Collaboration: A New Paradigm.

Typically, we understand collaboration in the value chain as initiatives performed jointly between manufacturers and retailers, like CPFR (Collaborative Planning, Forecasting and Replenishment), EDI, VMI, etc. However, Collaboration goes beyond that. For us, Collaboration are all capabilities developed jointly with your partners in the value network (i.e. providers, manufacturers, retailers, and even clients) in order to conquer and satisfy the needs of the consumer. It means that the Collaboration should not have the old approach of "let´s work together and save some cost to share the money saved between us". This old approach lead us to lack of trust, absence of a win-win mentality and even losing focus on what is important: the consumer.

In a recent study we did for Mexico jointly with GS1 Mexico, ANTAD (Mexico´s retailer association) and CONMEXICO (Mexico´s manufacturers association), we wanted to understand the level of Collaboration´s culture, processes and technologies in order to understand the gap and defined required actions for the industry. For this analysis, we based the study in a very complete framework for Collaboration of Accenture, shown below:

In our study, we had the response to 266 surveys, covering almost every area in the consumer goods sector and almost all retailers formats. The study is quite detailed, but some of the main conclusions are:

. The Collaboration practices adoption in Mexico are in a consolidation stage (it means, most of the practices are in the "mainstream" area of the framework). Manufacturers show a better level of maturity compared with Retailers.
- Collaboration is considered important, however the level of adoption limites the execution.
- There is a partial understanding of Collaboration. For example, the win-win aspect of the Collaboration appears in sixth place.
- The knowledge about the Collaboration practices is correlated with the adoption. It may be obvious, but it implies that the industry should understand better what it is before implementing enabling technologies.
- Collaboration is perceived as a required capability to have a competitive advantage in the near future.

In the study, we have shown that implementing some practices of Collaboration, we may have a potential of 3.6 Billions USD to unlock, and they will represent an increase of 0.5 to 1 points in the net marging of both retailers and manufactures. As a result of the effort, the main industry associations are starting initiatives to develop Collaboration in Mexico.

You may find more detail (in spanish) in the following publication:

http://www.accenture.com/mx-es/Pages/insight-strategic-pulse-high-performance.aspx

How to define Key Performance Indicators (I)

One of the favorite phrases in business is "You Get What You Measure". Not wonder whay there are many business with not so good results:

- 75% of the companies with a Balanced Scorecard do not connect their Key Performance Indicators (KPIs) to their strategic factors.

- Organizations employ too much time and effort gathering data and information that are not key for the decision making process.

- 43% of managers think that capability of taking important decisions are blocked by too much information.

- Estimates suggest that more than 40 billion USD are employed annually in "data warehousing" applications. 60% of that figure is used in data cleansing.

(Based in a research of Accenture).

Let´s Start with the Basics...

In our experience, KPIs (and metrics in general) should have the following characteristics:

- The KPIs must be linked (directly or in cascade) to the success factors of the strategy of the company. So, it is important to understand the strategy and to know with detail how the KPI will measure the progress toward the strategic goals.

- Differentiate KPIs from metrics. KPIs evaluate the success of the company or a function. A metric measure what a function does. Understand well what are the few KPIs that will help us to identify success.

- Focus more on the KPIs that "predict" a possible future outcome (leading KPIs) and less in the KPIs that help to explain what happened (lagging KPIs).

- The responsibility of a role or position on a KPI is directly proportional to the ability to influence such KPI.

- The KPIs should "cascade" transparently along the business. The employees should know how their performance contribute to a higher KPI and to the business outcomes.

How to identify a well defined KPI?

A well defined KPI should comply with the following criteria:

- Enable decision making and control. If the KPI does not help you to take a decision, may be it is not a KPI.

- Relevant. If the KPI does not support the company strategy (directly or as part of a bigger KPI) is not relevant for the company.

- Easy to understand. If the KPIs requires a degree on math to understand it, it is going to be difficult to calculate and to communicate. Make it simple! As Einstein said: "Everything Should Be Made as Simple as Possible, But Not Simpler".

- Measurable. Sounds evident, but KPIs should be extracted directly from the information systems of the company, not as a result of calculations made by somebody in his/her spreadsheet.

- Specific. Do not use KPIs that may be interpreted in different ways. Try to define them in a clear way and try to measure one variable at a time. If you require to represent several KPIs to identify if you are going in the right direction, define a index.

- Think in a target. The KPI will have a target, so start thinking in the desirable objective and the normal ranges for the KPI. If you can not define it, think twice if it is the right KPI.

Innovation is not working out the way many companies expected.

Accenture recently sought to identify the state of innovation by surveying executives’ at large organizations. The survey revealed that innovation is not working out the way many companies expected. Despite increasing commitment, funding and organizational accountability, many companies are disappointed by the returns they are deriving from their investments.

The survey also found that those organizations that have a holistic, formal system in place for innovation, consistently report better outcomes and higher levels of satisfaction from their innovation investment. To help companies better understand the formal system approach to innovation the PoV describes five key aspects of a formal innovation system.

The report, authored by Adi Alon and Wouter Koetzier, is based on a survey of 519 executives from more than 12 industry sectors across the U.S., U.K. and France. The objective of the research was to explore the current state of innovation and the findings reveal some intriguing results. Let´s share some of them:

- The vast majority of executives, 93 percent, think innovation will shape the company long-term success. However, less than one out of five (18 percent) believe their own innovation strategy is delivering a competitive advantage.

- Companies feel that they have sluggish innovation processes.

- Those organizations that have a holistic, formal system in place for innovation, consistently report better outcomes and higher levels of satisfaction from their innovation investment.

There are 5 key aspects to implement this formal innovation system in your company:

- Run innovation as an end-to-end value chain emphasizing speed and flexibility.
- Move from product to business innovation.
- Apply risk management practices specially tailored to innovation.
- Leverage the digital power of Big Data and social media to integrate the Voice of the Customer.
- Pursue frugal innovation to capture middle class consumers in emerging economies and also to disrupt markets in developed economies.


More information:

https://primary.acn-edit.accenture.com/us-en/Pages/insight-low-risk-innovation-costly.aspx