0904 Plotting Your Course Along The Growth Excellence Matrix

Chairman’s Series on Growth Investing in Your Company’s Growth Potential: Plotting Your Course Along the Growth Excellence Matrix

Presented by Craig Baty Global VP, IT Practice, Sydney, Australia Frost & Sullivan 21 April 2009

Agenda 1. Overview: Where We Are in the Series 2. Why Measure the Future Growth Potential? 3. Introduction to the Growth Excellence Matrix (GEM) 4. Key Applications 5. Validating the Model 6. Competitive Benchmarking 7. Serious About Growth: Next Steps

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Polling Responses from March APAC/J CSG W hic h o n e o f th e follo w ing to o ls is y ou r c o m p a n y us in g to d riv e g ro w th? Str a tegi c Plan ni ng 33 .3 % N ew Pr od u ct D ev e lo pm en t 6 6.6 % C om peti tive Posi tion in g a nd Bra n ding 33 .3 % Sal es Optim izati on 6 6.6 % D is trib uti on C h a nne l Optim izati on 6 6.6 %

Is M & A a cu r re n t c o m p o ne n t o r fo cu s in y o ur gr ow th s tr a te g y ? Yes 100.0% No 0.0%

D o y ou fee l tha t y ou h av e a s s op his tic a te d a n a p pr oa c h to M & A a s yo u w ou ld id e ally lik e to ha v e ? Yes 0.0% No 100.0%

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The Growth Acceleration System

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Introduction to Growth Excellence Matrix (GEM): Ford in Hybrid SUV market Growth Strategy Factors: Growth Excellence Matrix

Ford is losing global market share year after year

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Toyota and Honda have most potential to gain / grow market share in Hybrid market

Toyota

Growth Strategy Excellence

Ford is early adopter of technology trends, but suffers with high cost to manufacture Dodge

Toyota first to market with affordable, mass production hybrid

Hyundai

Ford

5

Ford does not try to compete with other automakers by “best in class” practices, they focus on consumer perspective with investments in end-user data instead of market trends

Honda

Nissan

Implementation Excellence Factors: Ford has invested in costly, high-profile marketing campaigns that do not translate to consumer sales

Chevrolet

0 0

5 Implementation Excellence

10

Ford has high brand cache in APAC markets as luxury vehicles No unified growth strategy, they are trying several diverse strategies at once and hoping one will work 5

Growth Strategy Excellence Factors 1.

Benchmarking Growth: Industry and Company

2.

Culture of Growth, Innovation and Leadership

3.

Vision Alignment between Leadership and Staff

4.

CEO’s 360 Degree Perspective is Leveraged

5.

All 10 Growth Processes are Leveraged

6.

Growth Pipeline System

7.

Growth Strategies are Evaluated through All Research Methodologies

8.

Key Growth Careers (CEO’s Growth Team) are Leveraged

9.

TEAM Research Leveraged to Generate Ideas

10.

Leadership Focused on Growth

** Each factor is scored on a scale of 1-10 (10 is high) 6

Implementation Excellence Factors 1.

Best Practices in Sales & Marketing

2.

Best Practices in Research & Development

3.

Best Practices in Key Support Departments

4.

Best Practices in Leadership

5.

Best Practices in Finance

6.

Vision Implementation Alignment

7.

Best Practices in Project & Business Planning

8.

Training on Best Practices

9.

Culture of Growth, Innovation and Leadership

10.

Best Practices in Implementing the 10 Growth Processes

** Each factor is scored on a scale of 1-10 (10 is high) 7

The Growth Excellence Matrix: Growth Strategy vs. Growth Strategy Implementation Growth Excellence Matrix

Current position based on Strategy & Implementation

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Client Apple

Growth Strategy Excellence

Netflix Hyundai

Starbucks

VC Startup Dell

GE

5 AT&T Ford

Mercedes McKinsey

United Airlines Home Depot Bank of America

0 0

5

10

Implementation Excellence

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Growth Excellence Matrix: 4 Key Applications

•

Competitive Benchmarking Future Growth Potential

•

Merger & Acquisition

•

Growth Investing

•

Vision Alignment

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Developing a Valid and Replicable Growth Measurement System •

Provide support to highlight and enhance GEM as a powerful benchmarking tool.

•

Enhance the ability of GEM as a diagnostic tool and as a prescriptive tool.

•

To validate GEM as a predictive tool, providing evidence that it positively impacts company growth and performance.

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The Dynamics of Growth Strategy Excellence, Implementation Excellence, and Growth

The effectiveness of growth strategies on growth depends on the level of implementation

Implementation Excellence

excellence.

Growth Strategy Excellence

Growth

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Pe rs pe ct iv e

iv e

Su pp U or nd tT er EA st an M G di ro ng w of th In Sy du st st em ry or G ro w th Pi pe lin Vi e si on ar y Le ad er sh ip G ro w th W or ks ho p

R es ea rc h

B es tP ra ct ic es

of St ra te gy

Pe rs pe ct

er sp ec tiv e

of Te ch no lo gy

In te gr at ed

Sy nt he si s

G lo ba lP

Index Score

High growth companies generally have higher index scores across all the growth strategy excellence attributes 100%

80%

60%

40%

20%

0%

Low Growth Ave Growth High Growth

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C on se

St ra te gy

B tin es g tP ra ct B ic es es tP fo ra r ct Sa ic le es s fo r M an ag em en t Fo S cu en se se d of Tr U ai rg ni en ng cy on B es tP ra ct M ic an es ag em en to fC ha ng G e ro w th En vi ro nm en t

M ar ke

on

fo r

ns us

B es tP ra ct ic es

Te am

Index Score

High growth companies generally have higher index scores across all the implementation excellence attributes 1

0.8

0.6

0.4

0.2

0

Low Growth Ave Growth High Growth

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The impact of growth strategies varies across levels of implementation excellence

High

Strategies that significantly drive growth

Best Practices Perspective

Low

Impact on Growth

Growth System or Growth Pipeline

Average implementation excellence companies: • are affected considerably by strategies focusing on best practices strategies or those pertaining to operational excellence

Low implementation excellence companies: • are more vulnerable to intensity of competition • have potential for growth via technology turbulence Low

Average

Global Perspective of Strategy High implementation excellence companies: • grow with a global perspective of strategy • are impacted by new market and new product strategic orientation

High

IMPLEMENTATION EXCELLENCE 14

High growth companies generally have higher index scores across all the performance metrics 100%

Index Score

80% 60% 40% 20% 0% Growth vs. Industry

Low Growth

Growth vs.Top Competitor

PerformanceFinancial

Average Growth

Performance Quality

High Growth 15

Sample Mapping on the GEM Matrix

GEM Growth Strategy Excellence

Gliders

High flyers Cisco GE Security Honeywell

Agfa Health Corporation

Florida Public Utilities

US Postal Service

Standard Microsystems

Strugglers

Underachievers

Implementation Excellence 16

Quadrant Differentiators

GEM

GEM

GEM Gliders

Strugglers

GEM High Flyers

Underachievers

Strugglers are unable to formulate and implement any growth strategy.

Underachievers have the discipline to implement, but lack strategy.

Gliders soar only if the wind allows, but lack the engine to sustain flight.

High flyers soar at will, backed-up by a jet engine.

Growth Strategy Excellence

Growth Strategy Excellence

Growth Strategy Excellence

Growth Strategy Excellence

Implementation Excellence

Implementation Excellence

Implementation Excellence

Implementation Excellence

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Implications of GEM

GEM • Sound framework • Evidence-based • Diagnostic capability • Prescriptive capability • Predictive capability

Focuses an organization on the steps that lead to growth Represents a frontier capability for speedy, quantitative-based measurement Compresses the awareness to action cycle

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Global Automation and Process Control Markets: Evaluation of Market Participants Based on GEM (2007), World The contract to upgrade three refineries of British Petroleum (BP) is a key win for Emerson in 2006

Revenue growth rate of Emerson for the year 2006 is 16.0% During the period of 2004 to 2006, the company introduced more than 500 major products, which is a huge increase over any preceding period for Emerson

Growth Strategy Excellence

10

Honeywell

Emerson acquired Artesyn Technologies, Knurr AG, Bristol Babcock to serve diversified market.

Emerson

Siemens ABB

Schneider Rockwell Invensys Yokogawa

5

0 0

5

Implementation Excellence

10

Source: Emerson Process Mangement

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Global Automation & Process Control Markets: Evaluation of Market Participants Based on GEM (2008), World Over the last 18 months, the company has been selected to install its PlantWeb® digital plant architecture with the Ovation® expert control system at 12 new U.S. coal-fired units Acquisition of Data Management Inc, Damcos Holding, The Automation Group Growth Strategy Excellence

10

Honeywell Siemens ABB Invensys

Emerson’s launch of SmartWireless – based on wireless Hart protocol for plant wide area application, with 99% data reliability.

Emerson

Schneider Rockwell

Key wins as Major Automation Contractor in China & the Middle East drive the growth for Emerson

5

Yokogawa

0 0

5

10

Emerson and Cisco have combined their expertise and technology to deliver a complete open standard solution for wireless process and plant management applications

Implementation Excellence 20

Ro ck we ll Ho ne yw ell Sie me ns Sc hn eid er Yo ko ga wa In ve ns ys

Growth Strategy Excellence

Em er so n AB B

Global Automation and Process Control Markets: Evaluation of Market Participants Based on GEM (2008), World

1.Growth Compared to Competition and Industry Average 2.Visionary Integration of Technology,Markets, Economics 3. Strategic Partnering Optimization 4. Industry Breadth Perspective 5. Best Practice Perspective 6.Team Research Methodology & Evaluation 7. CEO’s Growth Team Utilization with GrowthWorkshops 8. Comprehensive Growth Pipeline System

Implementation Strategy Excellence 1.Team Consensus on Growth Strategy 2. Best Practices in Marketing 3. Best Practices in Sales & Sales Management 4. Best Practices in Leadership Change 5. Best Practices in Strategic Partnering 6.Technology Integration & Adoption Skills 7.Growth Training: Collaboration & Best Practices 8.The GIL Culture: Growth, Innovation and Leadership 9. Best Practices in R&D and Product Management 10.Global Teamwork on Growth Strategy Plan 1-5 6-7 8-10

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Global Automation & Process Control Markets: Comparative Evaluation of Market Participants Based on GEM (2007 and 2008), World For Rockwell, position has declined from 2007 to 2008 but the prospects for future trend are very high due to enhanced product portfolio through acquisitions

Position in 2008

Position in 2007 10

Growth Strategy Excellence

Honeyw ell

Even though ABB had a phenomenal year in 2007, changes in the leadership and lack of focus on the implementation strategy were a drag on its position in 2008

Emerson

Siemens ABB

Invensys’s future trend is looking slightly downward due to low order book and its cyclical effect in rail division

Schneider Rockwell

Invensys

5 Yokogaw a

Schneider continues to improve its position year over year, and has strengthened its position in its strongest vertical-power generation, transmission and distribution Yokogawa is continuously losing its overall position with a weak balance sheet and modest forecast

0 0

5

Implementation Excellence

10

Siemens is and has continued to implement better growth strategies and best practices despite senior management realignment

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Comparison 2007 & 2008 (contd.) Honeywell

Yokogawa

Honeywell Velocity Product Development™ has been deployed throughout their businesses, reducing cycle times and accelerating release of more than 300 new products in 2007, up 46% from 2006.

Yokogawa’s continuous fall in share holder value, despite better top line growth in local currencies, is because of the intense price pressures in Asia and willingness to take projects in the US at lower margins.

For Honeywell, the scope of Integrated Main ABB Automation Contractor projects increased by 20% at new and existing facilities across a number of industries, ABB had a growth rate of over 18% in comparison to including oil & gas, power, and life sciences. 2007 owing to its wins in power industry. The strength of its products in power generation and transmission, along with increased orders from North America, aided Rockwell Automation its growth. Rockwell Automation is trying to reverse its decline by strengthening its product offerings through acquisition Siemens of Incuity, ICS Triplex, and Pavilion Technologies. It has Siemens’s Product Life-cycle Management product fallen slightly due to slowdown in North America, its portfolio, along with SIProcess, enhances its position largest market. as total solution provider.

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CEO / CSO Response to GEM Analysis

“The GEM matrix has reduced lots of factors into a useful clean and simple picture.” Peter Zornio Chief Strategy Officer Emerson Process Management

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GIL GLOBAL 2009

www.frost.com/gilglobal

A global community focused on Growth, Innovation and Leadership

May 2009 London

October 2009 Kuala Lumpur October 2009

September 2009

Shanghai

San Francisco

October 2009

December 2009

Middle East

Sao Paulo

October 2009

February 2010 Tel Aviv

India

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Next Steps


Request a proposal for Growth Partnership Services to support you and your team to accelerate the growth of your company.




Attend Frost & Sullivan Executive MindXchange best practice networking events (http://www.frost.com/cal) to share and address strategic challenges




Consider Conducting a 360 Degree Growth Workshop to support your long-term growth strategy




Join us at a Growth, Innovation and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth (www.frost.com/gilglobal)




Register for the next Chairman’s Series on Growth: (http://www.frost.com/growthapac)




Schedule a Recession Strategy Session with a Frost & Sullivan Industry consultant (email us: [email protected])




Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth Consultant (email us: [email protected])




Register for Frost & Sullivan’s Growth Opportunity Newsletter and Growth Team Membership e Bulletin to keep abreast of growth opportunities in your industry and best practices in your career track. (www.frost.com)

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Contact Us If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly.

Alvin Chua Account Manager Automotive, Transportation & Logistics DID: +65 6890 0997 Mob: +65 9199 4566 eMail: [email protected]

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