business models: trends and transformations in finnish companies

Business Models: Trends and Transformations in Finnish Companies.

Cases Nokia, Kone, and Others.

Panu Kause

© Necorpoint Ltd Public @panukause @Necorpoint @FibresOnline

PANU KAUSE

20+ years of experience •  executive positions in three publicly traded corporations (Telecom Finland / Sonera, HiQ, Ixonos) •  top management of two startups (Service 4 Mobile, Necorpoint) •  interim management and/or hands-on consulting at ca. 70 customers •  member of Aalto Executive Education external faculty for open and corporate-specific programs: trained

ca. 3000 executives and managers from 800+ organizations; main topics on strategic foresight and planning, strategic program management, strategy-driven project operations, leadership

Other background and areas of interest •  MSc in Industrial Management •  Member of the Strategic Management Society of Finland •  VIP member of Boardman 2020 network of growth business professionals •  invited member of the global Gartner Research Circle

Entrepreneur, CEO, Necorpoint Ltd Necorpoint is a market foresight and strategic management company. The core of our business is FIBRES™, the simplest strategic management software available. It also serves as the platform for additional services provided by our partners.


The Finnish Private Sector Landscape

The Three Horizons Framework

Large Companies and Major Transformation Cases

Medium-Sized Companies and the Next Wave of Transformations

Conclusions

AGENDA


360$100$

775$000$

97$

3$400$

381$000$

113$

300$

279$000$

177$

0$%$

10$%$

20$%$

30$%$

40$%$

50$%$

60$%$

70$%$

80$%$

90$%$

100$%$

Number'of'Companies' Combined'Personnel' Combined'Turnover'(billion'EUR)'

>200'MEUR'

10'?'200'MEUR'

<'10'MEUR'

Size of Company (Turnover)

THE FINNISH PRIVATE SECTOR LANDSCAPE Statistics 2014

The Finnish private sector is dominated by a handful of big companies in terms of turnover, but by micro-‐sized companies in terms of number of companies and employees.

In terms of interna=onal growth poten=al, the mid-‐sized company segment is crucial for the Finnish economy.






Conclusions

AGENDA


HORIZON 1 – PRODUCTIVITY “EFFICIENCY INNOVATIONS” Manage and optimize your current operations.

HORIZON 2 – NEUTRALIZATION “SUSTAINING INNOVATIONS” Selectively let go of the past. Identify the changing logic of your business.

HORIZON 3 – DIFFERENTATION “EMPOWERING INNOVATIONS” Create your own future. Dream, test, and learn across industry boundaries.

Three Horizons Visualization & Guidance by Necorpoint / Panu Kause inspired by Mehrdad Baghai, Steve Coley, David White, Vijay Govindarajan, Gary Hamel, Clayton M. Christensen, and Geoffrey A. Moore


personal computer

mechanical typewriter

electronic typewriter






Conclusions

AGENDA


The Strategic Programs approach is common to the transformation and renewal efforts in many large Finnish organizations: Kone, Nokia, Outotec, City of Espoo, and others.


Kone Net sales 8.6 billion EUR in 2015.

Continuous renewal via five strategic programs or “must-win battles”, updated every three years. Management approach implemented by CEO Alahuhta in 2005 and still on-going.

Business Development 2005 -> 2015 Sales 3.2 billion EUR -> 8.6 billion EUR New Equipment 60 % -> 57 % Services 40 % -> Maintenance 31 %

Modernization 12 %

PROGRAM MANAGEMENT APPLIED


h?p://www.eis.fi/ect/fp/ECT09_240909_Plenary_Alahuhta.pdf

Years 2005 – 2007

Years 2008 – 2010

www.kone.com May 15, 2013

available in Finnish only, unfortunately

Years 2011 – 2014

“Customer Experience”

“DEVELOPMENT PROGRAMS”

“Par=cipa=ng Personnel”

“Innova=ve People Flow Solu=ons”

“Leadership in Services”

“Excellence Throughout the Supply Chain”

www.kone.com Nov 3, 2016

Years 2014 – 2017


h?p://docplayer.fi/1517994-‐Osaamisen-‐johtaminen-‐ja-‐kehi?aminen-‐case-‐kone-‐johanna-‐saarinen-‐6-‐6-‐2012.html

EXAMPLE: KONE COMPETENCE MANAGEMENT PROCESS


PROGRAM GOVERNANCE, CITY OF ESPOO

Development Programs of City of Espoo for 2014 – 2016. Adapted from Päivi Hoverfält, Program Director, City of Espoo

City Units & Departments -‐> Line Management

Group Communi=es -‐> Line Management

Vitality for the Youth

Vitality for the Elderly

Espoo Par=cipa=ng

Sustainable Development

Compe==veness, Innova=on and Entrepreneurship Developm

ent P

rogram

s -‐> Program

Managem

ent

Steering Group

Development of processes and

operations

Development of products and

services

Program Owner

HR changes and skills development

Subprogram Owner

Subprogram Owner

Subprogram Owner

Project

Project Project

Project Project

Project

Project Project

Project

Project Project Project

Project

Program Office

Program Manager


Kone Net sales 8.6 billion EUR in 2015.

Continuous renewal via five strategic programs or “must-win battles”, updated every three years. Management approach implemented by CEO Alahuhta in 2005 and still on-going.

Nokia Net sales 12.5 billion EUR in 2015.

E.g. the successful 1+ billion EUR one-off transformation/synergies program during the integration of Nokia and Siemens. Outotec Net sales 1.2 billion EUR in 2015.

Building a 500+ million EUR services business “from scratch” in ca 5 years. Partially ignited by the notion of the growing service businesses at Kone, Cargotec, etc.

PROGRAM MANAGEMENT APPLIED


In General •  highly important in internal and external communication •  long-term commitment & focus on business benefits realization •  continuous learning and adaptability

In Terms of Governance •  in most cases, programs crafted based on “future back” thinking •  executive ownership & power over the current line management •  “helicopter capability”: a highly strategic view combined with the

ability to drill down to implementation detail

STRATEGIC PROGRAM COMMON FEATURES






Conclusions

AGENDA


CASE FORTUM Net Sales 3.5 Billion EUR in 2015

www.fortum.com Nov 14, 2016

Three management aspects have been highly visible in the public discussion lately: 1.  enhanced customer experience 2.  focus on the corporate culture 3.  digitalization


The Platform Business Model is currently of great interest. Experiments are on-going especially within the international mid-sized companies, such as Etteplan, Fastems, and others.


“Etteplan is a specialist in industrial equipment engineering, embedded systems and IoT and technical documentation solutions and services.” “With engineering units in China since 2004, Etteplan is the oldest and largest Nordic engineering design company operating in the Chinese market. --- Our offices are located in Shanghai, Kunshan and Suzhou.” Turnover 140+ million EUR; ca 2,500 in personnel, 40+ offices globally, listed on Nasdaq Helsinki.

CASE ETTEPLAN


h?p://www.e?eplan.com/~/media/Files/E/E?eplan-‐V2/2016/Copy%20of%20E?eplan_Espotel_SoikeaSolu=ons_15032016_EN.pdf






Conclusions

AGENDA


Ecosystem-Driven or “Platform“ Business Models

Product-Driven Business Models

Lifecycle–Driven Business Models

BUSINESS MODELS FOR THE FUTURE


Networked/Open Innovation Programs? “Skunk Works”?

Current Line Organization

Strategic Programs? A “New Business” Unit?

Trying to work on all horizons with the same people and within the same “mainstream business organization” may prove impossible.

GOVERNANCE OPTIONS


1.  For the Finnish economy, business model innovation and international growth within our mid-sized company segment is of utmost importance.

2.  Continuously successful companies proactively work on Three Horizons at all times.

3.  For major transformations in big companies, the Strategic Programs governance model seems to contribute to success.

4.  The current trend of business model renewal is about going beyond services and into platform economies.

KEY TAKEAWAYS


Necorpoint is a market foresight and strategic management company. We help our customers identify new opportunities and manage their business to its full potential.

The core platform for our services is FIBRES™, the simplest strategic management software available. It also serves as the platform for additional services provided by our partners.

Panu Kause CEO +358 40 838 4603 [email protected] www.linkedin.com/in/panukause Twitter @panukause Necorpoint Ltd Fredrikinkatu 61 A 54 FI-00100 Helsinki www.necorpoint.com www.linkedin.com/company/necorpoint Twitter @Necorpoint

Heli Salonen-McGrath Service Delivery & Partner Management +358 50 326 9873 [email protected] Twitter @salonenmcgrath Nina Orvola Principal Consultant +358 44 505 1044 [email protected] Twitter @ninutchka

business models: trends and transformations in finnish companies

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