Taking Vietnam economy to the next level

To continue on a strong GDP growth trajectory, the country should work to raise its labor productivity.

During the past quarter century, Vietnam has emerged as one of Asia’s great success stories. In a nation once ravaged by war, the economy has posted annual per capita growth of 5.3 percent since 1986—faster than any other Asian economy apart from China. Vietnam has benefited from a program of internal restructuring, a transition from the agricultural base toward manufacturing and services, and a demographic dividend powered by a youthful population. The country has also prospered since joining the World Trade Organization, in 2007, normalizing trade relations with the United States and ensuring that the economy is consistently ranked as one of Asia’s most attractive destinations for foreign investors.

The McKinsey Global Institute (MGI) estimates that an expanding labor pool and the structural shift away from agriculture contributed two-thirds of Vietnam’s 7 percent annual GDP growth from 2005 to 2010.1 The other third came from improving productivity within sectors. But the first two forces have less and less power to drive further expansion. According to official Vietnam statistics, growth in the country’s labor force will probably decline to about 0.6 percent a year over the next decade, down from 2.8 percent between 2000 and 2010. Given the past decade’s rapid rate of migration from farm to factory, it seems unlikely that the pace can accelerate further to raise productivity enough to offset the slowing growth of the labor force. 

Read the full report at McKinsey Quarterly

Key IT investment areas for mid-sized companies

Midsize firms are increasing their investment in IT, striking a balance between solutions that drive short term cost savings and those that enable revenue growth and stronger customer relationships. Globally, managing costs, improving efficiencies, driving up productivity, and focusing on superior customer service are all cited as critical business priorities.

Cost reduction and operational efficiencies – The demands of today’s “new normal” financial environment require that midsize firms remain focused on efficiency and cost control. Given that, it is no surprise that in our study 76% of midsize businesses cite improving efficiency as a key priority, while 70% cite increasing employee productivity. From a geographic perspective, these priorities are particularly high in China, Brazil, and Mexico where roughly 9 in ten believe improving efficiencies and reducing costs are the top priorities. Many midsize businesses are optimizing key business processes to deliver greater efficiency and competitiveness. This is a particularly high priority in Italy, BeNeLux, and New Zealand.

Customer focus – Enhancing customer service (73%) and prospecting for new customers (67%) are top priorities among midsize businesses around the world. In Canada, the United Kingdom, Germany, Mexico, Singapore, and Poland, improving service and better managing customer relationships are the top priorities. In China, 92% indicate that finding new ways to reach customers (e.g., via social media) and customer acquisition are top priorities.

Increased insights and intelligence – Improving insights for better decision making (62%) is a top priority for midsize businesses. This capability allows them to use information more effectively in order to make informed and competitive business decisions regarding customers, competitors, and their own companies.

As midsize businesses look to gain better insights, improve collaboration, reach new customers, and improve workforce mobility, their investments in solutions that can deliver those capabilities will continue at a healthy pace. Advanced analytics software, for example, can help extract value from data, see patterns, and anticipate changes. At the same time, however, they must keep their core IT platforms current and secure, so they continue to invest in powerful systems, storage, software, and other infrastructure needs. Midsize firms that can manage this dual focus and who understand the deeper potential of technology as an enabler of change will gain a competitive advantage.

According to a survey by IBM.

Hallmark of success - Consistent Delivery and Well-Defined Processes

What is the hallmark of a successful company? 

Customers want to deal with a company that they can trust. Trust is measured in terms of consistent delivery of services and products that are:

1. Reliable
2. Competitively priced 
3. Well supported

Reliability of product or services is achieved through well defined processes for design, production and delivery. While all products and services can be competitively priced – only companies delivering reliable products and services are sustainable in the long term. Good support is achieved through well defined support processes and well trained staff. 

What are well defined processes? 

Well defined processes are ones that have:

• specific objectives that are real and quantifiable
• simple, clear and easily understood procedures 
• agreed best practice procedures

For a product or service this might mean: 

• Guidelines on relationship attitudes and manners
• Delivery within a specific timeframe
• Carrying out specific installation services
• Carrying out specific follow up services
• Monitoring Key Performance or Success Indicators 

In today’s market to be successful organisations must be adaptable and continuously

• improving their products and services. To do this you need to know:
• What are we currently doing? (assessment)
• How can we improve what we are doing? (redesign)
• How do implement improvements? (communication & implementation)

Critical questions that need to be addressed include:

1. How well defined are our company processes?
2. How visible are these processes?
3. Do we address the why sas well as the whats?
4. How do we support continual review and improvement of our processes?
5. Do we have efficient knowledge management systems in place to support the above activities?

Specific Reasons to Document and Model Your Business Processes

The following are specific focus areas where modeling your business processes can help:

1. Cost savings

Identifying cost savings out of inefficient processes remains one of the key drivers of process analysis. For some enterprises the mere exercise of documenting and discussing graphic representations of processes can highlight improvements not otherwise seen.

2. Adapt to changing environment

Enterprises face continual pressure to adapt and change. Well documented processes are understood and can be changed quickly. New services or changes due to competitive threats can be easily and rapidly implemented.

3. Transparency

Confidence in knowing what the business does and how it does it creates a more confident approach to issues and management. A healthier relationship can be built with your IT function as business needs will be more clearly stated.

4. Competitive advantage

Businesses who know and manage their processes achieve higher returns and better customer satisfaction. A key reason is their ability to identify and work on elements of their process that offer competitive differentiation. It can create a powerful advantage over your rivals.

5. Simulation and Measurement

Most modeling software has features which enable simulation of processes. Different alternative designs and workflows can be modeled. Questions such as ‘How many resources will be required to run a particular task?’ or ‘is a manual process appropriate or should we invest in automation?’ can be estimated before major investments are made.

6. Staff induction and cross skilling

Getting new staff to understand their roles and responsibilities quickly is critical across many enterprises. Modeling software enables comprehension of tasks, responsibilities and can even provide forms and other documents at appropriate steps. Well documented processes also enable people from similar functions to work across more roles and extend their contribution.

Business insurance

7. Manage merger and acquisitions more effectively

Realising the investment from economies of scale or achieving shared services can be more quickly delivered if processes are well documented. Simulation of different approaches can also assist to get the right answer in how to get merged or acquired businesses working more efficiently with the existing businesses. 

8. Corporate Governance

Up to date process documentation provides evidence of a comprehensive understanding of how the business works. There is increasing emphasis on organisations fully understanding how they produce their services or products. Well managed process modeling can increase confidence in how the process actually works over what is believed. 

9. Quality and Risk

Certainty of outcome is increased and potential risks can be minimised if the relevant processes are known and followed. Barely a function exists that would not benefit from documentation and yet many enterprises still do not maintain process documentation that is accessible, comprehensive and up to date. 

10. Define software requirements

When selecting software systems, it is important to build a picture of exactly what you need the systems to be capable of, so that options can be evaluated effectively. The difference between companies that get their requirements right and those that don’t can be as costly as a systems replacement within a few short years. 

11. Business insurance

What happens if information is still in the heads of your employees? What will happen if he/she becomes sick, leaves the organisation or is involved in an accident? Vital information for the continuity of a business (process) should be stored where everybody can access it.

WHY USE A BUSINESS PROCESS MANAGEMENT SYSTEM?

You can map business processes on a roll of paper, but it is a very limited communication medium. If you want the features that will make your process analysis project work effective then you need to look at specialist modeling software.

It is feasible to use standard tools such as “Word”, “PowerPoint” and ‘Visio”. They can be a good place to start but they are very limited in the way they present information. In addition their processes for creating process charts are very labour intensive. In short they don’t have the features necessary to sustain success with good process analysis disciplines.

Business Process and Knowledgebase Management systems have advanced significantly in recent years and now offer features that make them tools of choice when addressing process issues, including:

• Specialised software designed for process work
• Process mapping automation features that minimise the time to create visual charts
• Relationship management functions to quickly document the who, what, where, when and why aspects of a process
• Publication version control for information management and audit compliance
• Simulation of processes with transactions and timings
• Sophisticated change management features to encourage process innovation and keep your process definitions current
• Comprehensive publishing features optimised for both document and internet publications
• Different views for different functions and audiences 
• Security features and controls

WHERE DO I START?

All business processes should be designed to achieve business strategy and improve profitability. These are the number one gains that organisations are looking for.

Staff further down in the organisation are looking for guidance and assurance that they are working smart to achieve results. They also want to be able to contribute to improvements, as they are the ones who receive the direct gain from improved processes and knowledgebase access.

Key objectives for implementing a Business Process and Knowledgebase Management System are:

• Management – how to improve governance and manage effectively;
• Measurements : how to monitor performance;
• Structuring information and processes: how to improve information and process structures; Accessing Information: how to optimise the provision of accessible and useable information.

The first step is identifying the process and information knowledgebase needs of your organisation. You can start by completing a document such as a ‘Process Issue Matrix’ which identifies your company’s requirements for information and process management. The specific objectives you identify will then serve as an overriding control for the whole implementation process.

The second step is to determine the project implementation cost and resource requirements. To estimate these accurately you need to have a good understanding of how easy the system you are going to use can import and utilise information already available in your organisation. It is very useful to conduct a ‘proof of concept’ workshop, where you trial some organisational processes to gain a thorough knowledge of the implementation processes.

The third step is to review what likely returns you are going to achieve by implementing a process and knowledgebase management system into your organisation. There are Return On Investment calculators to help you to calculate an estimate of tangible savings of implementing a process and knowledgebase management system into your organisation.

The fourth and final step is to determine an implementation strategy in terms of project phasing and management. You may choose to externally or internally resource project staff or run with a mix of both – it usually comes down to the availability and experience of resources. Key issues are knowledge of your business environment and experience with managing the successful implementation of a Business Process Management System. Seldom are these found in the same head, so usually it is best to include resources that can cover both areas of expertise.

Now you have all the information you need to present your business case to the organisation. There are templates available for your business case to help you along the way – however most organisations have their own formats.

THE BOTTOM LINE

If staged and managed well, implementing a process and knowledgebase management system is a low-risk, high-return investment that will bring real benefits to your organisation. Typically organisations can quickly achieve a 100% return on investment on the introduction of a process and knowledgebase management system. From that point on the savings and benefits continue to accrue as staff engage with a continual improvement culture. 

This article is a white paper from our partner, Mavim.

Key Benefits of Virtualization

A recent IDG survey findings reveal overwhelming support among business and IT leaders for taking business-critical applications to the next level and preparing for the new cloud era. The survey found that 96 percent of the respondents agreed that virtualizing business-critical applications is important as a foundation for enabling cloud computing. Moreover, the survey shows that enterprises that have virtualized their critical applications are getting excellent results, with 60 percent reporting improved quality of service and 60 percent reporting reduced total cost of ownership. 

These findings are helping dispel misconceptions about virtualizing business-critical applications that still persist in the marketplace. Leading vendors report that some business and IT leaders are sticking to the “if it’s not broken, don’t fix it” mantra whereas others fear pitfalls that are either avoidable or nonexistent. By clinging to this mind-set, enterprises put an artificial glass ceiling on the potential business benefits and miss the opportunity to leapfrog their competitors. 

Making the case to a VC firm

Part A - Preparation 
Before engaging with a VC firm, you should ensure that you have a crisp and succinct document detailing the following, 

• The people behind the company
• The market opportunity
• The proposition
• USPs and differentiation
• Fit in the market landscape
• Customer reasons to buy from you
• Customer engagement process and a very high level review of key customers and prospects
• Revenues to date and forecasts for three years
• Exit game plan
• Funding requirement and use of funds 

Part B – Making the case. 

Do: Know exactly what you want from the meeting.

• Identify one, single outcome for each meeting. Yes, you want capital at the end of the journey but there may be a number of steps to take before getting there.
• Plan what you say based on that result. For example: you may need another meeting so you can demo your product, or have the VC conduct some initial due diligence, or ask your investors to become referral sources. You can’t plan a journey without a destination.

Do: Your homework on the VC.

• If you don’t know specifically what they need right now, ”what makes them want to invest”, you can’t identify what you need in order to move them in your desired direction. Of course they need return for their limited partners, but you can go deeper than that. What have they invested in and why? How does your business fit their portfolio? Do your homework. 

Don’t: Pitch.

• Pitches are for baseball players and used car salesmen. You are the senior leader of a dynamic, growing company. Act like one.
• * If you want your company and your plan to look and sound like every other pitch that VC has heard that day, sit down, open PowerPoint and narrate your presentation. Otherwise, facilitate a business meeting that creates value for both parties.

Do: Look and sound like a world-class leader.

• Like all of us, VCs are influenced by leaders with real vision, power, passion and a willingness to reach out to others.
• If you don’t look and sound like a world-class leader now, learn how to look like one.

Do: Let comfortable with silence.

• The more you talk, the less insight you can gain from the other people in the room. Simply pausing at the end of an idea makes room for questions, objections, and makes you look more comfortable and confident.

Do: Listen for Closing Signals.

• If you ever hear a VC say “I want to bring in a couple of partners on this” (even after only five minutes) and that was the result you had in mind consider the meeting over and get the next one on the calendar. You don’t get brownie points for finishing your prepared remarks. You win when you achieve the objective you established at the beginning of the process.

Do: Listen for and work to overcome objections.

• If they are telling you why they won’t invest and don’t hear the objection, you have gained nothing – no capital and no insight. If you hear the objection and the VC acknowledges that Yes, this is what doesn’t work for us, ask if fixing the perceived problem would increase the likelihood of investment. If so, get another meeting after you fix the problem. If not, find out the real reason and act accordingly. If they are not investing no matter what, end the meeting and find another potential investor. 

Don’t: Sell your product.

• Smart investors are only interested in your product’s functionality out of intellectual curiosity. Other than that, functionality is the last thing on their minds; they are more interested in knowing if your product can drive huge returns. If they are not interested in your business they will not invest. If they are not going to invest, you don’t want them to know too much about your product. 

Do: Sell your company.

• Like it or not, selling your company is why you’re there. If all goes well, at the end of this process some investor will own 40 to 80% of your company.
• Your job is to sell it to them based on the return of that equity investment. 

Do: Work with an experienced consultant like Radialis.

The human factor in service design

Focus on the human side of customer service to make it psychologically savvy, economically sound, and easier to scale.   

Poor customer service isn’t a headache just for consumers; it’s a problem that vexes senior managers too. Balancing the trade-offs between the cost of services and the customer experience benefits they provide is difficult. Ensuring that frontline workers can efficiently and consistently execute service offerings across a far-flung organization is harder still. Along the way, many companies lose sight of what makes human beings tick—for instance, by overlooking well-known principles of behavioral science when delivering services—and thus unwittingly predispose customers to dissatisfaction.

At the same time, the customer service landscape is changing as social media and new mobile phone technologies give companies unprecedented access to data on customer interactions, while the technologies are changing the nature of the interactions themselves—for example, by amplifying the speed and impact of customer complaints. 

Three questions

Against this backdrop, some organizations are making strides in the design and delivery of services. By focusing more thoughtfully on the human side of customer service, these companies are lowering costs by 10 percent or more while improving customer satisfaction scores by up to 30 percent. In this article, we’ll look at three such companies—a provider of cable-TV and Internet services, a technology company serving small and midsize businesses, and a car rental company. From their experiences, we’ve distilled three interrelated questions that CEOs and other senior executives should ask themselves before they introduce new services or conduct a reality check on the health of existing ones. Taken together, the questions can help spur productive conversations among top-team members, raising the odds that a company’s services will be both efficient and effective.

Read the rest of this article by John DeVine, Shyam Lal, and Michael Zea at https://www.mckinseyquarterly.com/

A CEO’s guide to innovation in China

Dynamic domestic players and focused multinationals are helping China churn out a growing number of innovative products and services. Intensifying competition lies ahead; here’s a road map for navigating it.

China is innovating. Some of its achievements are visible: a doubling of the global percentage of patents granted to Chinese inventors since 2005, for example, and the growing role of Chinese companies in the wind- and solar-power industries. Other developments—such as advances by local companies in domestically oriented consumer electronics, instant messaging, and online gaming—may well be escaping the notice of executives who aren’t on the ground in China.

As innovation gains steam there, the stakes are rising for domestic and multinational companies alike. Prowess in innovation will not only become an increasingly important differentiator inside China but should also yield ideas and products that become serious competitors on the international stage.

Read the rest of this article by Gordon Orr and Erik Roth at http://www.mckinseyquarterly.com/