6733 F Insights Wipro REPORT

7/27/2019 6733 F Insights Wipro REPORT

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GLOBAL CXO OUTLOOK

Growth Strategies for 2012 and Beyond


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Dear riends,

Business leader ship in the emerging globa l order is a whole new paradigm. The challenges o the past, such as limited tech-

nology access and limited access to global resources (capital, talent, natural resources), have given way to a world without

boundaries. Instead, companies operating in dierent geographies and industries are now conronted with a resh set o

challenges that mainly stem rom the competitive global business regime, alongside the call or sustainable development.

Building Growth Strategies or 2012 and Beyond, the theme o our rst Global CXO study, is an onerous task that may be

accomplished with a careul analysis o the key imperatives o global growth and development that can help organizations

global ly to do business better. This study, based on a survey o more than 300 CEOs and other C-level executives at global

enterprises, underscores three key imperatives: strategic innovation, adoption o green practices, and a meaningul pres-

ence in emerging markets such as India and China.

The ndings o this survey, conducted by Forbes Insights in association with Wipro, ampliy the key actors that underpin

the imperatives as well their inter-connectedness. This could serve as actionable input in CXO decision-making. Let me

now share my views on the three key imperatives:

Strategic innovation

Managing top- and bottom-line perormance remains the top business priority o CXOs around the globe. However, in

working towards this objective, business leadership would be called upon to place a premium on strategic innovation,

which will act as the true dierentiator in the competitive business arena. Innovate or perish is the dictum.

In earlier days, R&D was among the rst casualties in times o business d istress. But with innovation acquiring a strategic

ocus, companies have begun to sharpen the ocus on innovation when the chips are down. More than two thirds o the

surveyed leaders said that the 2008 meltdown made innovation even more o a business imperative.

What is important to note is that innovation is not just a process but an all-encompassing approach that is cross-cutting,

touching upon every vital pillar o business covering products and processes, nancial and risk management, talent devel-

opment, and branding and promotion, among others. Hence, in building growth strategies, the business leadership would

need to pursue a collaborative approach wherein all key stakeholders, including customers and strategic suppliers, partici-

pate in the dialogue.

While the innovation canvas is broad, the underlying processes would necessarily have to be robust, smart, and data-rich. It

is equally important that the returns are tang ible and aligned with the top- and bottom-line perormance o the company. In

these circumstances, cost becomes an important consideration, more so in developing markets that take time to warm up to

innovative products, processes, and practices. Nearly 80% o the CXO respondents to the survey echoed the view that cus-

tomer willingness to pay should be a critical yardstick to measure the viability o an innovative product or service.

Innovation has another important dimension that relates to timeliness. Getting a product or service switly out to market

is a critical business tactic and part o every enterprises strategy to outwit competition. Having a aster time-to-market is

an imperative both in mature and developing markets, more so in the supercharged business domains o ICT, retail, and

automotive.

Rajan KohliCMO -Wipro Global IT Business


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Key ndings 5

Introduction 6

Seeking the key dierentiator 8

Going green or business growth 15

Developing opportunities in the developing world 22

Methodology 27

Table of ConTenTs


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Forbes Insights, in association with Wipro, conducted an exclusive survey o more than 300 CEOs and other C-level executives at

global enterprises ($500M-plus in annual revenue). The key ndings o this survey include:

Sttegicivtiiseiptttevetiviggwt.This commitment to innovation will impact how

companies approach environmentally riendly, or green, business practices, as well as how they manage their expansion into

global emerging markets. For example, in some cases, companies are using so-called reverse-innovation, taking innovative

products and services rom their emerging market eorts (such as in China) and commercializing them elsewhere in the world.

C-eveexectivesseeivtiswtieetiteteisiesses,pticwigte2008-09

ecessi. Fully two thirds o the executives said they believe that innovation is more critical than ever because o the

economic downturn o 2008-09.

Spee-t-etisecesssccessivti. More than 80% o survey respondents agreed that getting a

product or service switly out to market is a critical business innovation tactic.

Csteisteiggestetsteigivti. It topped the list o innovation barriers cited by C-level

executives, ollowed by issues related to the regulatory environment, and nding and retaining top talent.

Pigttetitestpcticesistesteectivewtsteivti.Other innovation tactics promoted

by executives included technology, data-based decision making, and customer collaboration.

Exectivesseevecesiesscsesiggeesiesspctices. The most important actors they

cited include reducing costs, improving operational eciency, and meeting customer demand or more environmentally

riendly products.

Eciggeesiesspcticessptcpteivtisttegisessetitteisccess.

Overall, nearly three quarters o C-level executives indicated their companies had incorporated environmental elements into

their innovation strategies.

GeeITispiitetteeqtescpies. Their strategies in this area include reducing data

center ootprints, greater use o server vir tualization, and greater use o cloud computing.

Exectivesseeivestetexpsiiteegigetssccitteisttegiestitee

te. More than hal believe China holds the greatest opportunity, ollowed by India, Southeast Asia, and Eastern Europe.

Expsiiteegigetsiseigivewecstsigetegwt,ccigt

exectivessvee. Potential barriers to strategic success in these areas include poor distribution channels, unstable

political environments, and a shortage o skilled talent.

Key findings


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Managing top- and bottom-line perormance emerged

as the top business priority or about a third o the 308

senior executives responding to a February 2011 survey

conducted by Forbes Insights, in association with Wipro.

(Fig. 1) The survey polled 122 CEOs and 186 other C-level

executives worldwide.

What kinds o tools do these top-level executives

expect to use to shape their strategies or growth in 2012

and beyond? The survey ocused on three key areas:

Strategic innovation

An overwhelming number o respondents agreed that

innovationboth related to new products and services

and to business practicesis critically important to driv-

ing growth. And more than two-thirds o the surveyed

leaders say that the 2008-09 recession made innova-

tion even more o a business imperative. Innovation is

being driven by data-based business decisions and intel-

ligence; collaboration with external customers and

vendors; enhanced risk management solutions; selective

outsourcing; vigilant compliance; and integrated global

communications. As they go down this road, leaders are

trying to keep an eye on costswhich they cited as the

biggest hurdle to innovation.

SuStainable development

So-called green initiatives have the greatest chance orlong-term success when they make business sense. Three

out o our survey respondents indicated they believe

there is a strong business case or sustainable develop-

ment. Eco-eciency can earn revenue and help to reduce

costs, two legitimate reasons or companies to adopt such

initiatives. Another reason: more than a third o respon-

dents said their companies were taking up green practices

because their customers were asking or it.

inTroduCTion

0% 50% 100%

30

28

26

26

24

22

21

17

15

14

14

12

Managing top- and bottom-line performance

Figure 1: What are your companys current top business priorities?

Expanding into new and emerging markets

Cutting costs

Developing new products and services

Driving innovation and research & development

Leveraging technology

Recruiting and retaining employees/talent

Driving environmentally conscious growth

Improving supply-chain effectiveness

Ensuring risk and regulatory compliance

Building value through M&A

Building and maintaining our competitive position and brand

Over the past decade, the art o doing business has changed. Companies are re-shaping strategies to innovate and

compete globally. New methodologies, new opportunities, new markets, new technologies, and new practices are

being brought into play with an eye on boosting prots and curbing costs.


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emerging marketS

China and India are the most popular investment spots

or survey respondents, with China the clear avor-

itethe countrys rising purchasing power presents

opportunities or a diverse range o business. Venturing

into developing markets is not a surprising business ini-

tiativethese economies oer aster, higher growth

potential compared to more mature markets. However,

emerging economies also may present challenges: poor

distribution channels, skill shortages, volatile political

climates, and strong local and international rivals, or

example. The trick or oreign entrants may be to or-

mulate business plans that consider the socio-economic

trends in those emerging markets, and correctly identiy

the opportunities and challenges there.

All in all, the corporate mood appears buoyant head-

ing into 2012. Chie executives and their direct reports

are condent their companies are perorming well in var-

ious aspects o business. They believe their strategies o

innovation, sustainability and expansion are eective

and this will continue in 2012 and beyond.


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Any company not thinking about innovation is not going

to have long-term sustainable success. So said Wong Wai

Ming, senior vice-president and chie nancial ocer o

Lenovo, one o the worlds largest computer companies.

Without innovation, you can survive or a ew years but

then you die, noted Jean-David Calvet, chie procurement

ocer o Alacatel-Lucent, a global communications rm.

Their thoughts refect those o more than 90% o

respondents to the survey who wholeheartedly agreed on

the importance to business o innovation in products and

services, and business practices. (Fig. 2)

Fully two thirds o the senior executives said they

believe that innovation is more critical than ever because

o the economic downturn o 2008-09. (Fig. 3) The silver

lining i s that the bad times may actually lead to good ideas.

True, recession makes jittery companies cut research bud-

gets, lay o sta, pare operations, and reeze hiring. But

on the fip side, an economic slump orces companies to

survive, so they cut costs, shed fabby operations, and nd

innovative ways to make money.

Consider the situation at Xerox, which announcedthat it added 1,031 U.S. patents to its intellectual property

portolio in 2010, an increase o 46% rom 2009, ranking

it among the top 20 companies or U.S. patents in 2010.

It is critical to our customers success that we continue

to push the boundaries o the unknown, noted Sophie

Vandebroek, Xeroxs chie technology ocer and president

o the Xerox Innovation Group. We are passionate about

innovating. It is at the very core o what Xerox does. More

than 2,400 employees, past and present, have been granted

ve or more patents, an extraordinary accomplishment.

sTraTegiC innovaTion

sk th K dtt

37

46

31

31

22

17

7

3

3

3

Figure 2: Importance of innovation

Two years from now

Today

34

41

35

32

19

19

9

6

3

2

Product/service innovation

Business process innovation

Two years from now

Today

Extremely important Very important Important

Somewhat important Not important

68%

19%

13%

Figure 3: Did the economic downturn of 2008-09 change your companys

approach to innovation?

Innovation is now

more important

than it was prior

to the recession

Innovation is less

important than

it was prior to

the recession

It did not change

our approach to

innovation

It is critical to our customers

success that we continue to push

the boundaries o the unknown.

SoPhIEVandEbroEk,Xex


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alCaTEl-luCEnTIvti,ivti,ivti

Imagine no ugly cell phone tower antennae. Instead, theyre replaced by a miniature base station that can be attached

at the bottom o the tower, or on an electricity pole,or on the side o a building. Plus, this equipment can slash a

telephone companys operating expenses and electricity consumption.

LightRadio is an innovation rom global communications company Alcatel-Lucent that seems to make this imagining a

reality. Jean-David Calvet, Alcatel-Lucents chie procurement ocer, calls the device a typical example o how dierent

components o the company work together to develop innovative products in partnership with key suppliers. An

internal team was set up consisting o personnel rom Bell Labs, a core unit responsible or pure research, and the

products division responsible or dening new products, to create a disruptive approach to the market, according to

Calvet. The development was done in partnerships with Freescale and HP.

Another important element in Alcatel-Lucents innovation is its partnership with its customers, the telecommunications

operators. I a product is provided as part o a solution, it should be what the customer demands, noted Calvet;

through partnerships with customers, Alcatel-Lucent provides end-to-end solutions, rom concept to product.

Equally ruitul are partnerships with suppliers, as seen in the development o lightRadio. O course, some suppliers are

simply that and little more, but others are so-called preerred or strategic suppliers and are treated dierently. With

these suppliers, Alcatel-Lucent has an in-depth, common, win-win relationship, working together, especially on

innovation, said Calvet. The criteria or selection or the strategic suppliers are dierent rom those or normal

suppliers, noted Calvet, adding that the relationship with preerred suppliers is less transactional, more strategic.


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The range o patents refects Xeroxs ocus on mak-

ing business processes easier and more ecient, said

Vandebroek. For example, the 2010 patents included solu-

tions that improve inventory management, e-mai l overload

and personalized packaging. Other patents help in doc-

ument management and in making sense out o large

volumes o inormation. Patents on printing systems using

less power are a way or Xerox also to minimize the envi-

ronmental impact o its products and services.

FocuSing on eFFective innovation

The key is eective innovation. Corporate resources should

be allotted neither to too many channels (because that can

lead to a lack o ocus) nor too ew (because that would

stife creativity). To drive business innovation, robust

data should underpin all decisions and competitive intel-

ligence, according to three in our o survey respondents

worldwide. Collaboration within the company, as

well as with customers and supply chain partners,

is another eective tactic to spur innovation, three

in our o the senior executives believe. One way

to go beyond pure technical innovation is to work

together, between research and R&D and key sup-

pliers, to dene new approaches to be the rst to

market with innovative products. This is one o the

main elements o our strategy, said Alcatel-Lucents

Calvet. He noted that its recent lightRadio cell

architecture is the outcome o such a collaboration. (See

sidebar, page 8)

There are other examples o internal innovation. Toyota

practices kaizen or continuous improvement, in which

teams get together not only to problem-solve the weakpoints, but also to look at what are considered the strong

points, said Norm Baunno, president o Toyota Motor

Manuacturing Indiana (TMMI) in the U.S.

Also applied at Toyota is obeya (which means big

room in Japanese), a key project-management tool used

primarily in product development to shorten the Plan-

Do-Check-Act or PDCA cycle, which in turn leads to a

speedier-to-market approach. Obeya is all about eective

and timely communication between upper and lower man-

agement, and across unctions, who meet daily in ongoing

sessions. An obeya group at Toyota would typically include

engineers, assembly workers, marketers, designers and sup-

pliers; an obeya room would have whiteboards with graphics

to depict schedules, progress, warnings, and scenarios or a

products development. When theres a big problem, we

know [we] have to change, but when there isnt a problem,

we still want to innovate. Thats where I think this culture,

this kaizen, this sharing o ideas...this obeya links, where you

try to generate ideas or something that may already be per-

orming pretty well, noted Baunno. (See sidebar, page 12)

getting cuStomer input

Listening to customers is imperative or business inno-

vation; there is no point in having a great idea i nobody

wants to buy it. We have to come up with products that

meet the need o customers and the ways to service thatneed, noted Lenovos Wong Wai Ming. Apple may have

opened up the market or tablet computers with its iPad,

but as consumer demand has ri sen, others, like Lenovo, are

entering the market. Lenovo unveiled its LePad in end-

March, rolling it out rst in China, its home-tur. Xeroxs

newly launched Innovation Hub in India aims to under-

stand customer needs by leveraging the experience o local

partners (See sidebar, page 11).

But the speed-to-market approach isnt restricted to

computers or electronics companies. Fashion houses live or

42 39 11 5 3

Figure 4: Innovation requires getting new products and/or services to the

market swiftly

Strongly Agree Agree Disagree Strongly Disagree Dont know

When theres a big problem, we know

[we] have to change, but when there isnt

a problem, we still want to innovate.

normbafunno,Tt


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die by their ability to set runway trends. Carmakers world-

wide increase sales by regularly launching new models which

promise better mileage, better looks, and better eco-riend-

liness. Retail banks hasten to be the rst to oer consumers

new nancial solutions or savings schemes. Getting a prod-

uct or service switly out to market is a critical business

tactic, agreed 81% o surveyed executives. (Fig. 4)

Companies take a breather in emerging countries, how-

ever. Product and service innovation is less important in

developing markets than mature markets, according to 67%

o senior executives surveyed.

The reasons are diverse. In a less developed market,

companies may have ewer rivals, or consumers may have

ewer choices o product or service available to them, or

have lower user maturity. Or purchasing power? To be

sure, customer willingness to pay should be a critical yard-

stick to measure the viability o an innovative product or

service, said 79% o respondents. Spending millions o dol-

lars on development is only worthwhile i the product or

service sells. Price is less o a concern than the willingness

o a consumer to pay.

the litmuS teSt oF a great idea: will it Sell?

CFOs are leery o pouring money into ideas that either

wont get o the ground or will end up gathering dust.

They tend to become particularly anxious about unds or

innovation when companies have to tighten their belts. Not

surprising, then, that 39% o respondents point to cost as

the biggest hurdle to ostering innovation. (Fig. 5) It is seen

as a bigger challenge than ta lent recruitment and restrictive

regulatory environments.

Figure 5: What are the biggest barriers your company currently faces

regarding fostering innovation?

0% 50% 100%

39

Cost

25

25

23

22

21

19

19

18

17

Talent recruiting/retention

Regulatory environment

Technology infrastructure

Lack of metrics to measure impact of innovation

Innovation is not a strategic priority

Lack of understanding about innovation

Corporate comfort with risk

Lack of an organizational framework for innovation

Leadership lacks vision


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XEroXIvtiveesec

The Xerox India Innovation Hub, which opened in March 2010, has a ew unique characteristics. For a start, it is Xeroxs

rst research center in an emerging market, and has an initial objective to develop document management solutions

or India and other markets. At the hub, Xerox is not taking the conventional captive route o relying on in-house

research skills and acilities, a strategy that some multinational companies have pursued in their research centers in

emerging markets.

Instead, the Xerox hub has adopted Open Innovation, working in some ways as an incubator or ideas rom

entrepreneurs and entities outside the company, especially its local partners. Our Open Innovation model is core to

how we innovate at Xerox. The best way or us to understand customer needs is to partner with local people and

leverage their experience, said Falynne Smith, public relations manager or developing markets operations at Xerox

Corporation. The reason we call it an Innovation Hub is because its a central point that brings together research rom

all o our centers with the best and brightest minds in India. Were building a strong global innovation network by

partnering and collaborating, rather than competing.

Located in Chennai in southern India, the hub represents innovation without borders in its truest orm, said Smith.

Weve leveraged our existing competencies to help solve emerging-markets business problems in India, but also to use

the talent there to address global concerns. This team is engaged in innovation-ocused projects spanning a wide

range o exciting areas, including business process optimization, inormation and secure content management, cloud

computing and collective intelligence-based systems.

In many o these elds, Xerox is using the hub to expand partnerships with leading Indian technical and business

schools. Some examples:

Apartnershipwith thewell-knownIndianInstituteof TechnologyMadras (IITMadras)touseon-demandcloud

computing to improve the eciency and economics o document-services delivery

Another partnership with IIT Madrass Rural Technology Business Incubator to develop innovative solutions

to improve workfow at small technology-based businesses in rural India

AcollaborationwiththeIndianInstituteofScienceonaprojectonmachine-learningandgame-theoryprinciplesto

improve the perormance o online service marketplaces

Aprojectwith theIndian Instituteof Technology Bombay todevelop linguisticdatabases toprovideautomated

translation o documents

AprojectwiththeIndianInstituteofTechnologyKharagpuronthedynamicsofmobilephoneusers.

The Xerox hub also can leverage the experience o a channel partner network o 500 partners, value-added resellers

and sub-distributors spread across 28 locations in India. These partners are expected to deliver appropriate solutions to

customers and, through their interaction with the latter, are well placed to provide eedback to Xerox on customer

requirements and problems.

According to Smith, in the year since the India Innovation Hub opened, it has been fourishing with activity that is

beneting Xerox clients all over the world.


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Leadership, meanwhile, must be the driver o corporate

innovation. Four out o ve respondents sa id business inno-

vation should be a clear priority or a companys leadership.

Fully 77% o senior executives worldwide agree also that

the top bosses should be willing to take risks to acilitate

business innovation.

Toyotas Baunno agreed that risk-taking is important

or a companys leadership, but that it should be seen in

context o a companys culture. I a leadership team is not

in line with the r ight kind o environment to take risks, no

risks will be taken, he said.

toolS For innovation

Driving business innovation requires efectivetools. Survey

respondents had clear l ikes and dislikes (Fig. 6):

Attention to best practices is the premier technique or

ully 80% o surveyed respondents. Learning rom the

success and ai lures o others may be a no-brainer, but the

lessons must be prudently tted to suit each companys

peculiar circumstances and culture.

The next most-eective tool or business innovation is

technology, rated eective by 79% o respondents.

Closely related to technology, data-based decision-mak-

ing ranks third, tied with collaboration with customers.

Technology that fosters greater internal collaboration

Very effective Effective Ineffective Very ineffective

Dont know/NA

Figure 6: How effective do you believe the following tools and tactics are

for driving business innovation?

0% 50% 100%

Attention to industry best practices

Collaboration with customers

Collaboration with supply chain partners/vendors

Data-based decision making

Integrated global communications

Data-based competitive intelligence

Enhanced risk management solutions

New organizational structures

Selective outsourcing

1

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31

28

40

42

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ToyoTaCtisipveet

Innovation isnt about eureka moments. More oten, it is about continuously tweaking an existing idea, and making

small changes that lead to a better, more competitive product or service. At Toyota, this is embodied in the practice o

kaizen or continuous improvement, and linked to the Japanese automakers use o obeya or big room, a

management tool that encourages cross-unction communication to spur the product development process. Engineers,

assembly workers, marketers, designers, suppliers and others engage in ongoing sessions to mark progress, resolve

problems and insert changes, with the aim o improving the nal product.

What are the criteria or good ideas generated by the application o kaizen and obeya?

Toyota Motor Manuacturing Indiana (TMMI) tries not to limit the generation o ideas or improvement, but categorizes

and prioritizes them based on their potential impact. We try to hit on those major categories, and within those we try

to gure whats going to give us the best result and what we can implement, said Norm Baunno, TMMIs president.

And thats a win-win or everybody.

He cited an example o innovation or posture change. During assembly o a

vehicle, even though the doors are o to maximize access, the center line o a

vehicle is challenging to reach. So we look at other ways to place parts

within that area; maybe its with a special assist arm, or how we asten it to

the foor, and things like that. Those are the kind o ideas that would occur

with obeya, said Baunno.

Another example: innovation in relocating equipment. An employee asked, I

have to take our steps to pick up that partwhy cant I just take two? So

TMMI looked at the equipment and moved it. It may sound simple, but I tell

you it isnt the result o engineers coming in and saying move that equipment

closer. The team members came up with the idea and said this is going to be

more ecient, said Baunno. He sees such kinds o improvement as the core

link to Toyotas overall vision, creating innovation at the plants aligned with it.

The TMMI president believes cost is always important in decisions on new ideas, but it isnt the biggest challenge in the

automotive industry; instead, the No 1 hurdle is to design very fexible equipment that builds the cars and trucks. So

innovation can occur through what I consider to be continuous improvement o the equipment that we have or theapplication o that equipment in a dierent model, he said. There are a lot o ways in which you can save and

improve and innovate that dont cost a lot o money. In our industry, the point o view in assembly operation is that we

dont look at that as being a major stop to innovation at all.

Continuous improvement is built into the annual planning process. Each year, TMMI assigns tasks to its executives and

asks or some innovative breakthrough activities. These ideas are measured and monitored throughout the year. Some

turn out to be good, some do not. But their existence indicates the espousal o innovation and risk-taking at a senior

level at Toyota.

There are a lot o

ways in which you

can save and improveand innovate that

dont cost a lot

o money.

normbafunno,

Tt


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A trawl through corporate websites will show that almost

every large business has a sustainability initiative (some

more energetic than the others), oten in keeping with its

social responsibility aims. Green practices are the way or-

ward, and make a great marketing tool as they highlight

the engaged side o a company. But sustainable practices

are not only the right thing or companies to do, but also

are critical rom a business growth perspective.

It is against this background that many organizations

have implemented strategies to improve their environ-

mental standing. According to the survey results, reducing

costs is the most important reason or adopting green busi-

ness practices g iven by 41% o respondents, part icularly by

the chie executives among them. (Fig. 7) About one in

three respondents worldwide turn to eco-riendly action

to improve operational eciency, meet customer demand,

and comply with regulations.

FocuSing on return, not coSt

Improbably, some companies are inhibited rom participat-

ing in carbon-emission reduction because o the perceived

costs involved. Can they become believers? They can, i

they understand that by cutting their carbon output they

are taking the waste out o their systems and are driving

eciencieseciencies that can then be converted into

cost savings better used or growth and expansion, said

Justin Barrow, co-ounder and chie innovation

ocer o China-based Climate Action, which pro-

vides carbon osetting services to help businesses to

meet their green or corporate social responsibility

objectives.

Mark Watson, head o environmental aairs atCathay Pacic, one o Asias leading airlines and a

Climate Action client, said there is always a cost

imperative in the airline industry, which works

on thin margins, and where protability is an

ongoing challenge. But while moves such as feet

modernization and innovative technologies carry

signicant upront costs, these are oset in the longer

term by uel savings and eciencies. It is a bit o a red

herring to say that being greener is going to cost more

money, said Watson. We have seen that companies that

invest in small but signicant environmental projects are

generating cost-savings and are also getting the reputa-

tional benets [that go] beyond the bottom-line savings.

To mitigate its carbon emissions, the Hong Kong-based

airline has explored initiatives that include feet modern-

ization, innovative engine technologies, and biouels. (See

sidebar, page 18)

susTainable developmenT

g wth

Figure 7: Which of the following factors are most important to your

companys use of green business practices?

0% 50% 100%

Meet internal objectives for sustainability or climate change

Reduce consumption of fossil fuels

Be a good corporate citizen

Comply with current or future regulation

Be a good corporate citizen

Meet customer demand for greener products

Reduce costs

41

37

35

33

31

27

25

We have seen that companies that

invest in small but signicant environmental

projects are generating cost-savings and arealso getting the reputational benets.

markWaTSon,CtPcic


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ClPholdInGSWitpwecesespsiiit

Worldwide demand or electricity is expected to grow by 2.2% annually through 2035, with more than 80% o that

increase coming rom non-OECD countries, according to the World Energy Outlook 2010. The emerging markets o

China and India lead the demand, as they ramp up their economic growth. In both countries coal-red generation is

the cheapest and most-prolic orm o electricity. It is also the most polluting.

This ocus on coal created a dilemma or CLP Holdings when it debated its

climate-change strategy, said Andrew Brandler, the companys CEO. A

leading power company in Asia, Hong Kong-based CLP invests and

operates in China and India, as well as Southeast Asia, Taiwan, and

Australia. Rejecting coal entirely and becoming a niche player in renewable

energy would have been an easy solution, said Brandler, but these

emerging markets will continue to use coal or many decades.

CLP decided instead to balance its generation portolio, and move towards

de-carbonization by osetting the emissions rom coal-red generation in

part with non-ossil-uel generation and renewable energy. We are

balancing the economic, social, and nancial goals that sustainability is all

about, said Brandler. I we ignore the benets o power, thats not

helping these societies. Someone else will build those coal-red stations; i we can set an example and build them

cheaper and more eectively, with cleaner technologies, then that is contributing to the social development o these

countries.

The company also changed its business approach to be compatible with global objectives or stabilizing greenhouse

gas emissions to limit climate change. In 2007, CLP developed Climate Vision 2050, which sets a group-wide target o

reducing carbon-emission intensity by 75%, by 2050. It continues to review its targets regularly, and has set even

stricter milestones or cutting carbon intensity, increasing renewable energy capacity, and using non-carbon-emitting

generating capacity.

Balancing the companys generation portolio is an imperative. As Brandler put it, We see carbon as a threat to any

business. In 2050 i you are a carbon-intensive business, you are in big trouble; chances are you wont be in business by

then. Thats the important part o our 2050 vision. We want to be in business in 2050, but that doesnt mean you take

action in 2049; you have to move down this path and be ahead o the curve as the world moves down that path.

We are balancing

the economic, social,

and nancial goals that

sustainability

is all about.andrEWbrandlEr,

ClPhigs


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17

Heavily uel-reliant industries such as logistics, auto-

motive, shipping or aviation have a greater stake in

carbon-oset and energy-eciency action. UPS began

a carbon-oset program in 2009 in response to customer

demands or environmentally responsible shipping options.

(See sidebar, page 20) Under the program, customers o

the U.Sbased logistics rm can choose to pay a small

ee to calculate the carbon emissions rom their shipments.

UPS collects the ee, chips in a matching amount, and uses

the money to und environmental projects worldwide.

Elizabeth Rasberry, a spokesperson or UPS, said that the

initiative is recognition that UPS is a critical part o our

customers supply chain and we have an obligation to help

them operate in a more environmentally sustainable way.

green =i nnovation

Becoming part o a corporate innovation strategy gives a

boost to environmentally responsible action. Overall, 71%

o respondents said their companies had embraced green

strategies as part o their innovation strategies. (Fig. 8)

The results were most dramatic in the Asia Pacic region,

where 100% o the companies linked green practices to

innovation.

There greater enthusiasm in Asia could have several

reasons. Companies in the region are catching up with

counterparts in the West who have been practicing sustain-

able business longer. As environmental regulations become

stricter worldwide, vendors in Asia servicing Western com-

panies have had to ramp up their green practices not only

to meet their customers requirements but also to comply

with enhanced rules at home. Governments in Asia are

introducing tighter controls on environmental degradation,with taxes and penalties imposed on polluters.

reducing itS carbon Footprint

IT remains one o the biggest consumers o energy within

the enterprise. Global data center capacity has been rising

considerably, and with it the amount o electricity these

acilities consume, as well as the amount o greenhouse

gases they emit.

Respondents expressed concern over the impact IT has

on their energy consumption. More than three quarters

100

60

69

71

21

17

15

17

13

13

2

Figure 8: As part of your innovation strategy, has your company embraced

green practices?

Total respondents

Americas

EMEA

APAC

Yes Not now, but will be adopting in the future No Dont know

1

1

Figure 9: Is green IT a priority for your company?

Yes

No

Dont know

19%

77%

4%


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18

o the C-level executives indicated using IT solutions that

consume less energy and are more environmentally r iendly

is a priority or their companies. (Fig. 9)

Specically, executives pointed to data centers as a key

energy consumer, and reducing data center ootprints was

the most common element o their green IT strategies.

(Fig. 10) That was ollowed by two critical and comple-

mentary sotware technologies that are also linked to

reducing data center size: greater use o server virtuali za-

tion and greater use o cloud computing.

creating an eco-Friendly Framework

As with innovation, companies need an organizational rame-

work to spur green business practices. In act, more than 80%

o executives in the survey agreed that is the case. (Fig. 11)

Asked about what it takes to drive companies to ocus

on the environment, Climate Actions Barrow indicated

that it all boils down to strong executive leadership,

which needs to demonstrate that it is prepared to make

decisions that stand by what the company wants to repre-

sent now and the uture.

Andrew Brandler, CEO o CLP Holdings, a power gen-

eration company, agreed. Certainly the leadership team

[has it] imbued in all their strategies that we need to de-

carbonize. Ater laying out sustainable-development

targets in its Climate Vision 2050strategy paper, CLP car-

ried out an exercise to educate its 6,000 employees about

the targets.

Cathays Watson added that a companys middle man-

agement also plays a part in sustainable development, and in

act its everybodys duty to do their bit.

in need oF government Support

Can business do it alone? Three-ourths o respondents

believe green initiatives by business cannot be successul

without the support o local and national governments. (Fig.

12) They refect the opinion o international associations such

as the World Business Council or Sustainable Development,

a CEO-led, global association o about 200 companies. The

council believes that tackling climate challenges requires

greater collaboration across business sectors and between

business, government, academia and civil society.

Figure 10: Which of the following elements are part of your companys

green IT strategy?

0% 50% 100%

Reducing data center footprint

46

42

41

32

30

30

30

20

20

17

Greater use of server virtualization

Greater use of cloud computing

Shifting data center location

Replacing older servers, computers, and peripherals

Assessing energy consumption of all equipment purchases

Greater use of outsourcing

Monitoring use of IT energy consumption

Using smart grid or other energy management technologies

Implementing ways to reduce, store, and dispose of e-waste


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CaThayPaCIfICfigigeeesies

The aviation sector today accounts or 2% o the worlds carbon dioxide emissions; by 2050 this is orecast to grow to

3%. So how can the aviation industry fy greener?

To mitigate the emission o greenhouse gases, the International Air Transport Association (IATA) has set certain goals,

including improving uel-eciency by 1.5% annually rom through 2020, and halving CO2 emissions (rom 2005 levels)

by 2050. Hong Kong-based Cathay Pacic, one o the worlds largest airlines, subscribes to the IATA targets. Its

going to be challenging, said Mark Watson, head o environmental aairs at Cathay Pacic, but with new engine

technologies, development o sustainable biouels and improvements in air trac management, or example, those

targets are achievable.

Along with the innovative engine technologies and biouels that Watson mentioned, Cathay has also modernized its

feet in a bid to lower its carbon emission. Over the past two years, 10 new Boeing 777-300s have replaced less uel-

ecient passenger aircrat mainly on Cathays trans-Pacic routes.

Cathay also has been supporting development o sustainable biouels as a member o the Sustainable Aviation Fuel

Users Group, an industry working group led by Boeing to examine the commercial development o sustainable aviation

uel. Watson believes biouels will be important in the industry, not least because prices o conventional uel are

heading upwards.

Cathay scrutinizes real-time wind data to plan fight routes and speeds. It also works closely with governments,

particularly those in Asia-Pacic, to improve the eciency o global air-trac management. Delays mean more holding

time, which means more uel burn, which means more cost to airline and more emissions. But governments, not

airlines, control air-trac management. What we can do is operate our aircrat in the most eective way we can, not

just in terms o uel conservation management, but also at the maximum environmental optimum, said Watson.

Finally, Cathay gets its customers involved. The airlines FLYgreenerprogram oers passengers the option o osetting

the carbon emissions rom their fights with either requent-fyer miles or cash. Similar osets apply to sta travel

within Cathay and its parent company, Swire Group. The oset amount is ploughed into selected environmental

projects, including three in China. Watson is very pleased with the oset program, and said the airline is working to

increase interest and uptake, particularly among corporate clients, which are a key market and an important part o

the airlines premium proposition.


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20

Certainly, government support (and money) can con-

tribute to a cleaner environment. CLPs Brandler said

encouraging national policies assisted the companys

accelerated oray into renewable energy in India, China,

Thailand, and Australia. China, or example, has set sig-

nicant targets or low-carbon energy, energy eciency,

and clean technology in its 12th Five-Year Plan covering

2011-15. For its part, India has boosted allocations or clean

environment schemes in the 2011-12 budget.

But government involvement can also be painul or

companies. The carbon tax versus cap-and-trade debate has

passionate detractors and supporters on both sides. In the

survey, three out o our respondents were convinced car-

bon taxes would soon become widespread global ly. (Fig. 13)

Ultimately, it all comes down to companies believing

there is a strong business case or sustainable development.

Cathays Watson concurred. What companies have nally

woken up to is that sustainable development is not a ad.

Its here to stay. I done eectively, it can help to deal with

strategy, and be an eective tool to help to create value or

the company. At the end o the day, that is what businesses

dothey are there to create shareholder value, he said.CLP Holdings Brandler reers to sustainability activity

as long-term risk management. Doing nothing is a clear

threat, being ahead o the curve is a clear opportunity and

the challenge is getting that balance right as you move or-

ward...Businesses that are going to be around at the end o

century will have to look at it that way, he said. As chie

executive, I want the business to be thriving. [Sustainable

development] is part o our core strategy otherwise we

know we are not going to be in business in the uture.

Figure 13: Carbon taxes will soon become widespread globally.

Strongly agree Agree Disagree Strongly disagree Dont know

26 48 14 4 8

Figure 11: Companies need an organizational framework to spur green

business practices

42 41 10 4 3


Figure 12: Green initiatives by business cannot be successful without the

support of national and local governments


29 42 20 6 3

What companies have nally woken

up to is that sustainable development

is not a ad. Its here to stay.

markWaTSon,CtPcic


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21

uPSGeeigcstessppci

For logistics companies, which move millions o packages each year by land, sea and air, the conundrum is how to cut

uel consumption and carbon emissions, cater to environmentally responsible customers, and oset unavoidable

carbon output. UPS has ound a ew schemes.

Since late 2009, UPS has been oering a carbon oset option to customers in which they can choose to pay a small

ee to calculate the carbon dioxide emissions rom their shipments. The ee is collected by UPS, which matches the

amount and uses the money to und environmental projects such as a 39.9-mw wind-power plant in Nicaragua, a

wastewater biogas-to-energy system in Thailand, a landll gas scheme in China that captures methane released at the

site to generate clean electricity, and two commercial reorestation schemes in Tanzania. UPS contributes a total o up

to US$1 million annually.

For its own operations, UPS reduces ossil-uel consumption by using alternative uels and increasing operational

eciency. The company has a feet o more than 1,900 vehicles that run on alternative uels. UPS said that so ar it has

explored eight dierent alternative-uel technologies, such as liqueed natural gas, compressed natural gas (CNG),

hybrid-electricity and electricity. The bulk o the greener feet is deployed in the U.S., but CNG vehicles ply or UPS in

Germany, France, Chile and Brazil, and propane-powered vehicles make deliveries in Canada and Mexico.

UPS also has reduced its carbon emissions by improving the uel eciency o its domestic delivery feetby 10% in

the past decade, and by aiming or another 10% improvement over the next decade. This has been achieved by

minimizing both the number o miles driven and the number o minutes vehicles idle during delivery and pickup. Every

gallon o uel is maximized, using proprietary sotware, methodologies and training programs. Telematics captures

hundreds o data elements rom UPS vehicles to improve eciency and customer service, slash energy consumption

and emissions, and make drivers saer. Telematics also helps to reduce the amount o time spent idling by 15 minutes

per driver per day. That equates to 25 gallons o uel per driver per year. There are denite cost savings there, noted

Elizabeth Rasberry, a spokesperson or UPS.


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22

Figure 15: In which emerging markets does your company see greatest

opportunities for growth in the next two years?

China

India

Southeast Asia

Eastern Europe

Russia

Brazil

Middle East

South Africa

Turkey

Mexico

North Africa

Indonesia

0% 50% 100%

55

29

21

20

15

11

10

10

8

7

7

6

Emerging marketsrom the explosive markets o China

and India to developing areas such as Southeast Asia and

Eastern Europeare critical to the growth o global enter-

prises. More than three quarters o respondents indicated

that investment and expansion into emerging markets is

extremely or very important to their strategies today, and

a similar number believe it will continue to be crucial two

years rom now. (Fig. 14)

For companies to grow ast organically, it is necessary

to grow ast in emerging markets where the rate o growth

is quicker, noted Wong Wai Ming, senior vice-president

and CFO o Lenovo, the Chinese computer maker. While

Lenovo is based in China, it is a global brand, having pur-

chased the personal computer business o IBM in 2005.

Unsurprisingly, Chinathe second largest economy in

the worldtops the list o markets that executives believe

have the greatest opportunity or growth in the next 24

months. (Fig. 15) In act, more than hal o respondents

(55%) cited China, ollowed by India (29%), Southeast Asia

(21%), and Eastern Europe (21%).

emerging marKeTs

d tt th w

Figure 14: Importance of investment/expansion into emerging markets

Extremely important Very important ImportantSomewhat important Not important

42 33 18 3 4

39 30 17 9 5

Today

Two years from now


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23

For many businesses, China presents multiple opportu-

nities or growth. On the one hand, many companies have

been manuacturing in China due to lower costs and high

capacity. On the other, the emergence o the Chinese con-

sumer over the past ew years has made it a more viable

market or selling goods and services. For example, Gap,

the U.S. retailers, last year launched our fagship stores

in Shanghai and Beijing, along with an e-commerce site.

According to a Gap spokesperson, China is the corner-

stone o our global growth strategy and we entered with

a view towards setting the oundation or building a long-

term brand.

Emerging markets are on the agenda or companies

looking or growth opportunities. Rapid economic prog-

ress in the past decade and growth potential in Brazil,

Russia, India and Mexico have established them as strategic

market priorities or Xerox, noted Falynne Smith, pub-

lic relations manager or Developing Markets Operations

at Xerox. Emerging markets are resilient and clients in

those areas seek more value-added services and technology

to strengthen their competitive advantage. This represents

a prime opportunity or our services business helping

improve productivity, enhance eciency, and reduce costs

so they can ocus on their core business.

0% 50% 100%

9

10

10

11

12

12

Similar social and business culture to home market

Strong IT infrastructure

Stable political environment

Transparent financial markets

Strong law and order system

Strong civil and business legal system

12

14

15

15

15

16

16

19

20

35

Lower costs

They are growing faster than developed markets

Growing consumer base

Fewer domestic rivals

Good recognition of our brand

Pool of skilled local talent

They have industries that complement our own

Fewer international rivals

Investor-friendly policies of governments

Shrinking consumer base in our home economy

Figure 16: What are the key drivers for your company to target emerging

markets?


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24

lEnoVoPtectttc

The world is awash with new tablets rom the major computer-makers: Apple, Dell, Samsung, Motorola, Hewlett-

Packard, and Toshiba. Lenovo, too, has launched its LePad and IdeaPad (a hybrid notebook-tablet), but only within

China, its strongest market. Lenovo will watch how these products perorm at home beore releasing them elsewhere,

a tactic also employed last year or LePhone, its rst smartphone, which is selling robustly in China.

Staggered launches are part o Lenovos protect and attack strategy in

which it protects the core business in China and mature commercial

markets, and attacks in ast-growing emerging markets such as India,

Russia and Brazil. We plan our business on a global basis but when we

launch, we identiy a market that will give us the best chance o success.

Once we have that, we roll out continuously, said Wong Wai Ming,

Lenovos senior vice-president and CFO. The initial ocus is always on China,

a market that accounts or about 46% o its worldwide sales, and where it

has strong brand recognition.

Going orward, Lenovo is investing in its brand. The Chinese company

came on the global stage in 2005 by buying IBMs PC business. From the

consumers perspective, acknowledged Wong, Lenovo is still not as well

known as other international brands. Despite the IBM unit acquisition,

Lenovo is still a Chinese brand, with all the less-than-positive perceptions that has or Western consumers. Even within

its stronghold o China, international rivals can turn consumers heads (and renminbi) towards their own strong brands.

We plan our business

on a global basis but

when we launch, we

identiy a market that

will give us the bestchance o success.

WonGWaImInG,

lev


25/28

25

driverS and barrierS

Interestingly, investor-riendly government policies and

political stabilitytraditionally considered attractive

incentives or investorsare not rated highly by respon-

dents when it comes to emerging markets. Respondents

indicated their companies emerging market strategies were

ocused mostly on costs and the overall pace o growth.

(Fig. 16)

But respondents also noted signicant barriers to

strategic success in emerging markets. While no single

concern rose above others, many appeared worried about

a oundation that could support the growth they desire.

(Fig. 17) For instance, about one in ve respondents (21%)

said poor distribution channels were a hindrance. A simi-

lar percentage (18%) were concerned about a shortage o

skilled talent.

Xeroxs Smith agreed that in terms o innovation,

talent in India is an issue. We have more demand than sup-

ply. But, she added, at the same time there are a lot o

great minds th inking about this and how to solve this prob-

lem and build a larger pool o talent.

Constraining regulatory policies

0% 50% 100%

14

14

Figure 17: What are the key barriers in your target emerging markets?

Poor distribution channels

Unstable political environment

Lack of understanding of social/business culture

Shortage of skilled talent

Inadequate domestic partners and/or suppliers

Feeble law and order system

Corruption

Opaque financial markets

Inadequate infrastructure

21

19

18

18

17

16

16

15

15

15

Strong presence of international rivals

Lack of need for our products/services

13

12

12

Feeble legal system

Strong presence of domestic rivals

Little recognition of our brand


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26

GaPG,twiteesCi

Gap is hoping to tempt Chinas consumers to spend on its jeans and casual wear. The U.S. apparel retailer last year

opened our fagship stores in Shanghai and Beijing, two prosperous Chinese cities, along with an e-commerce site.

The investment in China came ater lengthy market research and marks the beginning o a long-term, multi-channel

strategy that will eventually result in more stores throughout the country, said a Gap spokesperson.

Given the compulsion to save in China, and its lower purchasing power, does Gap anticipate sucient sales to justiy

the costs o a China venture? The Gap spokesperson said the company doesnt disclose orward-looking projections

or sales or earnings, but has great condence that Gap will be well-received by Chinese customers and that our

target demographic will embrace the brand. She added that Gaps approach to pricing was to oer a range rom

value to premium o stylish, quality products at accessible prices, all tailored to the Chinese t.

There is less traction or Gap in India, a market that the company continues to evaluate, along with other emerging

markets. Entry into new markets worldwide is part o Gaps global growth strategy, which includes ranchise, online

and company-owned expansions.

Gaps strategy or global growth is to leverage core brands across multiple platorms, channels and geographies. With

regard to new countries, we take a dierent approach depending on the market. For instance, rst we identiy large

markets, like China and Italy, with signicant long-term upside or our brands and decide to make the investment to

own and operate our own stores, whether its ull-priced brands or our outlet models, said the Gap spokesperson.

In smaller countries with projected growth and a limited risk prole like Australia and the Middle East, Gap leverages

its successul business model. In major regions where it has its own stores, the company builds dedicated e-commerce

sites, such as in Canada, Europe and China, so customers can get localized shipping and rates. In other markets, where

Gap wants to test its brand acceptance and build market share, it ships directly rom the U.S. Gaps goal is to improve

top-line revenue, and to increase the percentage o its online and international revenue to 30% o total revenue by

2014, up rom 22% o total revenue in 2010.


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METHODOLOGY

The information in this report is based on the results of a survey and one-on-one interviews conducted by Forbes Insights in

March 2011.

Forbes Insights, in association with Wipro, surveyed 308 C-level executives at large global enterprises with annual revenues

of more than US$500 million. About a third worked for companies wi th annual revenues of $US5 billion or more.

All respondents had C-level titles, including CEO (40%), COO (10%), CFO (13%), CIO (15%), CMO (10%), and other C-level

executives (13%). They represented a wide range of industries, including manufacturing (28%), banking/financial services

(23%), retail (10%), telecommunications (10%), insurance (7%), and energy (7%)

Geographically, 37% of respondents were located in the U.S., 6% were located elsewhere in the Americas, 39% were from

Europe/Middle East/Africa, and 18% were from Asia Pacific.

ACKNOWLEDGEMENTS

The Global CXO Outlook was produced by Forbes Insights in association with Wipro.

For Forbes Insights, Bina Jang wrote the report. Stuart Feil is the practices editorial director, and Christiaan Rizy is the d irector.

For more information about Forbes Insights, visit: www.forbes.com/forbesinsights

Forbes Insights would like to acknowledge the support and contributions of Karthik Negandra and Rahul Koul of Wipro in

helping to develop the theme of the study and refine the report.

ABOUT WIPRO

Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting

and Outsourcing company, that delivers solutions to enable its clients do business better. Wipro Technologies delivers

winning business outcomes through its deep industry experience and a 360 view of Business through Technology

helping clients create successful and adaptive businesses. A company recognised globally for its comprehensive portfolio of

services, a practitioners approach to delivering innovation and an organization wide commitment to sustainability, Wipro

Technologies has 120,000 employees and clients across 54 countries.


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