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  • The History of Strategy and Its Future Prospects

    The History of Strategy and Its Future Prospects

    Strategy has been evolving for centuries—and is on the verge of reclaiming its rightful place in history.

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    Strategy, for most of its 2,500-year history, was one-dimensional. Warmongers were largely focused on avoiding wars by not instigating them and business was mostly focused on building power and monopolies. The past 50 years have more than made up for this one-way view as strategy hit its prime and spewed out countless new ideas and solutions. But as the strategies piled up so did the complexity, and the chance that any one overall strategy was the answer to ever expanding strategic freedom was trampled in the competitive scramble.

    As a result, we are in for some interesting times. Strategy is on the verge of reinventing itself and reclaiming its rightful place at the top of the business food chain. We believe that strategy will come back as a much more powerful guiding force of organizational energy, which we are excited about because it brings “strategy” and “doing” back together again—something we wholeheartedly believe in. This paper constructs a brief history of strategy within a framework of noteworthy publications. We generalize, simplify, and cut corners, not out of ignorance but to create a holistic overview to show where strategy has been and where we believe it is now headed.

  • In Pricing, Success Breeds Success

    In Pricing, Success Breeds Success

    Learn about Pricing Full Potential (PFP) Analyzer and read current research.
    The more market power you have, the more you stand to gain from your pricing strategy.


  • The Rise of the Female Economy in B2B

    The Rise of the Female Economy in B2B

    A study published in association with the Confederation of British Industry (CBI) reveals that now is a crucial time to secure competitive advantage by addressing female B2B decision makers.


  • Collaborative Supplier Innovation

    Collaborative Supplier Innovation

    Work with your suppliers to generate profitable, value-building growth.

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    Innovation is key to enabling future success. But development costs can quickly eat up the benefits of the growth in sales and profit generated. This is one reason why more companies are reshuffling their internal capabilities to rely on a cadre of well-chosen partners—especially suppliers—to pursue profitable, value-building growth.

  • Cracking the Growth Code in IT-BPO Mergers

    Cracking the Growth Code in IT-BPO Mergers

    What will it take for IT-BPO companies in India to see their M&A strategies pay off?

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    India has been the world's dominant destination for information technology (IT) and business process outsourcing (BPO) services. However, as the market matures the industry has experienced a slowdown in growth, pushing IT-BPO providers toward focused M&A strategies to build and sustain growth momentum. Growth through M&A is now a core strategy influenced by the need to:

    • Fill gaps in service portfolios or geographic presence, to meet client demands and compete with the global majors; examples include Infosys' acquisition of Lodestone to tap its European customer base, Wipro's acquisition of Opus CMC to tap into its capabilities in high-end mortgage BPO, and Genpact's acquisition of Triumph Engineering to bolster engineering capabilities
    • Manage cash reserves more eff ectively to meet shareholders' expectations
    • Capture opportunities from client divestitures of services assets; examples include Cognizant's acquisition of ING's and CoreLogic's captives, TCS' and Wipro's acquisition of Citigroup's captives, and Tech Mahindra's acquisition of Hutch BPO

    Done well, M&A strategies can help Indian players tap into $2 billion to $4 billion in revenues each year. Yet, about 70 percent of mergers fail to create value, as the consolidated companies receive a one-time revenue uplift but miss powerful opportunities to create revenue synergies. This paper takes a closer look at the Indian IT-BPO industry's M&A track record and explores how to harness the power of consolidation to create more value.

  • Virtual Vertical Collaboration

    Virtual Vertical Collaboration

    Not only is the concept of merging without merging not crazy, it's already happening. And the results can be significant.

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    Collaboration is not new. Companies have exchanged data and forecasts for years. Virtual vertical collaboration, however, means capturing the benefits of M&A without the associated complexities, and involves a retailer and manufacturer acting as though they are about to merge, and creating the efficiencies that come with merger integration. Abandoning their traditional adversarial relationship, they build a bond, make mutually beneficial business decisions, and gain advantages including a 10 to 15 percent increase in sales, 40 to 60 percent faster new product launches, and 20 percent reduction in cost of materials.

    In the old way of thinking, such possibilities would be almost unattainable, since the costs would likely fall on one party and the benefits accrue to the other. That's why it is important to act as though a merger is just a touch away. If you can trust each other, then figuring out how to pay for your collaborative efforts and how to distribute the benefits is transformed from a matter of competitive survival to a value-sharing opportunity.

  • A Game Plan for P-O-P Excellence

    A Game Plan for P-O-P Excellence

    How can CPG companies cut waste and improve companywide P-O-P efforts.

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    Most CPG companies allow multiple internal groups with differing priorities to plan, develop, and execute their point-of-purchase (P-O-P) strategies, making the entire system difficult to manage and almost impossible to measure.

    This paper, underwritten by RockTenn and produced in collaboration with A.T. Kearney and the Path To Purchase Institute, highlights a new A.T. Kearney framework that helps companies improve their in-store marketing efforts. The framework can bring savings of up to 12 percent sales increases, unit cost reductions of 45 percent, and increased speed to market.

    Finding the best person to oversee P-O-P efforts is step one. Step two is creating an enterprise-wide system to address the problems of waste and inefficiency. The framework addresses three primary issues: strategy design and planning; supply chain; and improving execution.

  • The Merger Endgame Revisited

    The Merger Endgame Revisited

    Shedding light on the best ways to gain long-term growth. 

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    Growth drives value for companies across all industries, and mergers and acquisitions have always been a major strategy for growth. But with a lack of market transparency, investment decisions are made and merger strategies developed with a degree of uncertainty. As a result, growth investments often fall short.

    A.T. Kearney's Merger Endgame tool reveals strategic ways to win the race to consolidate, creating 360-degree transparency by reflecting industry consolidation patterns, competitive value growth dynamics, and structural breaks. This methodology, which uncovers the challenges and strategies of consolidation stages, is based on a global database of more than 600,000 companies, covering 98 percent of the global market. Applying the Merger Endgame strategy to leading blue-chip companies has helped our clients generate significant returns on their growth investments. A superior strategy is essential for winning the merger endgame. The paper recommends several questions to ask at the planning stage—to which the Merger Endgame and its practical tools can help find the answers.

  • What Shape is Your Curve?

    What Shape is Your Curve?

    Curves are magnificent things. Think of the Jaguar E-Type or the Sydney Opera House. Mergers have curves, too—synergy curves.

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    For mergers, there is a window of opportunity for capturing the most benefits. A synergy curve defines this window and, ultimately, the success or failure of a merger. The result of months of preparation, planning, and implementation, the curve shows the accumulation of synergies over time. In successful mergers synergy curves are defined in the early stages and used as a driving force for the integration. A merger with a sense of urgency is far more likely to reach its full potential and by plotting a synergy curve during the planning of the merger senior executives can see the speed at which synergies could be delivered and track the planned accumulation of synergies over time. Plotting a curve also helps clarify the deal's strategic rationale, fundamental to maximizing synergy delivery. As the deal progresses through announcement and toward close, the curve's accuracy can be refined as more data is made available. A final curve takes shape as the synergies are tested through the development and sign-off, and once completed, can be used throughout the integration to benchmark, plan, and track the synergy delivery rate. In this paper, we bring together our experience and data from many mergers to describe the types of synergy curves for various integration strategies, and highlight the typical time frames for delivering synergies at an overall level and at the level of individual functional work streams. Used correctly, the synergy curve is the fundamental tool for successful synergy delivery and, to the CEO, the cornerstone of a successful merger.

  • Setting Standards: A Strategy for Europe

    Setting Standards: A Strategy for Europe

    As emerging economies seek to influence global standards, Europe's role as a shaper becomes a priority.

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    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.
  • video Scenario Planning in a Volatile Environment

    Scenario Planning in a Volatile Environment

    Sean Ryan, A.T. Kearney partner, and Erik Peterson, GBPC managing director, discuss scenario planning and why companies need to take a look at the broader external environment.

  • Decision Making in a World of Uncertainty

    Decision Making in a World of Uncertainty

    MWorld: Journal of the American Management Association, Winter Issue

    Great companies make great decisions amid increasing uncertainty. This article discusses the problems caused by systemic errors in judgment and offers solutions.


  • Tied in KNOTs

    Tied in KNOTs

    The right way to think about network optimization

    Networks are complicated, and managing them requires an expansive strategic imagination.

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    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.

  • Winning in a Turbulent World

    Winning in a Turbulent World

    In an environment that is likely twice as volatile today as it was 10 years ago, the Turbulence Index offers direction for managing in an era of volatility.

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    There has never been an age when people did not marvel at the pace of change in their lives. If the acceleration of change in our era is not unprecedented, there has certainly been nothing like it for at least a generation. A.T. Kearney’s Global Business Policy Council has developed a measure of volatility that quantifies just how volatile our age has become.

    Our Turbulence Index portrays an interwoven world economy in which the volatility of external conditions doubled from 1999 to 2011. For strategic planners, operating environments became twice as difficult to predict, even in the near term. We call this “the 200 percent effect.” 

    This picture of extraordinary volatility quantifies what we all know intuitively about the growing influence of externalities on senior executives and the companies they manage. A decade ago, variables such as currency fluctuations and input costs had half the impact on corporate earnings that they do today.

    The Index illustrates the macroeconomic uncertainty, financial instability, and unprecedented thirst for resources in an age of unpredictable energy and commodity prices. But bear in mind that the Index does not measure prices. It measures the degree of price movements—their volatility. It offers a foundation for analytics that, if approached systematically, can guide choices about resourcing, investment ideas, and talent management.

  • "De-Stranding" the Strategic Planning Process

    Amid ongoing instability in the global business landscape, the case for a continual strategic planning capability is unassailable.

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    As most people are painfully aware, few leaders—business or others—were able to foresee the chain of events in 2008 that plunged the world into recession. Of those who did foresee the meltdown, still fewer were able to prosecute a strategy to mitigate relevant risks. It is not surprising, therefore, that in a survey of global business leaders conducted last year by our Global Business Policy Council, more than half of all leaders were focused on improving their strategic-planning processes and tools.

    While we can hope that the recession is increasingly behind us, few argue that the strategic outlook is any more sound or certain and the idea of negotiating unarmed the oncoming period of disruptive and potentially discontinuous political, social, economic, and commercial change without a strong and continual process for anticipating and preparing for change is simply untenable. But how to move to the next stage? While a great deal depends on the style of the leaders and the extent of commitment to empowering the planning process, a number of steps are useful in building a vigorous planning capacity that transcends corporate cultures and the nature of business. This paper discusses seven steps that stand out.


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