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%

3
The Growth Acceleration System

4
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
10
Toyota and Honda have most potential to gain
/ grow market share in Hybrid market
Toyota
Ford is early adopter of technology trends, but
suffers with high cost to manufacture
Growth Strategy Excellence

Dodge
Hyundai Toyota first to market with affordable, mass
production hybrid
Ford Honda Ford does not try to compete with other auto-
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makers by “best in class” practices, they focus
on consumer perspective with investments in
Nissan end-user data instead of market trends
Implementation Excellence Factors:
Chevrolet Ford has invested in costly, high-profile
marketing campaigns that do not translate to
consumer sales
0
0 5 10
Ford has high brand cache in APAC markets
as luxury vehicles
Implementation Excellence
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)

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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 10

Client
on Strategy &
Implementation Netflix Apple

Hyundai

Growth Strategy Excellence

Starbucks
VC Startup

Dell GE

5
AT&T Mercedes
Ford McKinsey

United Airlines

Home Depot
Bank of America

0
0 5 10
Implementation Excellence

8
Growth Excellence Matrix: 4 Key Applications

• Competitive Benchmarking Future Growth Potential

• Merger & Acquisition
• Growth Investing
• Vision Alignment

9
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.

10
The Dynamics of Growth Strategy Excellence,
Implementation Excellence, and Growth

The effectiveness of growth

strategies on growth depends
Implementation
on the level of implementation Excellence
excellence.

Growth Strategy
Growth
Excellence

11
 G
lo
ba
lP
er Index Score
Sy sp
nt ec
he tiv
si e
s of
of

0%
20%
40%
60%
80%
100%
St
Te ra
ch te
no gy
lo
gy
Pe
rs
B pe
es ct
tP iv
ra e
ct
ic
es
Pe
rs
pe
R ct
es iv
In ea e
te rc
gr h
at Su
ed pp
U or
nd tT
er

Low Growth
st EA
an M
G di
ro ng
w
th of
Sy In
st du
em st
ry
or
G
ro
w
Ave Growth
th
Pi
pe
lin
Vi e
si
on
ar
y
all the growth strategy excellence attributes

Le
ad
er
sh
ip
High Growth

G
ro
w
th
W
or
ks
ho
p
High growth companies generally have higher index scores across

12
 Te
am
C
on
se Index Score
ns
us
on
B

0
0.2
0.4
0.6
0.8
1
es St
tP ra
ra te
ct gy
ic
es
fo
r
M
ar
ke
B tin
es
tP g
ra
B ct
es ic
tP es
fo
ra
ct r
Sa
ic le
es s
fo
r
M
an
ag
em

Low Growth
en
t
Fo
cu S en
se se
d of
Tr
ai U
ni rg
ng en
on cy
B
es

Ave Growth
tP
ra
ct
M ic
an es
ag
em
en
all the implementation excellence attributes

to
fC
ha
ng
G e
High Growth

ro
w
th
En
vi
ro
nm
en
t
High growth companies generally have higher index scores across

13
The impact of growth strategies varies across levels of
implementation excellence

Strategies that significantly drive growth

High

Global Perspective
of Strategy
Best Practices
Growth System or Perspective
High
Impact on Growth

Growth Pipeline
Average implementation
Low implementation excellence
implementation excellence companies:
excellence companies: • grow with a global
companies: • are affected perspective of
• are more considerably by strategy
vulnerable to strategies focusing • are impacted by
intensity of on best practices new market and new
competition strategies or those product strategic
• have potential for pertaining to orientation
operational
Low

growth via
technology excellence
turbulence

Low Average High

IMPLEMENTATION EXCELLENCE

14
High growth companies generally have higher index scores
across all the performance metrics

100%

80%
Index Score

60%

40%

20%

0%
Growth vs. Industry Growth vs.Top Performance- Performance -
Competitor Financial Quality

Low Growth Average Growth High Growth

15
Sample Mapping on the GEM Matrix

GEM Gliders High flyers

Growth Strategy Excellence
Cisco

GE Security

Honeywell

Agfa Health
Florida
Corporation US Postal
Public Utilities
Service

Standard
Microsystems

Strugglers Underachievers
Implementation Excellence

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 Quadrant Differentiators

GEM GEM GEM GEM

Gliders High Flyers

Strugglers Underachievers
Strugglers are unable to Underachievers have the Gliders soar only if the High flyers soar at will,
formulate and implement discipline to implement, wind allows, but lack the backed-up by a jet engine.
any growth strategy. but lack strategy. engine to sustain flight.

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

Focuses an organization

GEM on the steps that lead to

growth
Represents a frontier
• Sound framework
capability for speedy,
• Evidence-based
quantitative-based
• Diagnostic capability measurement
• Prescriptive capability Compresses the
awareness to action
• Predictive capability cycle

18
 Global Automation and Process Control Markets:
Evaluation of Market Participants Based on GEM (2007), World

The contract to upgrade three refineries of British Petroleum Revenue growth rate of Emerson for the year 2006
(BP) is a key win for Emerson in 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
10 Emerson
Growth Strategy Excellence

Emerson acquired Artesyn Technologies, Knurr

Honeywell Emerson
AG, Bristol Babcock to serve diversified market.
Siemens
ABB Schneider
Invensys Rockwell
5
Yokogawa

0
0 5 10

Implementation Excellence Source: Emerson Process Mangement

19
 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

10
Emerson’s launch of SmartWireless – based
Growth Strategy Excellence

on wireless Hart protocol for plant wide area

Honeywell
Siemens Emerson application, with 99% data reliability.
ABB Schneider
Invensys Rockwell
5
Key wins as Major Automation Contractor in
Yokogawa China & the Middle East drive the growth for
Emerson

Emerson and Cisco have combined their

0 expertise and technology to deliver a complete
0 5 10 open standard solution for wireless process
and plant management applications

Implementation Excellence

20
Global Automation and Process Control Markets:
Evaluation of Market Participants Based on GEM (2008), World

ell

wa
er

ys
n

ll

ns
yw

eid
we
so

ga

ns
me
er

ne

hn

ko
ck

ve
B
Em

Sie
Growth Strategy Excellence

AB

Ho
Ro

Yo
Sc

In
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

21
 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

Position in 2007 Position in 2008 2008 but the prospects for future trend are very high
10
due to enhanced product portfolio through
acquisitions
Even though ABB had a phenomenal year in 2007,
changes in the leadership and lack of focus on the
Honeyw ell Emerson
Growth Strategy Excellence

implementation strategy were a drag on its position in

Siemens
2008
ABB
Schneider
Invensys’s future trend is looking slightly
Invensys
Rockwell downward due to low order book and its cyclical
effect in rail division
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 Siemens is and has continued to implement better

0 5 10 growth strategies and best practices despite senior
Implementation Excellence
management realignment

22
 Comparison 2007 & 2008 (contd.)

Honeywell Yokogawa
Honeywell Velocity Product Development™ has been Yokogawa’s continuous fall in share holder value,
deployed throughout their businesses, reducing cycle despite better top line growth in local currencies, is
times and accelerating release of more than 300 new because of the intense price pressures in Asia and
products in 2007, up 46% from 2006. willingness to take projects in the US at lower margins.
For Honeywell, the scope of Integrated Main
Automation Contractor projects increased by 20% at ABB
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
fallen slightly due to slowdown in North America, its Siemens’s Product Life-cycle Management product
largest market. portfolio, along with SIProcess, enhances its position
as total solution provider.

23
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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 www.frost.com/gilglobal
GIL GLOBAL 2009
A global community focused on Growth, Innovation and Leadership

May 2009 October 2009

Kuala Lumpur
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October 2009
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Shanghai
San Francisco

October 2009 December 2009

Middle East Sao Paulo

February 2010
October 2009
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: alvin.chua@frost.com)

Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth
Consultant (email us: alvin.chua@frost.com)

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)

26
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: alvin.chua@frost.com

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