A.T. Kearney New Delhi partner, previews the paper “And Action! Making Money in the Post-Production Services Industry“.
As emerging economies seek to influence global standards, Europe's role as a shaper becomes a priority.
Standards are the rules, guidelines, and definitions that describe repeatable ways of doing things. Standards are a crucial element in the EU's industrial strategy as Europe seeks to remain a shaper of global standards rather than a follower.
The European Round Table of Industrialists worked with A.T. Kearney to study the issue of developing and implementing standards. We found six recommendations for establishing standards in European industry:
- Establish performance targets to foster innovation. Standards spread collective knowledge, bringing together industry players in a working environment of sharing and collaboration. The use of standardized parts and business processes can reduce early investment costs and risks, and provide a platform from which industries can innovate.
- Consult with experts. Involving technical and industrial experts, even when standards are initiated by governments, can help build standards on solid foundations.
- Coordinate industry players. European standardization bodies can play a larger role in facilitating standard-setting along the value chain and across industries.
- Balance speed and consensus. Standards must be put in place quickly in the face of accelerating technological change and market competition, and they must be built on a foundation of consensus to broadly address the requirements of all players.
- Encourage a global approach. European companies that adopt and participate in setting global standards increase their market access to other countries.
- Encourage SME participation. Despite their importance to the European economy, few small and medium-sized enterprises (SMEs) are actively involved in setting standards.
As film production budgets shrink, visual effects and 2D-to-3D conversion services are poised to become stars.
The post-production services industry is at an interesting juncture. Driven by the squeeze in film production budgets in the United States, it has long faced low margins, slow growth, and operational complexity. Traditional post-production services such as audio and video editing, sound recording, and telecine have stagnated, causing overall market growth to stall in the low single digits. In the past few years, however, the industry has been thrown two lifelines: visual effects (VFX) and 2D-to-3D conversion. While the overall U.S. post-production industry is expected to grow only slightly, VFX and 2D-to-3D conversion services are poised to gain momentum.
Investors, movie production houses, service providers, and other post-production stakeholders would be wise to pay attention to VFX and 2D-to-3D conversion as services that could make or break their fortunes. In this paper, we explore the challenges—two big names in VFX recently filed for bankruptcy—and opportunities for these services from an investment and management perspective and discuss the success factors that will define each service's future market leaders, or failures.Close
- The right way to think about network optimization
Networks are complicated, and managing them requires an expansive strategic imagination.
The conventional way of looking at a network is through the direct-value lens: How much does it cost to run the network? Networks are a great deal more complicated than that, and managing them—or, more fittingly, optimizing them—requires an expansive strategic imagination.
No matter what kind of network one manages—hospitality, retailing, banking, leisure, telecommunications whatever it might be—once the network is built, it immediately begins its evolution. Even within a single local market, the network is evolving all the time. As the network goes through its life cycle, perspectives on sustaining it must change as well. The means for doing this are distilled in A.T. Kearney’s Network Optimization Tools, or KNOTs, comprised of eight elements, each focused on a strategic element of the network.
The English word knots translates as les nœuds in French, or nodes. This is an apt image for thinking about the symbiosis of the local and the networked—the balance of savoir-faire métier and savoir-faire local, of the collective intelligence of the network and the specific intelligence of the individual.
Think of KNOTs not as a laundry list of best practices used to build an optimal network but as electrons—each one discrete and at the same time interacting around the nucleus. A national bank develops financial products centrally, but the local branch manager manages the relationship with customers. The national bank maintains good relations with the regulators while the branch manager cultivates the good will of the town mayor. A manufacturer’s leverage with suppliers may be directly proportionate to its number of plants, yet procurement is not only about concentrated volume. It is also about expertise the manufacturer owns in a multitude of categories and brings to bear in the local nodes of its network.
A sobering counterexample is the flameout of video retailer Blockbuster, which channeled its energies into adding thousands of stores and tens of thousands of employees in North America and Western Europe only to be caught off guard by competitors such as Netflix and the rapid adoption of streaming video. In hindsight, Blockbuster’s history suggests an unbalanced emphasis on its real estate network and not enough on the customer experience. The result was catastrophic.
We organize our network nomenclature into three types: production networks, service networks, and distribution networks. La Poste, for example, is a production network in that it operates like a factory producing a product: collecting and distributing mail. Taxi companies, railroads, and airlines are other good examples of production networks. The nodes in these networks are more than just infrastructure. One must own the nodes or there is no business to manage. Closely related to the production network is the service network, typified by telecommunications and hospitality. A hotel network, for instance, cannot deliver a night’s sleep over the Internet. The consumption of its product is done at the local level even though each node in the network is supported by the expertise of the whole. The service is the network.
A distribution network is retail in all senses of the word, especially in its tailoring of products to meet the needs of local customers. Distribution networks are high touch and in certain ways are the easiest networks to think about in terms of nodes. The most familiar example, literally the most concrete, is a brick-and-mortar retail chain. Find a Wal-Mart, and its distribution center will not be very far away.Close
As mobile operators spin off their towers, is this strategy creating real, sustainable value for shareholders?
Captive or independent tower companies are emerging like never before as more telecommunications companies sell or spin off their tower holdings. Because towers make up the bulk of their capital investments and most of their operating costs, mobile operators are opting to share towers—renting them from other telcos or tower companies instead of making ongoing financial investments in infrastructure. In the process, these operators are searching to drastically cut costs and maximize profits.
But has it really been a success? Are tower companies creating value for their shareholders and their mobile operator clients? In this paper, we answer these questions and examine what tower companies and mobile operators can do to create a sustainable business and increase shareholder value.Close
While digital marketing is still in its infancy—at somewhat of a trial-and-error stage—consumers are way ahead.
The amount of time we spend online is enormous, equal to or more than the time chalked up to watching television or reading newspapers. Indeed, while watching television, up to 60 percent of us are multitasking—using computers, tablets, or smartphones to browse the Web, check email, or visit social networking sites. While television's total advertising market share is still healthy, the attention we pay to traditional channels such as television, and especially to traditional advertising on television, has shrunk dramatically. To keep up with these trends, companies are reaching out to consumers on more modern channels. We call this digital marketing.
The paradox is that while digital marketing is still in its infancy, consumers are way ahead, expecting real and relevant interactions. While much is being written about aspects of digital marketing such as location-based social networking apps, not much is being said about a marketing transformation. Transforming the marketing forest to blend in with today's digital world is a challenging but necessary undertaking for companies that want immediate impact and long-term growth.Close
Blanca Treviño, CEO of Softtek, discusses the future of global IT outsourcing and how Mexico can improve its competitive advantage.
A passionate advocate of service over labor arbitrage, Blanca Treviño has focused Softtek on adeptly undertaking complex projects and providing value, not just low costs. She is also a vocal proponent of sponsorship as a means of helping small- and medium-sized Mexican companies in the sector gain a toehold. At a recent A.T. Kearney conference on global competitiveness, Ricardo Haneine and Rodrigo Slelatt interviewed Mrs. Treviño for Executive Agenda to discuss the future of global IT outsourcing, the means by which Mexico can improve its competitiveness, and her aspirations for Softtek.Close
How do the leaders stay consistently ahead of their markets while formerly thriving businesses fail?
What causes one leading company to stay consistently ahead of the market while another formerly thriving company flounders? The question is intriguing—and pressing, too, during these times of volatility. To explore the reasons and possible solutions, we conducted a study of industry champions. The result was a matrix that measures market success—a combination of growth in sales relative to market growth, and market share relative to the next largest competitor. Where BCG's matrix was created to help companies plan their portfolios, this matrix is used to chart a company's evolution and derive insights about its strategies. We call it the four seasons matrix:
- Spring. Companies that have outgrown their market but are not (yet) market leaders
- Summer. World leaders that have outgrown their markets
- Autumn. World leaders with below-average growth, gradually losing their positions
- Winter. Market followers that are growing more slowly than their market
We chose the axes of growth and market share because both metrics have a strong, proven relationship to long-term profitability and shareholder value. Combining those measures provides a solid basis for picking long-term winners.Close
It is not at all difficult to turn customer dissatisfaction or even mere indifference into pure delight.
Creating a unique customer experience is one of the best ways to achieve sustainable growth, particularly in industries that are stagnating. If a telco, a utility, or an insurance company can create a highly differentiated customer experience that turns dissatisfaction or indifference into delight, it will recruit an army of vocal advocates online and offline, gain market share, and generate revenue growth.
Sound simple? It isn't, especially in sectors where the core product or service is difficult to differentiate. But it is doable, as Disney, IKEA, and ArcelorMittal have demonstrated. These firms are among the 15 Summer Champions identified by A.T. Kearney from an initial list of 500 as companies that outgrew their markets consistently over a five-year period despite being the largest players in their sectors.Close
It is time for telecommunication operators to choose their weapons to win the battles for mobile voice, messaging, media, and cloud services.
YouTube, Skype, Facebook, WhatsApp Messenger, Viber, and Netflix are well-known examples of over-the-top (OTT) services that have many believing the demise of mobile operators is inevitable—and not without reason. YouTube now accounts for 24 percent of global mobile traffic, Facebook Chat consumes 22 percent of all instant message-related mobile bandwidth, WhatsApp carries 5 percent of global messaging traffic, and Netflix boasts nearly 30 million streaming subscribers.
The over-the-top (OTT) invasion is occurring on four distinct battlegrounds, and telecommunication operators that have a variety of strategic weapons in their arsenal stand the best chance of gaining a foothold.
An understanding of the factors driving OTT voice, messaging, media, and cloud will be key to choosing the appropriate business weapons, positioning troops, and determining whether the competitive posture is to be offensive or defensive. OTT services are evolving fast, consumer behaviors are shifting faster, so operators will have to create business models that are both agile and adaptable, and partnering will be the best way to do it.
Creating new platforms and approaches, rethinking organizational approaches, and remaining flexible and ready to adjust will be vital—for, as on real battlefields, the opponent's moves will be unpredictable.Close
A new product generally gets just one opportunity to make an impact: at launch. And the launch often determines success or failure.
A well-executed launch can enable a company to increase sales and win market share—as famously demonstrated by successive Apple iPhone launches. Conversely, a badly managed launch can cause even highly innovative or well-designed products to flop: Think Nokia's N-Gage or RIM's Playbook. Yet the launch process is often neglected by senior managers, particularly in R&D-driven technology markets. Today, people are continually bombarded with advertising, marketing messages, and other promotional information. But attention spans are short, and patience is limited. At the same time, products are now often bundled with services, which makes them increasingly complex both for the end customer to understand, and for sales teams to sell effectively. With only one chance to get it right, a launch must be seen as far more than just the final milestone in the product or service development process—launch management should be an integral part of the entire product life cycle, overseen by a senior manager right from concept to several months after the actual market launch. By taking this approach, a company will maximize its chances of driving the successful adoption of a new product and delivering profits that exceed investors' expectationsClose
The value of good capital management is almost priceless, especially in high-spend industries such as telecommunications and utilities.
Managing multibillion-dollar capital expenditures (capex) is a balancing act where it is easy to lose sight of the basics due to the intricacies of the allocation process, the internal politics, or the complexity of the business case. This last distraction is almost always dealt with by quantifying every aspect of the business case, which may give the impression of "managing all the details" but in reality often results in at least three symptoms of poor capital management. The first symptom is failure to prioritize—when capital investments are not linked to corporate strategy and financial targets, it is almost impossible to capture the required level of returns across the portfolio. The second symptom is loss of accountability—when accountabilities are not clearly defined, followed, or enforced, and reviews are not conducted, no one owns the outcome. The third symptom is poor visibility—without a corporate-wide reporting structure there is limited visibility into spending and even less control of the investment portfolio. As cost overruns mount and projects slow down, the economics of the original investment case are often lost. Any one of these symptoms can lead to poor returns. However, four principles can lessen the chance of a fall.Close
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