strategic planning challenges & practices in the technology industry
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Strategic Planning Challenges & Practices in the Technology Industry. Therese Bassett VP Strategic Planning and Business Intelligence Avnet Incorporated. Agenda. About Avnet Surviving and succeeding in today’s technology market Avnet’s Strategic Planning and Management Process - PowerPoint PPT PresentationTRANSCRIPT
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Putting our imprint on technologysince 1921.
A c c e l e r a t i n g Y o u r S u c c e s s ™
Strategic Planning Challenges & Practices
in the Technology Industry.
Therese BassettVP Strategic Planning and Business
Intelligence
Avnet Incorporated
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Agenda
• About Avnet
• Surviving and succeeding in today’s technology market
• Avnet’s Strategic Planning and Management Process
• Rules governing our planning process– Thinking and planning
– Challenges
– Cadence, discipline, alignment
– Communication
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Avnet Inc. Vision
Avnet will deliver the highest value to our customers, suppliers, employees and
shareholders as the premier technology marketing, distribution and services
company, globally.
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TS39%
EM61%
Asia Pac21%
EMEA31%
Amer48%
Avnet Inc Company Snapshot
• Founded in 1921• Incorporated in 1955
• NYSE: AVT in 1959• Relocated headquarters to Ariz. in 1998• No. 172 on Fortune 500• June 30 fiscal year end• FY07 Annual Revenue
– Avnet, Inc. - $15.7 billion– Electronics Marketing - $9.7 billion– Technology Solutions - $6 billion
• ~ 300 locations in over 70 countries• 300 suppliers/100,000 customers• 52 Acquisitions since 1991
As of Q1 FY 2008
As of Q1 FY 2008
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Vital Link in Global Technology Supply Chain
Avnet effectively manages the complexity of the technology supply chain in a cost-efficient manner, delivering value to suppliers and customers
Original Equipment
Manufacturers
Original Equipment
ManufacturersEnd Users
End UsersEMS / ODM
EMS / ODM Resellers andSystems Builders
Resellers andSystems Builders
Semiconductors Interconnect
PassiveElectro-
mechanical
Semiconductors Interconnect
PassiveElectro-
mechanical
Software Vendors
Software Vendors
EM TS
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Global Logistics Scale & Scope
5.9 Million Orders
35 Billion Units
7.6 Million Line Items
134 Million Devices Programmed
250,000 Integrated Systems
Value-added
Regional Distribution Centers
Quality Systems
Pinpoint Logistics
2.0 Million Square Feet
Computer Integration
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AsiaJapanKoreaTianjinShanghaiTaiwanHong KongSingaporeShenzhenMelbourneIndia
EMEAGermanyNetherlandsBelgiumIsraelS. Africa
AmericasArizonaCaliforniaKentuckyTexasMexicoCanada
>100k <100K Prog. Ctrs. V/A Integration Ctrs. 3PLs
Avnet Logistics Network
7 11 8 5 12 44=1
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Putting our imprint on technologysince 1921.
A c c e l e r a t i n g Y o u r S u c c e s s ™
Surviving and Succeeding in
Today’s Technology Market
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The World of Technology Distribution
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The World of Technology Distribution
Commoditization EM & TS
Margin
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The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
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The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
ConsolidationCompetitorsCustomersSuppliers
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The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
ConsolidationCompetitorsCustomersSuppliers
GlobalizationSuppliersCustomersInformation
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A c c e l e r a t i n g Y o u r S u c c e s s ™
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The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
ConsolidationCompetitorsCustomersSuppliers
GlobalizationSuppliersCustomersInformation
RegulationsRoHSWEEE
Sarbanes-Oxley
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A c c e l e r a t i n g Y o u r S u c c e s s ™
Avnet Confidential
The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
ConsolidationCompetitorsCustomersSuppliers
GlobalizationSuppliersCustomersInformation
Information Visibility Knowledge
RegulationsRoHSWEEE
Sarbanes-Oxley
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A c c e l e r a t i n g Y o u r S u c c e s s ™
Avnet Confidential
The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
ConsolidationCompetitorsCustomersSuppliers
GlobalizationSuppliersCustomersInformation
Information Visibility Knowledge
RegulationsRoHSWEEE
Sarbanes-Oxley
TechnologiesWireless
RFIDVoIP
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A c c e l e r a t i n g Y o u r S u c c e s s ™
Avnet Confidential
The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
ConsolidationCompetitorsCustomersSuppliers
GlobalizationSuppliersCustomersInformation
Information Visibility Knowledge
ConsumersPurchasing PowerKnowledge
RegulationsRoHSWEEE
Sarbanes-Oxley
TechnologiesWireless
RFIDVoIP
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The World of Technology Distribution
Commoditization EM & TS
Margin
ServicesDifferentiation
Evolution
ConsolidationCompetitorsCustomersSuppliers
GlobalizationSuppliersCustomersInformation
Keeping pace in a decade of change…
Information Visibility Knowledge
ConsumersPurchasing PowerKnowledge
RegulationsRoHSWEEE
Sarbanes-Oxley
TechnologiesWireless
RFIDVoIP
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So what…
• Traditional technology distribution businesses are getting squeezed
• In order to remain the competitive global leader, we must develop new service and product solutions that are differentiated and high-value Expand our customer base
• We must leverage our strengths in mature regions and develop similar competencies in each region of the world
• Leveraging our scale, scope, and supply chain visibility will be our differentiator and allow us to achieve competitive advantage
• Our strategic thinking, planning, and intelligence models need to address all of the above within a more complex global supply chain…
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Global Acquisition
Our Strategy Evolution…
VBM
•Focus on regional achievement of ROWC•Greater scrutiny of engagement profitability
•First global acquisition•Required coordination and harmonization of strategy across regions
•Predominantly a U.S. business•Established global footprint & consolidated industry thru acquisition•Emphasis on Asia expansion in latter part of the decade•Strategies developed and executed regionally
Consolidation Era
Global Differentiation
• Accelerated investment in strategy that leverages scale & scope advantages for competitive differentiation•Increased cross-regional partnering•Structural alignment
•Development of strategy extensions•Core business productivity enhancement acceleration
Regional Excellence
1990 2000 2008…
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Putting our imprint on technologysince 1921.
A c c e l e r a t i n g Y o u r S u c c e s s ™
Avnet’s Strategic Planning and Management
Process
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Avnet’s Strategic Long-Range Planning
SL
R
P
trategicWhat do
we want to look like?
What’s changing?
What are we good
at?
Where are we
deficient?
What to invest in today for
tomorrow?
A good strategy is one that asks and answers the right
questions before everyone else
A good strategy is one that asks and answers the right
questions before everyone else
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Avnet’s Strategic Long-Range Planning
SL
R
P
trategicong
ange
lanning
Prioritizing Opptys
Investment
Alignment
Structure
3-5 Years
Measures & Goals
Execution
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” ---- Sun Tzu
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Rules that govern our process…
1. Clearly define Thinking and Planning processes
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Thinking vs. Planning
StrategyStrategy
StrategicThinkingStrategicThinking
Strategic thinking is the capability of an individual or group to capture disparate pieces of information, identify inherent themes or patterns, and synthesize these learnings into a vision of the long-term direction that a business should pursue.
--Adapted from Corporate Strategy Board
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Thinking vs. Planning
StrategyStrategy
StrategicThinkingStrategicThinking
Thinking Activities Interpreting environmental changes
Identifying opportunities & threats
Generating & evaluating alternatives
Assessing core competencies
Challenging assumptions/models
Creating visions, missions, and strategic imperatives
Proposing strategies
Redesigning organizational structure & business processes
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Thinking vs. Planning
StrategyStrategy
StrategicThinkingStrategicThinking
PlanningPlanning
Planning Activities Documenting thinking outputs
Setting tactics & targets
Creating balanced scorecards & measures
Developing detailed action plans
Aligning resources with initiatives
Communicating the plan & the organization’s role in achieving it
Linking individual performance & development plans with team plans
Adjusting rewards to reinforce the objectives
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Rules that govern our process…
1. Clearly define Thinking and Planning processes
2. Understand your leadership team’s de facto starting point and challenge from there
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Challenges we – and others – face…
• Because companies that want breakthrough performance must fight some basic laws of nature:
– Tomorrow’s strategy will be the same as yesterday’s strategy
– Leadership focus on attainment of short-term goals– Long term risk avoidance– Tendency to isolate focus on internal performance – limit
to within the scope of control– Biases and mental models shape what we see– Belief that continuous “challenging” of strategy creates
chaos
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Rules that govern our process…
1. Clearly define Thinking and Planning processes
2. Understand your leadership team’s de facto starting point and challenge from there
3. Build cadence, discipline, and alignment into your process…but limit bureaucracy
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Strategic Strategic PlanningPlanning
Feb – JuneFeb – June
ExecutionExecution
All YearAll Year
The Right ResultsThe Right Results
Continuous LearningContinuous Learning
Performance Performance Monitoring/ Monitoring/
ManagementManagement
All YearAll Year
QSPRs & QSPRs & Performance Performance AppraisalsAppraisals
Avnet’s Strategic Management Process
ResultsResults
When?When?
Strategic Strategic ThinkingThinking
All YearAll Year
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Achieving Alignment
Define Global Objectives and LRP Targets
Define Group Strategic Imperatives
Define Divisional Strategies,and Goals
Define TacticalAction Plans
Define Projects
Define Milestones
CEO Group President
DivisionalPresident
Strategy Owner
Tactic Owner
Team Leader
RegionalPresident
Define Regional Strategic Imperatives
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Rules that govern our process…
1. Clearly define Thinking and Planning processes
2. Understand your leadership team’s de facto starting point and challenge from there
3. Build cadence, discipline, and alignment into your process…but limit bureaucracy
4. Mobilize the critical mass
"Leadership is a combination of strategy and character. If you must be without one, be without the strategy.“
Gen H. Norman Schwarzkopf
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The Role of Communication
• External
– Wall Street
– Lending Institutions / Rating Agencies
– Customer / Suppliers
– Alliance partners
• Internal
– Board of Directors
– Employees Line of Sight Index 84%+
IndexAvnet
Overall
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In Closing…
Business is a race against time --- Where there is never enough time to answer all possible questions; And
everyone gets the right answers eventually; Therefore, asking and
answering the right questions first is vital to winning.
Business is a race against time --- Where there is never enough time to answer all possible questions; And
everyone gets the right answers eventually; Therefore, asking and
answering the right questions first is vital to winning.
Modified from University of Chicago
Strategic Planning for Executives
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Q&A
Thank You