Exploring the Future Potential of AI-Enabled Smartphone Processors
Joel Nickelsen “Growing Lean – The New Paradigm”
1. Growing Lean:
The New Paradigm
North America
inSIGHT 2013
Applied Value LLC
One Grand Central Place
60 East 42nd St., Suite 2825
New York, NY 10165
Phone: +1 646 336 4970
Fax: +1 646 336 4974
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Growing Lean: The New Paradigm
Lean Growth in Action
Application
Agenda
Lean Growth Philosophy
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Growing Lean: The New Paradigm
Our lean growth philosophy argues cost/capital efficiency is
always the foundation for long-term profitability.
Lean AND Growth
Lean & Growth
Lean Manufacturing
Lowest Cost
Process Focused
Project Oriented
Lean
Multi-Dimensional
Lean Costs & Capital
Growth Focused
Ongoing Culture
Growth without “lean” is temporary…Lean without growth is
no fun.
Lean Growth Philosophy
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Growing Lean: The New Paradigm
Lean operations create a virtuous cycle of growth for
companies to stay ahead of competition.
Enhanced
Product
Economies
of scale
Cost
Efficiency
Increased
market share
Increased
Profits
Company X ensures a
lean operation
Enhanced product offering
will deliver new business and
increase the company’s
market share
Economies of scale further
increases delivery of the
organization’s cost
competitiveness
Larger company size
will generate economies of
scale through higher utilization of
assets, reduced sourcing costs
and learning curve
Reduced costs enable
the company to optimize
its product offering’s
quality and price
Virtuous cycle
Lean Growth Philosophy
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Growing Lean: The New Paradigm
There is no fundamental conflict between cost efficiency and
product innovation – On the contrary!
Lean Growth Philosophy
Competitive Strategy – Porter’s Framework Applied Value Framework
Cost
Leadership
Differentiation
Broad
Narrow
• A company must focus on either cost
or product differentiation to sustain a
long-term competitive advantage
• A company must choose to have
either a broad or narrow portfolio
• Cost efficiency is a requirement for
sustainable long-term profitability
• Differentiate your product offering
where it makes financial sense but
always ensure cost efficiency
Cost Leadership and
Differentiation
Broad
Narrow
Time
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Growing Lean: The New Paradigm
Many myths create invisible barriers to change.
“The company has always been well managed”
“There are insufficient funds to invest”
“We are lean”
“We can rely upon superior products”
“We drive operational efficiency via acquisitions”
“Volume is more important than margins”
“We have too little inventory”
Lean Growth Philosophy
Examples Of Common Myths
Lean Growth driven change can happen anywhere.
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Growing Lean: The New Paradigm
• Facts and benchmarks must set the standard for world class performance –
not what your management team or organization believe
• Do not wait for “management” to tell you to “get lean”
• Your customers will be more cost oriented over time
• Companies who go lean before competition will be ahead of the curve and
outperform its industry
• There are few (if any!) corporations that have lost competitiveness because
they were “too lean” – there are corporate graveyards full of the other
category
Do not wait to pursue Lean Growth, it destroys value.
Lean Growth Philosophy
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Growing Lean: The New Paradigm
Lean Growth in Action
Application
What is Lean Growth?
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Growing Lean: The New Paradigm
What is complexity?
“A several billion dollar opportunity”
-Jack Welch,
Ex Chairman & CEO
General Electric
Companies are rewarded for making the complex simple.
Lean Growth In Action
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Growing Lean: The New Paradigm
2 Minutes, 2 Taps
Lean Growth In Action
Unreasonable?
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Growing Lean: The New Paradigm
What is the single most important competitive advantage a
company has in any industry?
SPEED
Financial return increases with speed.
Lean Growth In Action
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Growing Lean: The New Paradigm
Applied Value’s overall path to Lean Growth.
SPEEDFOCUS SIMPLICITY SUCCESS=
Lean Growth In Action
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Growing Lean: The New Paradigm
Lean Growth is based on Focus, Simplicity, and Speed.
Lean Growth
SpeedSimplicityFocus
Define strategic focus areas,
excel in key capabilities and
use partners to handle non-
core activities
Complexity is the key cost
and capital driver and should
be minimized in all cases
Time is an asset which
should be valued greater
than money – you can win
back money but never time
• Strategic focus:
‒ Markets
‒ Customers
‒ Channels
‒ Products
‒ Technologies
‒ Suppliers
• Value proposition and
offering
• Organizational efficiency
• Footprint optimization
• Supplier consolidation
• Level of variable vs. fixed
costs
• Process lead times:
‒ Time to market
(of a new product)
‒ Time to customer
(of a proposal)
‒ Time to invoice and cash
(of a delivery/shipment)
‒ Time to integration
(of an acquisition)
Lean Growth In Action
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Growing Lean: The New Paradigm
Lean Growth in Action
Application
What is Lean Growth?
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Growing Lean: The New Paradigm
Application of Focus, Simplicity, and Speed must occur across
the organization.
Lean Growth
Process Speed
Double Speed
Organizational Simplicity
Organizational 8D,
Activity Value Analysis
Business Focus
Customer and
Product Profitability
SG&A
Productivity G&A efficiency
S&M efficiency
PricingGross
Margin
Improvemen
t
Sourcing
Production
Cash management
Inventory management
Fixed assets leverage
Capital
Efficiency
Segmentation/PositioningGo-to-
Market Product/Channel mix
R&D
Productivity R&D efficiency
R&D effectiveness
Application
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Growing Lean: The New Paradigm
Significant Lean Growth efforts will include both strategic and
tactical initiatives.
Application
Create Shareholder Value - EVATM“The Challenge”
Business Structure &
Complexity
Business Strategy &
Product Decisions
Strategy &
Structural Level
Tactical &
Operational
Level
Capital EfficiencyCost Efficiency
Order To Cash
Efficiency
Corporate Strategy &
Structure
Both levels of initiatives need to be considered simultaneously
in order to significantly boost shareholder value creation.
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Growing Lean: The New Paradigm
ResultsOpportunity/Problem
Global Telecom – Cost and Capital Initiatives
• $1.3B Annual Loss
• $8.5B OPEX Spend
• 107k Employees
• 17k Consultants
• Turnaround in < 3
Years
• $3.8B Operating
Income
• OPEX Reduced by
65%
• Achieved with 50%
less HC
OPEX
• Market unit consolidation
• BU structure and efficiency
• Corporate governance
• Headquarter and support functions
• R&D concentration
• IS/IT cost reduction and outsourcing
• Real estate
Lean Growth
Solutions
Cost
• Manufacturing outsourcing
• Local cost of sales
• Sourcing strategy & organization
• Fact-based negotiations/sourcing
• Product mix review
• Product rationalization
Cash
• Joint venture
• Sales/leaseback
• Sold customer financing stock
• DSO reduction (collection)
• Inventory reduction
• Capital restructuring
Application
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Growing Lean: The New Paradigm
ResultsOpportunity/Problem
Third World Non-Profit – Structure and Process
• Create jobs for the
poorest of the poor
• “To be the most
efficient organization
in the world at
creating jobs”
• 1.4M jobs over past 7
years
• Cost/Job of $50-200
• Afghanistan, India,
Eastern and Southern
Africa impact
Structure
• Lean Overhead
• Local Structures
Lean Growth
Solutions
Process
• Sustainability
1. Formation of
Self-Help
Groups (SHGs)
2. Business
education
(business plan
formation, cash flow,
marketing etc.)
3. Microfinance
services
(either directly or
through partnership)
4. Specialized
skills training,
access to
new/larger
markets
Application
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Growing Lean: The New Paradigm
Small/Private Manufacturing – Cost and Sales Initiatives
ResultsOpportunity/Problem
• 1-3% EBIT
• Declining Sales
• Avoid Bankruptcy
• Limited Capital
• 3 Years In – 14% EBIT
• 5 Years In – 26% EBIT
• 5 Years In - Sales
+30%
• Sold Business
Cost Initiatives
•Divested non-core business
•Lean Organization – Multi-tasking
•Lean Energy – Sustainability
•Sourcing
•Lean Supply Chain
Lean Growth
Solutions
Sales Initiatives
• Lean Sales Force
• Wholesaler agreements
• Pricing optimization
• Strategic customer partnerships
• Channel strategy
Application
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Growing Lean: The New Paradigm
1. There is no point in finding efficiencies in things that
should not be done at all
2. Automate important but routine work processes for efficient
use of human resources, and ability to increase capacity/speed
3. Do not customize non-customer critical activities
4. Utilize shared services to the fullest extent and outsource
whenever it makes sense
5. Minimize complexity by focusing only on profitable products,
services and customers
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2
3
4
5
Applied Value’s ‘Top Five’ principles of Lean Growth.
Application
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Growing Lean: The New Paradigm
Final words on Lean Growth wisdom…
• Set goals that are unattainable with current processes
• “Growth requires more resources” is a fallacy; Create new ways of doing
things
• Taking out costs, increasing capital efficiency and improving revenue
processes to best practice standards can be done by rapid decision
making – it is not contingent upon external factors
• All experiences show that simplifying organizations and balance sheets
have positive effects, not only on shareholders, but also on customers
and the organization
• There is a first-mover advantage in decreasing cost and capital tied-up
– every company will ultimately have to go through this process
Go Lean…Grow Lean!
Application