who to harness the opportunities of this
live by yesterday’s definitions of new era while attempting to mitigate
customers will find the landscape the risks. Many companies will make
alien indeed. Accenture’s newest false starts; some will fail to keep
multi-polar world study confirms pace with the speed of evolution in
that only a minority of executives their surroundings. But others will
are confident that their companies thrive, seeking and finding new market
are crafting effective strategic spaces of their own. Just as primary
responses to the new environment. colors swirl together to make new
hues, so those organizations will blend
But that is not the whole story. There their proven operating models and
are many positive signs that the competencies with the new market-
majority see tremendous upside amid making forces to create new, robust
the changes wrought by technology’s economic entities. They will have
accelerating impact and by the surge moved beyond their old identities as
of emerging markets. Accenture’s well-connected global players. They
research shows that even though some will have continued to journey toward
corporate chiefs may still lack the high performance and become masters
strategic responses to the upheaval, of global orchestration.
more of them are alert to the threats,
eager to act to counter those threats
and keen to launch their own forays
into the new environment.

24

ICICI Bank: A leader of broadband access. At the heart
of ICICI’s ability to orchestrate its
Deploying Web-based platforms
and analytics to lower costs for
in the adoption of global operations is the creation
of new bridges to customers—
consumers

technology together with its willingness to
open up to other businesses.
ICICI-Prudential, an insurance arm
partly owned by ICICI Bank, is using
ICICI Bank is a fast-growing financial the Web to help reduce insurance
services firm that provides a range Using mobile technology to premiums for its customers who suffer
of banking products and services expand service offerings from diabetes. The insurer collects
to corporate and retail customers data on those customers’ behaviors
ICICI was the first Indian business to and lifestyles using an online
through a variety of delivery use the Wireless Application Protocol,
channels. It has quickly grown to monitoring system, working with
just months after the technology’s pharmaceuticals companies, fitness
become India’s second-largest bank 2000 debut.71 In 2004, it partnered
measured by total assets. ICICI clubs, and diagnostic and testing
with Indian telecommunications companies. Patients have full access
is active in segments including company Reliance Infocomm (now
retail banking, wholesale banking, to their data and can easily track
Reliance Communications) to start their health online. ICICI-Prudential is
insurance, investment banking and an interactive mobile banking service
fund management. It has operations better able to gauge each customer’s
in India.72 In 2008, ICICI launched risks and tailor pricing to specific
in 18 countries, including China, iMobile—an Internet application that
Russia, South Africa and Qatar.65 circumstances. Diabetes patients who
customers can download to their practice healthy lifestyles and use
mobile phones to enable them to medications in the prescribed way
During the 1990s, ICICI’s leadership
access bank or credit-card accounts. are offered lower premiums—if the
identified one main opportunity
Customers can also use their phones to data from the patients’ health reviews
and one main challenge facing the
pay bills or transfer funds to ICICI and confirm their behavior.78
company. First, there was a burgeoning
non-ICICI bank accounts—all free of
opportunity to tap into the growth
charge by ICICI.73 More than a million Partnering with business process
of the middle-class Indian consumer
subscribers signed up to iMobile
base—a market then underserved by
within six months of its launch.74
management vendors to improve
foreign and domestic banks. Second, data management
there was a need to compete with
Using broadband to reach more ICICI allocates an unusually large
the cost structures of subsidized
state-controlled Indian banks.66 customers proportion of its IT budget to new
applications. In a typical large US
In 2000, ICICI was the first Indian
ICICI’s response was to construct an bank, discretionary IT spending is
bank to offer online banking
IT infrastructure that would deliver considered high if it accounts for
services.75 By digitizing the banking
both scale and cost reduction. In fact, 25 percent of total IT spending.
experience, the company has been
the company has emerged as a leader At ICICI, the figure is nearly
able to develop successful new
in the adoption of technology in the 80 percent.79 One example: in 2005,
revenue streams, such as its Non
banking sector.67 Evidence of this is in order to make its IT infrastructure
Resident Indian (NRI) banking service.
the company’s IT “culture”: rather more efficient and cost-effective,
Using a Web-based and wireless
than have its technology strategy ICICI replaced its array of disparate
platform, ICICI provides the Indian
conducted by an IT department, technology systems with a single,
diaspora community with a suite of
ICICI’s different business groups enterprise-wide online platform.
services: savings and deposit products,
now underwrite and monitor all IT Among many benefits, the new
structured investment options, online
implementations—an approach that platform enables ICICI to provide
remittances, mortgages, insurance,
was forcefully championed under information access to all employees;
and equity-linked products.76 The
former CEO K.V. Kamath.68 it can scale upward and outward
service has become a “one-stop
to address multiple queries
shop” for NRIs as far afield as Canada
ICICI is now using IT to optimize simultaneously and can address
and the Middle East. In 2004, ICICI
operations and extend into new security concerns through a single
partnered with US bank Wells Fargo
markets. For example, the company point of control.80
to launch a remittance service that
has deployed a variety of innovative
allows customers in the United
ATM services, and its expanding ATM
States to send up to US$3,000 a day
network is one of the largest and most
from US to Indian bank accounts
widespread in India.69 Efforts such as
for US$8 per transaction.77
these have enabled the bank to quickly
grow its consumer base—from fewer
than 1 million customers in 2000 to
25 million in 2009.70 ICICI has also
moved into a different market—that
of international remittances—by
exploiting the worldwide growth

26

Procter & Gamble: and 10 of the top 25. The company
hopes to maintain its lead by investing,
General public
Individual consumers can submit their
Opening its on average, twice as much in its
innovation capability and pipeline as
ideas via the Connect & Develop site.
In 2008, P&G received more than
innovation model its big rivals do.88 4,000 submissions, and some are now
being funded for development and
Using online hubs to source collaboration within P&G businesses.95
Procter & Gamble (P&G) is famous To widen the site’s reach to consumers,
ideas from around the world
for such consumer brands as Crest, it is now available in Chinese and
Pampers and Tide.81 Its products are To open up the innovation process Japanese and it will soon be offered in
used in homes 3 billion times a day, globally, P&G launched the “Connect Spanish and Portuguese.96
and every house in the world is said & Develop” program—an online
to have at least one of its products.82 portal set up to exchange intellectual Bringing big ideas into the
After acquiring The Gillette Company property with third parties. Before organization
in 2005, P&G became the world’s Connect & Develop, P&G housed 7,500
largest consumer goods company. In researchers in its global R&D facilities. P&G’s external collaboration has
2008—despite the global recession—it It can still tap into the inventiveness translated outside ideas into successful
had profits of US$12 billion, making of this internal researcher pool, but product launches. For example,
it the world’s 22nd most profitable it can now also reach an additional while pursuing the development of
company and ninth most profitable in 1.5 million externally, in any part of an anti-wrinkle cream for the next
the United States.83 the world.89 Collaboration efforts generation of its Olay products, P&G
such as Connect & Develop have had came across a new peptide technology
In 2000, after decades of solid positive results. Today, more than developed by a small French cosmetics
performance, P&G missed its financial half of all of P&G’s new products company.97 This technology went
forecasts for two quarters in a row include at least one major component on to become a key component
and its stock price fell by more than from an external partner.90 The of Olay Regenerist—which quickly
half.84 What’s more, research and company now works with a diverse ascended to No. 1 in market share
development (R&D) productivity group of collaborators worldwide: for skin-care products, helping make
had started to stagnate: research Olay a US$1 billion P&G brand.98
costs were climbing, sales were Entrepreneurs
flat and the percentage of new P&G welcomes the experience of Refining existing products and
products meeting financial targets independent entrepreneurs and small technologies
had stalled at 35 percent.85 businesses, previously considered
too small to form alliances with P&G refines and develops technologies
P&G realized it could not sustain large companies.91 One of the ways from products that are already being
its new-product pipeline with the the company taps this talent is marketed—what it calls “cooked”
development processes it had in through online crowdsourcing R&D products. For example, a Japanese
place. Its response was to collaborate networks. P&G was one of the first company developed the technology
with external innovators across the companies to work with InnoCentive behind the product that became P&G’s
world to change the way it came and has helped found other global Swiffer Duster. P&G’s engineers had
up with new products. By doing crowdsourcing networks such as been working on a similar technology,
so, P&G was able to slash R&D NineSigma, YourEncore and Yet2.92 but when the company caught sight
costs, increase sales and enhance P&G also launched its Open Innovation of the Japanese product—a hand-held
its innovation success rate—the Challenge to identify innovative ideas dusting tool sold only in Japan—P&G
percentage of new products that meet in health care beyond its own labs. The sought a partnership. The Swiffer
financial objectives.86 In this way, initiative attracted 170 expressions of Duster is now sold in 15 global
P&G has successfully orchestrated interest, with 72 ideas submitted by markets, and the product and its
the co-production capabilities of 25 small companies. Eight of those manufacturing process were developed
other companies and individuals. ideas were selected for R&D funding within 18 months—a very fast product
and business support.93 development cycle.99
In less than a decade, P&G has Suppliers
significantly improved its performance, Collectively, P&G’s top 15 suppliers
with nearly all organic sales growth have 50,000 people in their R&D
coming from new brands and new groups—a significant source of
or improved product innovation.87 innovation. P&G has created an online
Over the past 14 years, the company supplier network to facilitate a private
has had 114 top-25 best-selling new exchange of technology briefings,
products in the US consumer goods knowledge and ideas across the world.
industry—more than its six largest Today, the company works jointly on
competitors combined. In the last year product development in suppliers’ labs,
alone, P&G had five of the top 10 new and vice versa. 94
product launches in the United States

27

Li & Fung: own offices and operations. Similarly,
its extranet sites—also launched
Using IT to manage global
operations
Metamorphosing in the 1990s—permitted seamless
interaction between Li & Fung and its Li & Fung’s global expansion over the
last decade is typical of the global
from exporter manufacturers and suppliers.103
rebalancing of economic power in
the multi-polar world. The company
to supply chain Achieving efficient internal and
external communication has been, launched its “onshoring” operations in
the United States between 2005 and
specialist and continues to be, a cornerstone
of Li & Fung’s success. It is early 2008; more recently, it has announced
evidence of how and why the company plans to open its first such facility in
The Li & Fung Group is a multinational transformed into a full-service the United Kingdom.107
group of companies that operates manager of global supply chains: it
in export sourcing, distribution and uses its highly efficient IT-enabled Information technologies continue
retail. Based in Hong Kong, Li & Fung global network to take its customers’ to feature in Li & Fung’s strategy. In
works chiefly in textiles, garments orders and distribute them to its particular, it is using IT to make its
and apparel, but it has branched thousands of contracted vendors global operations faster, nimbler and
out into hard goods such as fashion around the globe.104 The company more efficient—which has helped push
accessories and home products.100 The now even merges its operations with the company into the reenergized B2B
company is established globally, with many once-core business functions arena. Here are two recent examples:
80 purchasing offices in 40 countries. of its customers—or acquires those Centralizing global data management
In 2007, it exceeded its self-prescribed functions outright—thanks to its systems
three-year growth plan by growing IT-enabled efficiency. Here are two Prior to 2008, Li & Fung ran
annual revenues to US$12 billion.101 recent highlights: different online portals for its
Liz Claiborne vendors. To improve communications
Established in 1906, Li & Fung
In February 2009, Li & Fung paid between its clients and vendors,
exported mostly silk and porcelain
US$83 million to acquire the sourcing the company recently deployed
goods before shifting to garment
operations of Liz Claiborne. The New a single automated supply chain
trading in the 1950s. By the 1980s and
York-based fashion company had management platform. Developed
1990s, the company was expanding
been struggling to deliver its high- and provided by a software vendor,
its operations globally; since then,
value lines of clothing on an ever- the platform integrates product
its presence in overseas commercial
faster schedule—partly because it lifecycle management with supply
centers has only increased.102 In fact,
was finding it increasingly difficult to chain execution systems, combining
Li & Fung has transformed into a
deal with independent local suppliers data and functionality into a single
global, horizontal provider of services
overseas. Li & Fung will now act as the solution. It supports Li & Fung’s
traditionally performed internally by
primary global sourcing agent for all internal sourcing teams as well as its
retailers and wholesalers—services
Liz Claiborne labels, including Lucky suppliers, facilitating collaboration
such as supply chain management,
Brand, Juicy Couture and Kate Spade. across the company’s global supply
production and operations. A key
According to Liz Claiborne’s CEO, the chain and logistics network.108
reason for this transformation—often
overlooked—was its ability to use decision was made because “now is Increasing the efficiency of global
technology effectively. This IT the time to reinvent your business communications
pedigree continues to propel Li model to be more competitive.”105 Many of Li & Fung’s thousands of
& Fung’s business performance, Wear Me Apparel suppliers are located in remote
allowing the company to continually In October 2009, Li & Fung acquired areas, so the company is equipping
expand its B2B service offerings— several divisions of Wear Me Apparel them with mobile personal digital
and more effectively orchestrate LLC for US$402 million. The US assistants linked to the Internet. The
across the multi-polar world. apparel company holds licenses to technology has enabled Li & Fung’s
brands such as Disney, Calvin Klein, project managers to instantly feed
Handling horizontal activities for Timberland and Nickelodeon; it information from supplier factories
other businesses designs and manufactures clothing into a centralized database, improving
sold at Wal-Mart, Macy’s and other the quality control of information
The rise of the Internet brought the and increasing the number of daily
big retailers. In the future, Li & Fung
threat of highly efficient business inspections—saving the company
will take control of Wear Me’s design,
models that could bypass traders money. Li & Fung has also been able to
sourcing, licensing, marketing and
such as Li & Fung. In response, Li & improve the visibility of the production
sales divisions.106
Fung rethought its role in the value process: it can now track, in real time,
chain and began to harness a host of when an order has been accepted by
technologies to optimize performance. a vendor, when the vendor has begun
Its Web-linked intranet portal allowed cutting or stitching, and when the
for real-time connectivity between its goods have been shipped.109

28

Eli Lilly and Drug discovery than the industry standard—and at
half the cost.118 This is all facilitated
Lilly is now using technologies such as
Company: Using social computing to cut the costs and
by VOICE—a Web-based enterprise
management technology that
shorten the time it takes to discover
IT to transform new chemical solutions.
enables real-time collaboration.119
Harnessing analytics technologies
industry behavior Using online hubs to source ideas
from around the world
to aid information distribution and
access
Around 2000, Lilly created Lilly has recently created an “Advanced
Eli Lilly and Company is a US-based InnoCentive, the first global Web-
pharmaceutical company whose Analytics Hub” to implement new
based platform to streamline the clinical trial design and analysis
products are marketed in 143 drug discovery process. Formed
countries worldwide. Founded in practices. Clinical trials are the most
out of the eLilly division, Lilly spun costly and time-consuming stage of
1876, Lilly is known for breakthrough off InnoCentive as an independent
products in a number of clinical pharmaceutical R&D: a large-scale
start-up in 2001. Today, it allows Phase III trial, to prove effectiveness,
categories, including chemotherapy companies such as Lilly to source
(Gemzar), sexual health (Cialis) and can involve tens of thousands of
ideas from around the world. For patients, take years to complete and
anti-psychotics (Zyprexa).110 In example, more than 50 percent
2008, for the first time, the company cost hundreds of millions of dollars.
of InnoCentive’s solutions come Lilly’s new analytics platform will allow
surpassed US$20 billion in revenues, from China, India and Russia.115
with eight products exceeding its researchers to learn and adapt as
US$1 billion in annual sales.111 Using a Web-based initiative to find ideas move through the pipeline—
new compound developments increasing the pace and cutting
Today, the pharmaceuticals industry Lilly recently launched the Phenotypic the costs of clinical research.120
faces significant disruption. R&D Drug Discovery Initiative (PD2) to In addition, Lilly has recently begun
costs are rising. Competition from improve the discovery of products using a technology platform to
low-cost generic drug manufacturers that treat Alzheimer's disease, manage clinical research data. The
from emerging markets is intensifying. cancer, diabetes and osteoporosis. solution is helping Lilly accelerate
Consumers are increasingly well- Researchers across the world can use clinical processes and enhance data-
informed, through the Internet, the portal to safely submit compound analysis capabilities—for example, by
about the drugs they should be structures that Lilly will evaluate free allowing it to run “what-if” scenarios
using. There is also the growing of charge using a set of algorithms. on medical information extracted from
risk of intellectual property piracy All intellectual property rights clinical trials.121
by unlicensed drugmakers. remain initially with the submitting
researcher or institution. However, if
Lilly is harnessing IT capabilities to
Approvals and patents
the submitter chooses to take it to the
address these growing challenges. next stage of evaluation, Lilly reserves When a pharmaceutical company
While the company’s R&D the right to negotiate an exclusive wants to bring a drug to market,
expenditures were rising during the collaboration or licensing agreement if the product must be submitted
1990s, its large research staff was the submission has real promise.116 to government regulators for
struggling to solve difficult research approval. However, the costs and
problems.112 In 2000, recognizing the Clinical trials time associated with seeking drug
opportunities, Lilly created “eLilly,” Clinical trials allow safety and approvals are significant. To streamline
a division designed to improve R&D efficacy data to be collected for the approval process, Lilly is using
practices.113 Out of this came a new drugs in development. Lilly is a software solution that helps with
number of collaborative ventures, using technologies such as advanced regulatory compliance and helps
including InnoCentive, Chorus and analytics to help minimize costs and the company obtain patents more
Collaborative Drug discovery. This the time needed for trials. quickly. As more of the company’s
approach to R&D is part of what Lilly’s data becomes digitized, the
leadership calls its “FIPNet” (Fully Using social computing to connect platform provides drug regulators
Integrated Pharmaceutical Network) with virtual teams with online access to information
strategy.114 Today, the company is In 2004, Lilly assembled “Chorus,” a about products slated for approval.
demonstrating how pharmaceutical virtual development team designed In the United States, for example,
companies can use IT to help improve to speed the process of getting new the platform will allow Lilly to
their operations and pave the way ideas through to “proof of concept” submit data on drugs to the US
for breakthrough discoveries. By (POC—where there is clear evidence Food and Drug Administration.122
harnessing the advantages of co- that a drug works in humans). Chorus
production, Lilly is pointing to how cuts the cost of reaching POC by
pharmaceutical companies can connecting Lilly with an external
undertake global orchestration. network of content specialists.117
Eighty percent of the work is
performed externally, and Chorus is
able to reach POC 12 months earlier

29

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14 Vida Killian, Jamie Grenney, “Setting innocentive-at-a-glance/
8 AIMA and Accenture, “Innovating for your social media strategy,” Speech to
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dreamforce/DF09/pdfs/MKTG008_ the small volumes of hard-to-find items
Grenney.pdf that online firms can sell at a profit
because of their wide reach and low
inventory costs.

30

20 Tripadvisor.com, accessed December 34 Google, “About Google Wave,” accessed 47 BusinessWeek, “The web knows
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26 Wired, “CES 2010: Open source 3-D A&lsi=0&p=1
printer turns designs into objects,” January 38 Reuters, “Safaricom bullish on FY
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into-objects/61029613001 idUSSP53584720091104
53 USA Today, “Coffee fans frothing over
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32 Internet News, “What keeps for the Netflix prize,” February computing platform,” June 1, 2009. http://
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100-65m

33 Google, Annual Report, 2008, p. 20,
p. 37.

31

60 Convergys Corporation, “Client 72 ICICI Bank,“ICICI Bank partners with 84 BusinessWeek, “Open innovation's
testimonials,” accessed January 11, 2009. Reliance India mobile to launch mobile secret: It takes a crisis,” December 3, 2009.
http://www.convergys.com/customers/ banking service,” July 14, 2004. http:// http://www.businessweek.com/innovate/
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investorelations/pressrelease/icicibank_ html#more
61 Accenture, “From e-government to pressrealease/Reliance-mobileBanking.pdf
e-governance: Using technologies to 85 Harvard Business Review, “Connect and
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com/Pfsuser/aboutus/investorelations/
62 Accenture, “Leadership in customer pressrelease/icicibank_pressrealease/ 87 Procter & Gamble, Annual Report,
services: Creating shared responsibility for iMobileBanking.pdf 2009, p. 3. http://annualreport.pg.com/
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74 FORA, “Nature of new innovation,” AnnualReport.pdf
63 Accenture Outlook Journal, “A climate p. 58. http://www.newnatureofinnovation.
for change,” September 2008. org/full_report.pdf 88 Ibid.

64 Accenture, “Toward greater prosperity, 75 C.K. Prahalad, M.S. Krishnan, The New 89 Harvard Business Review, “Connect and
security and social cohesion: Critical Age of Innovation: Driving Co-created develop: Inside Procter & Gamble’s new
practices in managing immigration Value Through Global Networks, (London: model for innovation,” March 2006, p. 3.
services,” 2008. McGraw-Hill, 2008), p. 65.
90 Procter & Gamble, Annual Report,
65 ICICI Bank, “About us,” accessed 76 Times of India, “ICICI Bank NRI 2009, p. 3. http://annualreport.pg.com/
November 23, 2009. http://www.icicibank. services gets ‘best bank’ award,” March annualreport2009/_downloads/PG_2009_
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htm com/biz/india-business/ICICI-Bank-
NRI-Services-gets-best-bank-award/ 91 Harvard Business Review, “Connect and
66 C.K. Prahalad, M.S. Krishnan, The New articleshow/4261842.cms develop: Inside Procter & Gamble’s new
Age of Innovation: Driving Co-created model for innovation,” March 2006, p. 3.
Value Through Global Networks, (London: 77 Wells Fargo, “Wells Fargo and ICICI
McGraw-Hill, 2008), p. 61. Bank launch overseas remittance 92 Ibid., pp. 6-7.
service between United States and
67 Economic Times of India, “The new face India,” December 1, 2004. https:// 93 Chief Executive, “Web 2.0: the ROI
of technology in ICICI Bank,” September www.wellsfargo.com/press/20041201_ case,” June 2009, p. 43.
30, 2008. http://economictimes.indiatimes. Indiaremittance
com/articleshow/3542162.cms 94 Harvard Business Review, “Connect and
78 FORA, “Nature of new Develop: Inside Procter & Gamble’s new
68 CIO.in, “ICICI Bank—banking on IT,” innovation,” pp. 59-60. http://www. model for innovation,” March 2006, p. 6.
accessed January 4, 2009. http://www.cio. newnatureofinnovation.org/full_report.pdf
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79 C.K. Prahalad, M.S. Krishnan, The New business,” August 27, 2009. http://www.
69 C.K. Prahalad, M.S. Krishnan, The New Age of Innovation: Driving Co-created innovationuk.org/news/innovation-uk-
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Value Through Global Networks, (London: McGraw-Hill, 2008), p. 61. html
McGraw-Hill, 2008), p. 63; ICICI Bank,
“ATM,” accessed January 5, 2009. http:// 80 SAS, “SAS business report,” October 96 BusinessWeek, “Open innovation's
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atm.htm newsletter/business/2007_10_30.pdf http://www.businessweek.com/innovate/
next/archives/2009/12/open_innovation.
70 C.K. Prahalad, M.S. Krishnan, The New 81 Procter & Gamble, “All brands,” html
Age of Innovation: Driving Co-created accessed January 8, 2009. http://www.
Value Through Global Networks, (London: pg.com/en_US/brands/all_brands.shtml 97 Procter & Gamble, “Success stories,”
McGraw-Hill, 2008), p. 65; The Telegraph, accessed December 14, 2009. https://
“National Savings & Investments back 82 Procter & Gamble, “About P&G,” secure3.verticali.net/pg-connection-
with guaranteed equity bond,” April accessed November 25, 2009. http://www. portal/ctx/noauth/0_0_1_4_83_4_6.
24, 2009. http://www.telegraph.co.uk/ uk.pg.com/company/aboutPG/aboutPG. do#take-tech
finance/personalfinance/savings/5212988/ html; Procter & Gamble, “R&D's formula
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71 ICICI, “ICICI sharpens focus on com/p/articles/mi_m3374/is_13_25/
WAP; Launches WAP based mobile 83 Fortune 500, 2009; Fortune Global ai_108969940/
banking service,” May 22, 2000. http:// 500, 2009.
www.icicibank.com/pfsuser/aboutus/
investorelations/pressrelease/may22-2000.
htm

32

99 Mechanical Engineering, “Outside help,” 109 Ibid. About this study
February 2009. http://memagazine.asme.
org/articles/2009/February/Outside_Help. 110 Eli Lilly and Company, “Products,” This study was prepared from sources
cfm; Procter & Gamble, “Innovating from accessed January 8, 2009. http://www.lilly. and data that Accenture believes to
the outside in,” accessed January 6, 2009. com/products/ be reliable, but the company makes no
http://www.pg.com/en_US/news_views/ representation or warranty, express
blog_posts/2009/dec/innovating_from_ 111 Eli Lilly and Company, Annual Report,
2008, p. 2.
or implied, as to their accuracy
the_outside_in.shtml
or completeness. Any figures and
100 Apparel, “Li & Fung streamlines 112 Science, “Science by the masses,” statistics used in this study were
acquisitions and supply base with IT,” March 28, 2008, p. 1751. up-to-date at time of writing and are
August 13, 2009. http://www.apparelmag. subject to change without notice. The
com/ME2/dirmod.asp?sid=&nm= &type=M 113 Cell, “India takes an open source views and opinions expressed in this
ultiPublishing&mod=PublishingTitles&mid approach to drug discovery,” April 18, publication are those of Accenture
=CD746117C0BB4828857A1831CE707DBE 2008.
only and do not necessarily reflect
&tier=4&id=12184B7F4197441E96E5EDBD those of any of the companies
6861E6CA 114 John C. Lechleiter, “Innovation: The
cure for what ails us,” Speech to the researched or surveyed or any other
101 Asia Case Research Centre, “Li & Fung: Economic Club of Indiana, September third party referenced in the report.
Growth for a supply-chain specialist,” 24, 2008. http://www.lilly.com/news/ Such opinions should not be construed
2009, p. 3. speeches/080924/default.html as providing professional advice,
recommendations or endorsements, or
102 Ibid. 115 Cell, “India takes an open source
relied upon as such. Neither Accenture
approach to drug discovery,” April 18,
2008; Science, "Science by the masses,"
nor its employees accept responsibility
103 Harvard Business School case, “Li &
March 28, 2008, p. 1751. for any loss or damage arising from
Fung: Internet issues (A),” October 1, 2000.
reliance on the information contained
104 Apparel, “Li & Fung streamlines 116 Eli Lilly and Company, “Eli Lilly in this publication.
acquisitions and supply base with IT,” and Company announces new drug
discovery initiative,” June 15, 2009.
August 13, 2009. http://www.apparelmag.
http://newsroom.lilly.com/releasedetail.
Acknowledgements
com/ME2/dirmod.asp?sid=&nm= &type=M
ultiPublishing&mod=PublishingTitles&mid cfm?ReleaseID=389589 Core research team
=CD746117C0BB4828857A1831CE707DBE Tim Cooper, Christopher Hilson,
&tier=4&id=12184B7F4197441E96E5EDBD 117 In Vivo, “Lilly's Chorus experiment,”
February 2007, pp. 36-7. Katharine Hirst, Mark Purdy,
6861E6CA
Matthew Robinson.
105 BusinessWeek, “Li & Fung: A factory 118 John C. Lechleiter, “Reinventing
sourcer shines,” May 14, 2009. http:// invention: Fixing the engine of Senior Executive sponsors
www.businessweek.com/magazine/ biopharmaceutical innovation,” Speech, Mark Foster, Mark Spelman.
content/09_21/b4132054330480.htm San Diego, October 30, 2009. http://www.
lilly.com/news/speeches/091030/default. We would also like to thank the
106 Bloomberg, “Li & Fung will add to html following individuals for their
Disney license-holder purchase,” October contributions to the study
20, 2009. http://www.bloomberg.com/ 119 FDC Reports, “Lilly sings a new tune:
apps/news?pid=20601080&sid=ak9PolVX_ Chorus unit brings high efficiency note Claire Allen, Chris Allieri, Allan Alter,
Jeg to early R&D,” February 26, 2007. http:// Joanna Brown, Nicholas Bruneau,
www.choruspharma.com/p070226_26.pdf Rob Coffey, Ryan Coffey, Paul Chadha,
107 The Telegraph, “Li & Fung—the Ladan Davarzani, Alice Demaret,
Made in China giant you have never 120 John C. Lechleiter, “Innovation: The
Helen Doyle, Henry Egan, Dan Elron,
heard of,” June 1, 2008. http://www. cure for what ails us,” Speech to the
Economic Club of Indiana, September Ben Geschwind, Stéphane Girod,
telegraph.co.uk/finance/newsbysector/
24, 2008. http://www.lilly.com/news/ Nancy Hamill, Jeanne Harris,
retailandconsumer/2790870/Li-and-Fung-
--the-Made-in-China-giant-you-have- speeches/080924/default.html Phyllis Kennedy, John Kerr,
never-heard-of.html Denis McCauley, Laine Monaldo,
121 SAS, “Co-creating the future,” Raghav Narsalay, Andrew Newby,
108 Apparel, “Li & Fung streamlines accessed December 1, 2009. http://www. Paul Nunes, Armen Ovanessoff,
acquisitions and supply base with IT,” sas.com/news/sascom/2008q2/feature_ Alex Pachetti, Greg Parston,
August 13, 2009. http://www.apparelmag. elililly.html
Athena Peppes, Jeffrey Playford,
com/ME2/dirmod.asp?sid=&nm= &type=M Rajiv Roychaudhuri, Erik Schumb,
ultiPublishing&mod=PublishingTitles&mid 122 Ibid.
Sandra Silva, Fei Sun,
=CD746117C0BB4828857A1831CE707DBE
Kishore Swaminathan, Robert Thomas,
&tier=4&id=12184B7F4197441E96E5EDBD
6861E6CA Amy Van der Kleij, Oscar Vasco,
Dadong Wan, Christian Winslow.

33

About the Accenture About the Accenture About Accenture
Institute for High Institute for Health & Public Accenture is a global management
Performance Service Value consulting, technology services and
outsourcing company, with more than
The Accenture Institute for High The Accenture Institute for Health & 176,000 people serving clients in
Performance develops and publishes Public Service Value is dedicated to more than 120 countries. Combining
practical insights into critical promoting high performance in the unparalleled experience, comprehensive
management issues and global health care sector and in public service capabilities across all industries and
economic trends. Its worldwide team of delivery, policy-making and governance. business functions, and extensive
researchers connects with Accenture’s Through research and development research on the world’s most successful
consulting, technology and outsourcing initiatives, the Institute aims to companies, Accenture collaborates
leaders to demonstrate, through help health care and public service with clients to help them become
original, rigorous research and analysis, organizations deliver better social, high-performance businesses and
how organizations become and remain economic and health outcomes for the governments. The company generated
high performers. people they serve. net revenues of US$21.58 billion for
the fiscal year ended Aug. 31, 2009. Its
home page is www.accenture.com.

Copyright © 2010 Accenture For more information on this report
All rights reserved. visit www.accenture.com/mpw or
contact mark.purdy@accenture.com
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.

ACC 09-1998r2 / 11-1325

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