Three: Leveraging technologies
We learned that information technology is widely considered to be a weakness in the global operations of electronics and high-tech companies. The research exposed that:
- Only 1-in-5 (21 percent) respondents were very confident in the capability of their current IT systems to support their global operations, although 70 percent said IT is critical to do so;
- Only 7 percent indicated that building flexible and efficient IT systems to enable relationships inside and outside their firm was a focus for driving operating model decisions during the downturn, even though 60 percent of respondents agreed that doing so had grown in importance through that period;
- Less than one quarter said they are using open-source innovation or crowd sourcing. Likewise, less than one quarter said they are harnessing virtual or mobile platforms. Only 14 percent are using cloud technologies; and
- Sixty-four percent of those interviewed cited “poor global integration of systems and data” as the main reason why their corporate systems need improvement.
Clearly, new technology solutions offer a range of opportunities to improve global operations and gear them towards growth. Cloud computing, for example, provides an on-demand Internet based technology, lowers infrastructure, maintenance and energy costs, provides access to capacity on-demand, increases network capacity, and provides capacity to customers faster.
Our survey suggests that electronics and high-tech firms are not yet gasping these opportunities.
Four: Innovating new products and services
Innovation is a key activity that the operating models of electronics and high-tech companies must support. More than 80 percent of respondents said the imperative of innovating new products and services has increased in importance since the downturn. In fact, it is now on par with growing global market share. As such, decisions that improve the ways in which innovation activities are structured and executed are critical opportunities for competitive advantage.
By focusing on their international operating models, firms can confirm they have the global capabilities necessary for rapid and interconnected innovation across the world. Successful firms realize that their global footprint can be leveraged to build globally distributed innovation networks.
These networks can bring new and varied perspectives from the most innovative talent around the world. In addition, surveyed executives said innovation was not just about new products and services but also business models. More specifically, respondents told us shifting from selling products and services to offering full solutions formed a key imperative.
Improving the speed to market of new innovations also emerged as a critical imperative driving operating model decisions. When asked about the top three strategic imperatives that drive decisions about their firm’s operating models, the highest percentage, 57 percent, identified the development of more innovative products and services to meet customers’ needs.
Our research found that leadership and culture provide important levers for improvement in global operations. Three in five companies (60 percent) rely most on leadership, people and culture to adapt to changes in the global market. But almost the same proportion (57 percent) said leadership, people and culture are the greatest obstacles preventing firms from adapting to changes in the global market.
There is a strong understanding of the importance that leadership and culture play in achieving high performance global operations, both as potential enablers and as potential obstacles. Many benefits of investments in leadership and culture accrue in the mid-long term, but in an uncertain business environment, these investments can take on new importance. There are few things more valuable than a leadership team that possesses vision beyond the current uncertainties, and a culture that can continually adapt with the evolving business environment while remaining true to its core values.
Six: Focusing on global talent management
While virtually all companies say they currently are seeking low-cost talent, 33 percent told us they are not actively recruiting highly skilled talent abroad. A similar number are not actively seeking new locations to source talent for innovation. In fact, only 10 percent of survey respondents say finding new locations to source talent for innovation is a key driver of their operating model decisions.
Yet, with more than half of companies telling us that developing and managing human capital is a highly important activity, executives clearly understand the need to do better. For example, one executive told us how his company needed to work on its current talent and innovation capabilities even before considering its worldwide footprint.
“One of the biggest problems is that you have very educated, intelligent and motivated people working on things that aren’t needed. By the time you find out about it, a lot of money has been spent.”
The best firms tend to have the best global talent generating exciting new ideas for use around the firm and participating on projects globally. This philosophy serves as the backbone for their entire operating model.