Accenture Outlook Journal February 2011

The journal of high-performance business 2011, Number 1
PLUS
Cloud on the horizon: Is
outsourcing obsolete?
Jumping the S-curve: How to
sustain long-term performance
Does your company have the
talent to grow?
How to harness
the power of
social media

Outlook
Outlook
Vol. XXIII
2011, No. 1
Outlook is published by Accenture.
© 2011 Accenture.
All rights reserved.
Editor-in-Chief
David Cudaback
Managing Editor
Letitia B. Burton
Senior Editor
Jacqueline H. Kessler
Senior Contributing Editor
Paul F. Nunes
Contributing Editors
John Kerr
Craig Mindrum
Industry Editor
Wendy Cooper
Contributing Writers
Lance Ealey
David Light
Assistant Editor
Carolyn Shea
Design & Production
IridiumGroup Inc.
www.accenture.com/Outlook
This publication is printed on
10 percent post-consumer fiber.
Chairman
William D. Green
Chief Executive Officer
Pierre Nanterme
Chief Marketing &
Communications Officer
Roxanne Taylor
For more information about
Accenture, please visit
www.accenture.com.
The views and opinions expressed in these
articles are meant to stimulate thought
and discussion. As each business has
unique requirements and objectives, these
ideas should not be viewed as professional
advice with respect to your business.
Accenture, its logo and High Performance
Delivered are trademarks of Accenture.
This document makes reference to trade-
marks that may be owned by others. The
use of such trademarks herein is not an
assertion of ownership of such trademarks
by Accenture and is not intended to repre-
sent or imply the existence of an association
between Accenture and the lawful owners
of such trademarks.

The Long View
Pierre Nanterme
Chief Executive Officer
Accenture
1
New ideas, new opportunities
During my 28 years at Accenture, I have always been
passionate about helping our clients use innovation
to drive growth and achieve high performance. So it
is both a privilege and pleasure to be CEO at a time
when so many exciting new things are happening
around the world. I believe that innovation trans-
forms companies, and this has never been truer than
it is today.
Part of my job is to introduce each issue of Outlook,
our journal of high-performance business. This is
something I look forward to, because Outlook helps
shape Accenture’s innovation agenda by showcasing
our best thought leadership and chronicling how
the world’s top companies are leveraging new
technologies.
Drawing on our latest research and client experience,
this issue of Outlook is a source of fresh ideas for
leaders to consider as they seek to differentiate them-
selves in a highly competitive marketplace. The cover
story focuses on a particularly critical innovation in
customer relationship management—the use of social
media and digital marketing to become more relevant
to customers.
Another article explores new ways to attract and
retain the best talent—an essential source of innovation
for every company—while a third piece looks at how
the cloud has fundamentally redeined outsourcing
relationships. Innovation is not limited to the private
sector, of course; readers will also learn how it can
dramatically transform the delivery of government
services.
Just as innovation informs the rich content of Outlook,
it also deines who we are and what we do at Accenture.
Today’s world is one of new opportunities, driven by
new ideas. I look forward to sharing them with you
in future issues.

It’s one of the most important facts of economic life in
a multi-polar world: The complexity and volatility that
are permanent features of global markets mean that no
organization can succeed on its own. Collaboration, in
other words, is essential to high performance. It is also
a theme that runs throughout this issue.
Take the electronics business. Few industries are more
competitive or change more quickly. As our industry
professionals demonstrate in one article, the best
electronics and high-tech companies stay ahead of the
competition by skillfully leveraging alliances with
partners across this industry to drive growth, access
specialist talent and encourage innovation (the article
starts on page 70).
Collaboration is very much an internal phenomenon
as well, playing a more and more important role within
companies at the operational level. For example,
harnessing the power of social media—for superior
marketing, sales, customer service, innovation and HR,
among other business functions—demands high-level
cooperation, starting with an unprecedented degree of
collaboration between the chief marketing oficer and
the chief technology oficer. A pair of articles beginning
on page 22 explores how social media is fundamentally
transforming the way business is done.
Meanwhile, outsourcing is becoming a more collab-
orative endeavor as well. Despite predictions of its
imminent demise, outsourcing has, in fact, become
more important with the advent of the cloud model
for delivering business services. An article starting
on page 42 looks at how outsourcing is playing a key
new role as a value-added services aggregator and
integrator in the new cloud environment.
Collaboration is often the handmaiden of innovation.
In a multi-polar world, Western managers can learn
from their colleagues in emerging economies who
develop new and innovative solutions through a process
one article describes as “workaround innovation”
(page 62).
Collaboration has also become essential to success in
the public sector. Another article explores a series of
innovative collaborations—from interagency programs
to public–private partnerships—through which govern-
ments at all levels are providing better services at
lower cost (page 78).
As the authors of the article on the electronics industry
note, “Collaborations of all kinds are helping leading
companies adapt their global operating models to the
uncertainties of the upturn. Alliance partners have
brought them closer to consumers . . . [and] have also
contributed key capabilities that they would otherwise
have to build themselves, from scratch.” It’s a valuable
lesson for organizations everywhere.
David Cudaback
Editor-in-Chief, Outlook
From the Editor’s Desk
Growth through collaboration
2 Outlook 2011, Number 1

3
Case study after case study has
conirmed the value proposition
for analytics across a wide range
of business functions, including
pricing, demand prediction, targeted
marketing, supply chain optimiza-
tion, CRM and HR. In my view,
analytics is something much more
than a technology with an ROI; it’s
a transformational phenomenon
that will fundamentally change how
business discourse will be conducted
and decisions made. An analogy
may help in understanding why.
If you drop a feather and a rock
at the same time from the same
height, which will hit the ground
irst? At one point in history, this
was a question for philosophers to
resolve. Aristotle opined that the
rock, because it was heavier, would
fall faster and hit the ground irst.
Aristotle’s armchair wisdom was not
questioned until the 16th century,
when Galileo, through cleverly
designed experiments, proved him
wrong and established an empirical
basis for answering such questions
about the physical world.
Much the same way that an em-
pirically based scientiic method
became the basis of our understand-
ing of the world around us, analytics
will eventually bring empiricism
into business discourse and dethrone
many of today’s business practices.
Mundane decisions
Recently, I received a memo saying
that all employees at my location
would be required to keep their
ofices clean, subject to inspection
every other Friday. I wanted an
explanation, so I asked if there was
any data to show that clean ofices
lead to higher productivity.
My question, of course, was side-
stepped, and I was told that clean
ofices would make a better impres-
sion on clients. Undeterred, I asked
if there was any data to show that
clients walking through our ofices
buy more of our services or express
their “better impression” in any other
way. Not unexpectedly, I was asked
by the powers that be if this really
was a battle that I wanted to ight.
I chose this example to illustrate how
average, mundane decisions are made
in organizations daily based on well-
intentioned, plausible yet armchair
theories—those that, like Aristotle’s,
lack any empirical evidence. While
highly specialized functions such
as pricing or customer segmentation
may be based on sophisticated
models and empirical data, my con-
tention is that the long-term impact
of analytics will be in instilling
a culture of data-driven decision
making at all levels of an enterprise.
Or, put more bluntly, business
proposals and decisions—big or
small—will have to provide satis-
factory answers to this question:
“Do we think this is true or do we
know?” (This particular formula-
tion is attributed to Gary Loveman,
CEO of Harrah’s Entertainment.)
A sophisticated and analytically
oriented enterprise of the future
will behave and operate differently
from today’s enterprise along ive
major dimensions.
High analytical literacy
Data is a double-edged sword. When
properly used, it can lead to sound
and well-informed decisions. When
improperly used, the same data can
lead not only to poor decisions but
to poor decisions made with high
conidence that, in turn, could lead
to actions that could be erroneous
and expensive. Let’s consider some
speciic examples.
When one has access to real-time
data, it’s tempting to make real-time
decisions. For instance, if you are a
retailer and you have real-time access
to sales data from cash registers from
all your stores and real-time access
to your inventory in your warehouse,
you could be tempted to run sales
promotions on the ly and manage
your supply chain in tandem to
support your real-time promotions.
However, this is unlikely to work
because three types of events—your
decisions, the ensuing customer
behavior and supply chain events—
operate in different timeframes, so
making decisions any faster than the
slowest-moving event could be use-
less at best and dangerous at worst.
What the C-suite should know about analytics
Kishore S. Swaminathan
Chief Scientist
Accenture
On the Edge

On the Edge
Another problem with data and ana-
lytics is that they give you very ine-
grained visibility into your business
processes, and you could be tempted
to overoptimize the processes. Highly
optimized processes—just-in-time
inventory being an example—are
very fragile because circumstances
beyond your control could arise, and
there is little room for error.
A third problem is what’s known as
“oversteering,” or making decisions
when none is needed. So, for example,
your data could tell you that a project
is behind schedule, which, in turn,
may lead you to berate the project
manager or tell your stakeholders
that the project will be delayed.
Yet neither of these actions may be
necessary if the project has contin-
gency built in, if the status update
has a different frequency than your
sampling frequency or if perhaps the
employees who are aware of the proj-
ect delay will put in more work time
to get the project back on schedule.
Volatility
Businesses thrive on stability and
repeatability. Stable and repeatable
processes justify large-scale capital
expenses; they justify large-scale
employee training; and they reduce
cognitive overhead because processes
and decisions do not change and
hence their rationale does not have
to be explained repeatedly.
By contrast, an analytically based
enterprise of the future will have to
be designed around volatility rather
than repeatability.
When you have ine-grained vis-
ibility into your processes, customers,
suppliers and competitors, you have
the ability to make very ine-grained
decisions. In fact, your decision rules
can capture subtleties such as “stock
more beer on Sunday nights in loca-
tions where the home football team is
on a winning streak.” Such decisions
are highly context-sensitive and can
change as rapidly as the fortunes of
the football team.
Volatility—or rapidly changing
decisions that are context- and
time-sensitive—will be a big chal-
lenge for enterprises. Decisions
are no longer easily explainable;
capital investments cannot be
based on mass repeatability but
must cater to endemic volatility.
Integrated awareness
Today’s enterprises have more
information than they can act upon
because the information is siloed in
so many ways: technologically (data
in different systems that cannot be
brought together), organizationally
(data in different governance units
that cannot be brought together) or
by ownership (inside versus outside
the enterprise). The enterprise of
the future will be (or will be forced
to be) “conscious” in the sense that
it will know that it must integrate
everything it has access to.
As an extreme example of “inte-
grated awareness,” let’s consider
pharmaceuticals, an industry that
has traditionally relied on clinical
trials data as a means of estab-
lishing the eficacy and the side
effects of a drug.
A pharmaceuticals company today
can legally and morally claim im-
munity from any adverse effect of
a drug that was not revealed during
clinical trials—in other words, any
information that it did not explicitly
collect as part of a clinical trial
protocol. But in a world of blogs and
social networks, where people share
this information unprompted and in
public, it will become both a respon-
sibility and an obligation of phar-
maceuticals companies to monitor
public sources and integrate the public
An analytically literate
organization will have
a firm grasp of its risk
tolerance and guidelines
and models for action
under uncertainty.

5
information with their own clinical
data. (For more on the business
impact of social media, see page 22.)
“I should have known” (either for
regulatory or competitive reasons)
will be the new normal, replacing
the “I did not know” or “I could not
have known” approach to awareness
and information integration.
The end of analysis-paralysis
In the future, businesses will likely
be run by managers and leaders who
are no-nonsense empiricists; they
won’t move a inger until after all the
relevant data has been gathered and
analyzed. A recipe for organizational
“analysis-paralysis”? This is not an
unreasonable fear. But though it may
seem counterintuitive, an empirical
enterprise with high analytical
literacy is less likely to fall prey to
this malady than today’s enterprises.
There are three very distinct ways
that organizations can fall into
the analysis-paralysis trap. One is
a managerial tendency to “over-it
the curve”—a statistical term that
refers to the diminishing value of
additional data once a pattern (or
curve, in the graphic sense) has been
found. Data collection has a price,
inaction has a price and an analyti-
cally literate organization will clearly
understand the cost of over-itting.
The second cause of analysis-paraly-
sis is waiting for data that simply does
not exist, which relects an inability
to design experiments to generate
the needed data. As mentioned above,
experimentation has a price and in-
action has a price, so an analytically
literate organization will be charac-
terized by a clear understanding
of data gaps and the value of experi-
mentation to break the logjam.
The third cause of analysis-paralysis
is the fact that most companies
do not know or articulate their risk
tolerance clearly and are much
more likely to penalize failed
action than inaction. As a result,
many managers do not act unless
there is enough data to assure
them of successful outcomes. An
analytically literate organization
will have a irm grasp of its risk
tolerance. With guidelines and
models for action under uncertainty,
it will restore the symmetry be-
tween how it treats failed action
and inaction.
Intuition’s new pulpit
Empiricism and analytics sound
a death knell for such vaunted
business traits as intuition, gut feel,
killer instinct and so forth, right?
Wrong.
Science is purely empirical and
dispassionate, but scientists are not.
Science is objective and mechanical,
but it also values scientists who
are creative, intuitive and can take
a leap of faith.
Data, by itself, can be interpreted
in many ways. Imagine a physical or
business phenomenon that produces
the following sequence of data: 1,
2, 6, 24, 33. Perhaps it’s a factorial
sequence with 33 as noise, or a
sequence where every fourth term
is twice the multiple of the previous
three. Or perhaps every ifth terms
if the sum of the previous four.
All are indeed correct. To prove or
disprove any theory, you need the
next several terms of the sequence.
A good scientist knows when there
is enough data to warrant a theory,
when there isn’t, what new data to
gather and how to design an experi-
ment to gather the right data.
Apple’s Steve Jobs is known to ex-
plicitly discount the value of surveys
and focus groups for designing new
products. How do you explain this
apparent anti-empiricism?
One explanation is that, much
like a creative scientist, people
like Jobs recognize when there is
not enough data or the right kind
of data to form a theory. They
recognize that, for completely new
lines of products that will change
a user’s experience or behavior,
the only useful data is experi-
ential data, not commentary and
reactions from those who have
never used the product.
Jobs and people like him are akin to
scientists who recognize what type
of data is needed to support a theory
(in this case, whether a product will
succeed), recognize that such data
cannot be gathered through focus
groups (one type of experiment)
and boldly design new types of
experiments (release the product
and gather experiential data).
It should be noted that some prod-
ucts—in Apple’s case, it was the
Newton—do not succeed and are
terminated. Intuition, creative leaps
and clever experimentation are not
incompatible with empiricism; in
fact, the value of these traits will be
even better understood in the future
enterprise by analogy to theoretical
and experimental scientists.
The enterprise of the future, based on
empiricism and analytical decision
making, will indeed be considerably
different from today’s enterprise.
You may well ask: “Do you think
this is true or do you know?”
Touché.
Kishore S. Swaminathan is based
in Beijing.
k.s.swaminathan@accenture.com

Perspective
Contents
Features
Marketing II
32 Melding marketing and
IT: Are you ready for
the digital revolution?
By Tim Breene and Brian Whipple
Before the ultimate promise of
digital and interactive channels
can be fulfilled, leaders must
make sure that marketing
professionals work actively
with the IT department—and
vice versa.
Outsourcing
42 Has the cloud made
outsourcing obsolete?
By Jimmy Harris and Gavin Michael
The shakeup within the busi-
ness services industry means
more complexity, not less,
resulting in a critical new role
for value-added outsourcing.
Talent & Organization Performance
52 The talent to grow
By David Smith, Catherine S.
Farley, Diego Sánchez de León and
Stephanie Gault
To drive growth, companies
need to embrace a human
capital strategy that more
closely links workforce plan-
ning to business objectives
and the organizational culture.
High-Performance Business
8 Jumping the S-curve:
How to sustain long-term
performance
By Paul F. Nunes and Tim Breene
To make the jump from one
market-leading business to the
next, successful companies
manage growth across multiple
fronts.
High-Performance Business II
14 A team you can count on
By Paul F. Nunes, Tim Breene
and David Smith
The best companies surpass
competitors in part by attracting
and retaining serious talent—
people at the top of their
professions.
Marketing
22 Harnessing the power
of social media
By Caroline Firstbrook and Robert
Wollan
Companies that actively
experiment with social media
in their business processes will
transform their relationships
with customers and create value
in unforeseen ways.
The Long View
1 New ideas,
new opportunities
By Pierre Nanterme
From the Editor’s Desk
2 Growth through
collaboration
By David Cudaback
On the Edge
3 What the C-suite should
know about analytics
By Kishore S. Swaminathan
Analytics is a transformational
phenomenon that will funda-
mentally change how business
discourse will be conducted and
decisions will be made.

For additional thought leadership from Accenture, including the Accenture Institute for
High Performance and Accenture Technology Labs, please visit www.accenture.com/ideas.
For a personalized electronic newsletter tailored to highlight specific industries and
issues, subscribe to My Outlook at www.accenture.com/myoutlook.
The ongoing uncertainties of the current
economic situation underscore a critical
fact about today’s business strategies:
Growing effectively, at the right pace
and in the right ways, takes talent.
“The talent to grow” (page 52)
7
Emerging Markets
62 Why the West
needs to learn about
workaround innovation
By Karen Crennan and Carola Cruz
A different approach to
innovation pervades emerging
economies, expressed in levels
of ingenuity, resourcefulness
and drive that are harder
and harder to find at Western
companies.
Electronics & High Tech
70 Connecting for
competitive advantage
By Hans Von Lewinski, Armen
Ovanessoff and Joshua B. Bellin
Smart electronics and high-
tech companies are forging
and strengthening alliances
and partnerships to capture
new growth opportunities,
fill capability gaps and get
closer to customers.
Government
78 Joining forces
By David A. Wilson, Michael Henry,
Daniel J. McClure and Jason B. Wolenik
Collaboration is the key to
effective government in an era
of fiscal austerity—and not just
because it cuts costs.

Successful companies often manage growth to the curve of their inancial
performance. But that isn’t enough. High performers also manage the
maturing of three other equally important elements of their enterprise to
make the jump from one market-leading business to the next.
Jumping the S-curve
How to sustain
long-term performance
By Paul F. Nunes and Tim Breene

Back in 2003, when Accenture began
its program of High Performance
Business research, there was a lot of
talk about good companies becoming
great. A generation earlier, a similar
conversation had focused on the
meaning of “excellence” in business.
Yet our ongoing research, bolstered
by lessons from global client work
across dozens of industries, has
taught us that high performance
isn’t just about achieving “greatness”
or “excellence,” concepts that are
far too static. Nor is it just about
ensuring long-term survival by
building a company that will last.
High performance is about outper-
forming rivals again and again,
even as the basis of competition
in an industry or market changes.
Truly great companies show the
world that their irst arrival at the top
was not an accident. To do this, they
accomplished a dificult feat: They
jumped what Accenture calls the
S-curve of business performance.
When we say S-curve, we mean
the pattern of revenue growth in
which a successful business starts
small with a few eager customers,
grows rapidly as demand for the
new offering swells, and eventually
peaks and levels off as the market
matures. High performers not only
manage to successfully climb
S-curves; as each business perfor-
mance curve begins to latten, they
jump to the start of the next curve.
String of successes
The ability to both climb and jump
S-curves is what separates high
performers from those that never
manage to translate a brief period
of accomplishment with a single
winning offering into a string of
business successes.
Making the jump again and again
is crucial to sustained business
success and outperformance of
industry competitors. Consider
that once a company hits a major
stall in its revenue growth—as
Matthew Olson and Derek Van
Bever note in their book, Stall
Points—it has less than a 10 percent
chance of ever fully recovering.
Those aren’t good odds, and they
do much to explain why two-
thirds of stalled companies are
later acquired, taken private or
forced into bankruptcy.
There are many reasons offered
for why businesses fail to avoid
a stall. Some companies simply
don’t see the end coming, preferring
to view slowing revenue growth
as the result of a bad economy or
an industry slowdown, not as a
referendum on their own products
or services. Others don’t recognize
how slim their chances for late-stage
recovery and change really are
and thus fail to muster the urgency
needed to jump to a new S-curve.
As we discovered when we wrote in
these pages about the role of the chief
strategy oficer, many companies
hope they can pull off a reinvention
Source: Accenture analysis
Time
Maturity
The hidden S-curves of high performance
Three key aspects of business mature and start to decline much faster than
the financial performance of a company.
Distinctiveness
of capabilities
Lessens as competi-
tion intensifies and
imitation occurs
Talent development
Slows as companies
learn to do more with
less and competition
forces the lowering
of costs
Market relevance
Ebbs as the basis of
competition in the
industry shifts away
from the dominant
model
Hidden S-curves
Financial
performance
S-curve

11
Long before a successful business
hits its revenue peak, the basis of
competition on which it was founded
expires. Consider cell phones. Com-
petition in that industry, for both
manufacturers and service providers,
has shifted several times, from price
to network coverage to the value
of services to design, branding and
applications. High performers see
the shift and create the next basis
of competition in their industry
even as they exploit an existing
business that has not yet peaked.
The hidden competition curve
The hidden capabilities curve
In creating the offerings that will
enable them to climb the inancial
S-curve, high performers invari-
ably create new capabilities. If they
are successful, these capabilities
become distinctive. But distinc-
tiveness is leeting. As with the
basis of competition, the end of
the capabilities curve may not be
apparent to executives until time
to develop new ones has run out.
Take Polaroid and Xerox, two iconic
companies whose names were once
synonymous with their offerings
and the distinctive capabilities they
possessed. For Xerox, the renewal
of capabilities, including new
skills in ofice services and soft-
ware, came in time. But for Pola-
roid, the next round of distinctive
capabilities failed to materialize
before the company was forced
to ile for bankruptcy protection
in 2001.
late in the game by appointing a CSO
or a chief innovation oficer. But no
matter how good the executives put
into such positions are, they usually
aren’t miracle workers.
Still, companies see the problem
primarily as one of execution.
Observers after the fact often accuse
companies of sticking too close to
their core—or of moving too far
from it. They fault a failure to
commit to a new business model,
introducing the wrong products
and relying on the achievement of
massive scale as a strategy (or in
place of a strategy). The focus of
such criticisms has typically been
on ixing what is clearly broken
with a company. But at that point,
it’s almost always too late.
As a result of our research, we
came to a very different conclusion
about why companies fail to jump
their S-curves. The secret, we
found, lies in understanding the
hidden S-curves of performance.
We observed that too many com-
panies invest most or all of their
energies managing to the growth
curve of their revenues. In the
process, they fail to manage to
three much shorter but equally
important hidden S-curves (see
chart, opposite).
While companies are in some
senses always on the lookout for
the best talent, they often lose
focus on retaining in quantity
what we call serious talent—people
with both the capability and the
will to drive business growth.
When the business is successfully
chugging along but has not yet
peaked, executives feel that op-
erations can be leaner—they’ve
moved far down the learning
curve by then—and meaner, since
they are under pressure to boost
margins. They will then reduce
both headcount and investments
in talent, and will increasingly
focus on talent that can best
execute the existing business
model. This has the perverse
effect of driving away the very
people—the entrepreneurial risk
takers and business builder types—
best able to help them reinvent
the business.
As a result of managing to these
hidden curves—and, it must be
emphasized, in addition to keeping
focused on the revenue growth
S-curve—the high performers in
our study had typically started
the reinvention process well be-
fore their current businesses had
even begun to slow. In essence,
they had the foresight and where-
withal to begin to ix what didn’t
yet appear to be broken.
If, in fact, this should be manage-
ment’s real agenda, how do high
performers create an organization
that manages to all four curves
simultaneously?
The hidden talent curve

Intellectual property continues to lose protection as patents expire
Technologies continue to evolve rapidly
The patent ofice doesn’t put years
back on the clock just because a
company’s sales have tapered off in
a bad economy. Such an unfortunate
fact of corporate life can have a dev-
astating effect on some businesses.
In pharmaceuticals, for example,
patented drugs are under continual
assault from the relentless tide of
approved generics. In 2009, the FDA
approved 112 new generic drugs
aimed at exploiting the recent rash of
blockbuster patent expirations known
in the industry as the “patent cliff.”
With the patent clock ticking,
companies must be prepared for
the ill effects of a downturn at
some point during their period
of protected rights.
They do so by engaging in three
distinct management practices:
creating strategy in a way that is
“edge-centric;” changing the top
team well before it appears neces-
sary; and ensuring that they have
more talent than seems required
by becoming hothouses of talent.
These and other important insights
gave rise to Accenture’s new book,
Jumping the S-Curve: How to Beat
the Growth Cycle, Get on Top and
Stay There (Harvard Business Re-
view Press, 2011), which presents
the latest indings from our ongo-
ing High Performance Business
research.
We will return to these and
other topics in future issues of
Outlook as we continue to report
on new insights drawn from our
ongoing research. In this issue,
we introduce one of three essen-
tial business practices a company
must employ to successfully
climb the S-curve of business
performance.
In the following article, we examine
the practice of being “worthy of
serious talent.” It is critical to
attract and retain the right talent
for the right reasons, something
that is at the core of the perfor-
mance anatomy we have previously
described as necessary for high
performance.
The article makes clear how high
performers turn the war for talent
on its head. Rather than battle
for high-priced stars, they focus
on creating a corporate environ-
ment and culture that attracts
and retains employees who have
both superior skills and a strong
desire to thrive in a demanding
environment with equally skilled
colleagues.
Jumping in a downturn
It may be argued that the recent
severe downturn has made it
impossible to think about rein-
venting the business—that mere
survival was an accomplishment
during the past two or three
years, and may even continue to
be so in the near future. But such
reasoning is lawed.
Many managers believe that a
recession is primarily a time for
retrenchment, belt-tightening and
a redoubled focus on selling. But
economic slowdowns also call for
greater attention to innovation
and increased preparation to jump
an S-curve. One reason for this
urgency: Reduced sales and increased
discounting tend to latten the
revenue growth S-curve, which
can limit available funding for
new initiatives over time.
Another reason: As a downturn
bottoms out, the S-curve does
not regain its original shape; thus
companies do not regain time to
recoup their losses. Here are four
why this is so.
Economic downturns can slow the
introduction of new technologies.
But they don’t hold them back
for long. Disruptive technologies
continue to advance even as com-
panies struggle in lean times to
recoup their investments in older
technologies. Witness the fate of
plasma television.
The recent downturn has pushed
consumers to seek smaller televi-
sions at lower price points. Ex-
pensive large-screen plasma TVs
have a hard time competing with
the improving quality of LCD and
LED televisions. The intense price
competition at the lower end and
reduced potential for sales at the
high end, along with other factors
like LCDs showing better in a store
setting, have caused Vizio, once
a leading maker, to exit the plasma
sector, and the former top plasma
maker, Pioneer, to exit the television
market altogether.

13
During a downturn, the competition
can become even iercer. Com-
panies may be able to grow sales
only by seizing market share from
competitors, and already weakened
businesses face possible extinction
with further slips. In 2010, both
Hollywood Video and Blockbuster
iled for bankruptcy, while Netlix
and Redbox (which offers DVD
rentals through kiosks for $1 to $2
per night) gained market share and
enjoyed surging revenues. A variety
of new channels for obtaining
movies drove the inal nails into
the cofin of brick-and-mortar
outlets constructed by the titans
of the VHS rental.
Competitors continue to enter industries
and press advantages
For companies that want to be high performers, the lessons that result from
these insights may sound counterintuitive. But what matters most to long-
term performance is not so much what you do to reach the top—though that
is certainly important—but what you do to cross over to the bottom of the
next S-curve and begin the climb again. Similarly, the secret to successfully
jumping the S-curve is not about what you do at or near the top of the
curve, but what you do to prepare for the next jump on the way up.
About the authors
Paul F. Nunes is the executive director
of research at the Accenture Institute
for High Performance. His work has
appeared regularly in Harvard Business
Review and in numerous other publi-
cations, including the Wall Street Journal.
He is also the coauthor of Mass Afluence:
7 New Rules of Marketing to Today’s
Consumers (Harvard Business School
Press, 2004). In addition, Mr. Nunes
is the senior contributing editor for
Outlook. He is based in Boston.
paul.f.nunes@accenture.com
Tim Breene is the senior managing
director of Accenture Strategic Initiatives
and the CEO of Accenture Interactive.
Since joining the company in 1995,
Mr. Breene has held a number of senior
positions, including Accenture’s chief
strategy and corporate development
oficer, group chief executive of Accen-
ture Business Consulting and managing
partner of Accenture Strategic Services.
Mr. Breene is based in Boston.
tim.breene@accenture.com
Novelty wears off with time,
regardless of the strength of the
economy. Therefore, products
introduced in a downturn often
fail to capture their full potential.
Consumer tastes advance, and lost
sales can never be reclaimed.
Even during the current downturn,
for example, consumers accustomed
to the idea of “fast fashion” will not
be interested in last year’s styles.
And innovators have to prepare for
sudden changes beyond their control.
Witness the automakers that intro-
duced new pickup trucks targeted
at American construction workers...
just as the housing market crashed.
Bottom line: A strategy focused
mainly on retrenchment during
tough economic times is a strategy for
continued trouble during the recov-
ery. The logic of the S-curve demands
early innovation and preparation for
the jump, regardless of GDP growth.
Consumer tastes and preferences continue to change
For further reading
“A team you can count on,” this issue, page 14
“The talent to grow,” this issue, page 52
“Rise of the chief strategy oficer,” Outlook, January 2008
“Marks of distinction,” Outlook, June 2005
“In search of performance anatomy,” Outlook, October 2004
For these and other articles, please visit accenture.com/Outlook

15
The best companies surpass competitors in part by attracting serious
talent—people at the top of their professions. And they keep them on board
by ensuring they are part of an enterprise staffed with extraordinary
individuals all striving toward the same ambitious goals.
A team you
can count on
By Paul F. Nunes, Tim Breene and David Smith

Remember Shockley Semiconductor Laboratory?
If you don’t, you’re not alone. Truth be told, the lab is
much more famous for what it could have been than for
what it was. That’s because, back in the mid-1950s, Mountain
View, California–based SSL could boast some of the best
minds in the electronics industry. The lab was hardly the
ideal workplace, however, and in 1957, a group of SSL’s
top scientists (later dubbed the “Traitorous Eight”) would
leave to form Fairchild Semiconductor.
But Fairchild itself would suffer its own share of defections,
losing supremely talented individuals whose names read
like a Silicon Valley hall of fame roster: Bob Noyce and
Gordon Moore, cofounders of Intel; Jerry Sanders, cofounder
and former CEO of Advanced Micro Devices; Charlie Sporck,
former head of National Semiconductor Corp.; and Eugene
Kleiner, cofounder of the venture capital irm that would
later become Kleiner Perkins Cauield & Byers.
What happened to SSL and Fairchild? Why do some companies
lose world-class talent? And perhaps more important, why are
high-performance businesses able to retain such individuals?
Through seven years of ongoing research into what separates
high-performance businesses from the rest, we have come
to understand that the most successful companies surpass
competitors in part by developing a superior culture of talent.
They attract what we call serious talent—and then keep top
performers on board by making it clear that they are part
of a serious enterprise, one that is stocked with committed,
talented individuals all striving toward the same ambitious
goals. In other words, high-performance businesses make
themselves worthy of such serious talent.*
* This article is based on material drawn from the authors’ recently published book, Jumping the S-Curve:
How to Beat the Growth Cycle, Get on Top and Stay There (Harvard Business Review Press, 2011), which
presents the latest indings in Accenture’s ongoing program of High Performance Business research.

17
By serious, we are not talking
about stars with big egos. We are
talking about people who are at the
top of their professions (the best
researchers in the pharmaceuticals
industry, for example) as well as
those who are very good at what
they do (such as salespeople who
consistently land big new accounts).
We are also referring to the in-
dividuals for whom work is not
just a job but rather a source of
personal pride.
Put another way, employees who
are considered serious talent have
both superior capability and the
right attitude.
We have found that if organiza-
tions are to turn themselves into
magnets for serious talent, they
must establish a kind of perpetual
chain reaction in which top-notch
workers attract other highly capable
people. Those workers must place
expectations of merit on themselves
that are every bit as high as those
they place on recruits. This turns
the focus of the “war for talent”
on its head; it shifts the emphasis
from enticing “star” performers to
creating a company any employee
serious about his or her work would
want to be a part of.
High performers establish an
environment in which three fun-
damental and equally important
qualities desired by serious talent
lourish. The irst is capability.
Serious talent want to know that
the team they join has what it
takes to succeed in dificult situ-
ations. Employees observe this
through the pervasive competence
of those around them. The second
quality is predictability. To measure
its own likelihood of success, serious
talent demand to know what they
can expect from others. High per-
formers generate this through a
widespread commitment to mutual
accountability.
The third is reliability. Serious
talent believe they must be able
to count on their colleagues to
do the right thing. This trust arises
in high performers when an implicit
culture of honor is present. In
addition, serious talent need to
be working with others who share
a mindset that won’t settle for
harmful compromises and who
strive for continual improvement.
Incompetence corrodes an organiza-
tion’s ability to be worthy of serious
talent. Ineffectual employees who
are allowed to keep their jobs are like
broken windows in rundown urban
neighborhoods, which, according to
theory, signal an absence of concern
and control that encourages further
decline. The presence of inept em-
ployees sends a signal to coworkers,
customers, partners and others that
no one cares how they perform and
that, in any event, no one has the
power to change things. High per-
formers know that tolerating work
that doesn’t meet high standards
destroys the trust and conidence
of the best employees.
That’s one reason companies need
pervasive competence—employees
with the right knowledge, skills,
abilities and other characteristics
at every level. Another reason:
When an organization is pushing
itself to the limit of what can be
done, seemingly minor lapses can
have large repercussions. That
is, in top-performing businesses,
the fault tolerance before failure
occurs is usually much smaller.
To achieve pervasive competence,
companies need to know what
kinds of skills and capabilities are
required at each level of the orga-
nization, and they need to enforce
those standards across the board.
Defining competence
High-performance businesses have
their own deinition of what com-
petence is and rigorously adhere to
that standard. They deine not only
what constitutes general competence
but also the speciic elements that
are known to drive business success.
Requirements for roles are clear and
consistent, and people throughout
the organization are aware of what
they need to do to perform their
jobs well. At UPS, for example,
truck drivers need to know the
“340 methods,” which set out every-
thing from the most eficient way
to carry keys (to avoid fumbling
for them) to the number of steps per
second that would be considered
walking at a “brisk pace.”
When corporate goals change, dei-
nitions of competence must change
too. In the early 2000s, Procter &
Gamble set out to encourage more
innovation. It began by conducting
a survey of 2,000 former and current
employees to identify the leadership
behaviors that would best foster
innovation. Using the results, it
implemented a new performance
evaluation system that emphasized
key attributes, including the ability
to generate innovations by building
collaborative relationships. Those
criteria were then used to assess
Capability through pervasive competence

Pullquote goes here and
here and here and here
and here and here and
here and here and here
and here and here and
here and here.
managers regularly, and those who
failed to show a consistent record of
business-building innovation weren’t
allowed to become line-group presi-
dents, even if they had demonstrated
outstanding qualities in other areas.
Enforcing standards
At low- and average-performing
companies, the so-called Peter Princi-
ple—in which employees are promoted
to their level of incompetence—of-
ten seems to be in effect. Not so at
high-performance businesses, which
don’t fall into the trap of trying to
keep people happy with inlated titles
when the company can’t up their pay.
With that approach, too many vice
presidents and associate directors
ill small niches, and many of those
promoted are in over their heads.
High performers actually prefer to
go in the other direction, paying
an employee well into the next title
range as the person develops but
holding back on the promotion itself
until there’s no question that the role
requirements have been fully met.
Within a role, stretch projects are
assigned to build and assess compe-
tence for future roles; they are not
assigned as an early test for a newly
promoted employee. If anything,
employees at high-performance com-
panies are typically overqualified for
their positions by industry standards.
What do minimum high standards
look like at a high performer?
Consider the approach Best Buy
took with its salespeople when
it launched an initiative to shift
from a product-centered strategy
to a customer-centric one.
All new hires, after an initial
four-hour classroom session, had
to undergo online training and
then take an exam after each
course segment. After that initiation,
they shadowed a more experienced
salesperson until they were ready
to ly solo. Even then, they con-
tinued to receive monthly training
to stay abreast of new technologies,
and they were responsible for
learning about products outside
their department so that they
would be better able to cross-sell
them to customers.
The salespeople who showed
leadership promise weren’t then
promoted automatically into mana-
gerial roles. Instead, they had to
take a four-week training program
with a coach, undergo more job
shadowing, and work on small teams
to solve real business problems.
That type of employee development
doesn’t come cheap—Best Buy was
spending the equivalent of about
5 percent of its payroll on training
at the time, reportedly more than
any other retailer.
Predictability through mutual accountability
High performers are known to
operate like well-oiled machines, and
doing so requires more than rules,
regulations and standards. It requires
employees who deliver on their prom-
ises, on time, day in and day out.
What high performers’ employees
share is a sense of mutual account-
ability. The purpose is less about
holding employees’ feet to the ire
than it is about getting to a place
where employees know that a
coworker’s word is his or her bond,
making future actions and results
highly predictable. This increased
ability to count on coworkers to
deliver gives employees and teams

19
the conidence they need to take
on the more challenging tasks high
performers tend to engage in.
Two principles are critical to making
this work. The company must
constantly measure its progress
against its own stated goals, as
well as those of individuals. And
accountability must be a two-way
street, working not just from employ-
ee to supervisor but in the other
direction as well.
A system of mutual accountability is
only as good as its weakest link. No
employee can be exempt from this
obligation, and nobody—not even a
top executive with numerous past
successes to his or her credit—should
be allowed to “retire in place.”
Accountability means making good
on promises, or paying a price.
That kind of philosophy is a
hallmark of high performers like
UPS, a company committed to
measuring everything to ensure
that management and employees
remain accountable to each other
as well as to customers. UPS relies
on a variety of metrics, such as
a customer satisfaction index that
takes into account how the company
is doing with respect to package
handling, claims processing, billing
and pricing. And customers are just
one of four major areas of emphasis;
the other three are inancial, people
and internal processes.
At high performers, mutual ac-
countability is both lateral (between
coworkers) and vertical (between
supervisor and employee). As a
result, these organizations make the
development of people an obligation
of company leaders—and they
measure these leaders on their
skill at this task. In contrast, many
low- and average-performance busi-
nesses make the mistake of focusing
only on upward obligations—what
employees must do for their bosses.
At top performers, mentoring, coun-
seling and leadership development
programs are not just paid lip service;
they are taken seriously. Novo Nord-
isk, for example, assesses its manag-
ers partly by how well they develop
and retain talented employees.
Thanks to that approach, the com-
pany boasts, it loses no more than
4 percent of its top talent every year.
At UPS, hiring outsiders for any-
thing other than entry-level posi-
tions is generally frowned upon.
Speciically, it raises questions
about the managers involved—why
couldn’t they develop someone
internally for that position? UPS
expects its managers at the district,
regional and senior levels to have
in place succession plans that they
must keep updated so that the
company always has an accurate
view of its leadership pipeline.
To maintain order and punish
misconduct, societies typically
rely on a culture of law, in which
the group enacts and enforces a
body of rules and regulations. But
a culture of law by itself is not
suficient in society or in business.
The primary reason is that not even
myriad rules can cover every con-
ceivable infraction, and enforcement
can be costly and impractical.
For companies in particular, a
second reason is that serious talent
want to know that their colleagues’
actions are not governed by rules
alone, so when an urgent situation
arises, those colleagues will act out
of duty, conviction and courage,
not mere compliance. In that sense,
serious talent look for companies
that are not only reliable followers
of the rules but also reliable in
a crisis. And that’s why high-perfor-
mance businesses also tend to rely on
another system—a culture of honor.
In a culture of honor, when a
person violates some generally
accepted norm, others in the group
ostracize or otherwise punish that
individual swiftly to set an example.
Because people are concerned with
maintaining their reputations (and,
ultimately, their honor) within the
culture, they are less prone to become
transgressors and more likely to
punish those who transgress.
People can ind loopholes in laws
or otherwise discover ways to
sidestep a rule or regulation, but
they can never truly outsmart a code
of honor, because it’s self-policing.
That’s why cultures of honor can
be particularly effective for main-
taining order in an organization
stocked with serious talent, because
those types of individuals tend to
be especially concerned about their
professional reputations (as well as
the reputations of the groups they
associate with).
It is important to note that the
objective here is not to create
vigilante justice and boardroom
intrigue. Rather, cultures of honor
bring about conidence in distributive
justice, with proits going fairly to
those most responsible for creating
them; procedural justice, ensuring
that a system of patronage and
Reliability through a culture of honor

The best way to establish
a culture of honor is
to have zero tolerance
for violators, no matter
how far up the corporate
ladder they may be.
favors doesn’t overwhelm effective
processes; and interactional justice,
which requires certain measures
of respect be shown to all members
of the organization in their day-
to-day dealings.
Going above and beyond
One of the best ways to establish
a culture of honor is to hire people
with the right values in the irst place
and then reinforce those qualities
regularly, a process that takes a con-
certed corporate commitment. Novo
Nordisk is a case in point. “Every
ad, site and selection tool has a
strong component of individual
value and alignment with our
culture,” Jeff Frazier, Novo’s vice
president of human resources told
Medical Marketing & Media. “Culture
and values are a signiicant compo-
nent of management training.”
To continually reinforce a culture
of honor, many high-performance
businesses rely on judicious story-
telling—the stuff of corporate lore.
At UPS, managers frequently tell
anecdotes about employees who have
gone above and beyond the call of
duty, like the driver who was deliver-
ing a package on Christmas Eve to
a military base in Aberdeen, Mary-
land. The address wasn’t properly
illed out, but instead of leaving the
package at the base to be routed later,
the driver made the extra effort to
locate the soldier, who was grateful
because it contained a surprise gift—
airline tickets for a light later that
day that would allow him to be home
for Christmas. Such stories regularly
make the rounds at UPS, reinforcing
the core values of the company.
Typically, cultures of honor require
a rigorous initiation for new mem-
bers. At the multibillion-dollar oil-
ield services provider Schlumberger,
engineers hired out of college must
go through years of rigorous training
before they become ield engineers
in North and South America. They
irst need to complete an intensive
three-year program that includes
classroom work at training centers
as well as on-the-job experience at
various sites. After that, they have
to complete a project that addresses
a real business need, and only those
who pass that test are eligible for
promotions. According to the com-
pany, 40 percent of the newly hired
engineers don’t make it through
their third year.
Staying true to the code
Perhaps the best way to establish
a culture of honor is to lead by ex-
ample and to have a zero tolerance
for violators, no matter how high up
the corporate ladder they might be.
This is one of the most controversial
aspects of a culture of honor, but
it’s crucial that people believe the
punishment for violating an honor
code will be swift and harsh, even
for senior executives. Otherwise, they
will quickly lose faith in the system.
If after reading about cultures of
honor you begin to wonder why
your own organization’s commitment
to honor seems to have slipped,
that’s a good sign. Writes James
Bowman in his book Honor: A
History: “Honor cultures always
tend to be nostalgic about the past .. .
since honor’s tendency to venerate
the authoritative and traditional
naturally creates a built-in dissat-
isfaction with the present.” In other
words, people in honor cultures
often worry that their best days are
behind them. That’s a good starting
point for working to improve the
culture in the present.
Shared success
When companies provide a work-
ing environment with those three

21
essential qualities—capability,
predictability and reliability—they
set the stage for serious talent to
shine and for the organization as
a whole to thrive.
Perhaps the best way to assess
whether your business is worthy of
serious talent is to ask yourself this:
Are your employees so good that
they are being recruited heavily by
competitors? And when they choose
to leave, is it because they are
the most talented in the industry
and have been persuaded by gener-
ous enticements? Most important,
have you managed to attract and
retain suficient talent that you
can sustain the losses?
At Shockley Semiconductor, the
loss of superior talent was enough
to doom the company. In contrast,
high-performance businesses like
PepsiCo, P&G and Danaher Corp.
have become veritable breeding
grounds for the future executives
of other corporations while main-
taining their own extraordinary
level of success. Former Danaher
managers, for instance, are now
the CEOs of several other indus-
trial companies, including Belden,
IDEX Corp. and Polaris Industries.
And erstwhile P&G employees
who have gone on to run major
corporations include Jeff Immelt
(General Electric Co.), Jim McNerney,
(3M, Boeing Co.), Meg Whitman
(eBay) and Steve Ballmer (Micro-
soft Corp.).
Here we need to make a crucial
distinction: The nature of your
business is not nearly as impor-
tant as the nature of your organi-
zation. By that, we mean that any
company can become a magnet
for serious talent, regardless of
the products it sells. Yes, Apple
attracts some of the best minds
in its industry, but that’s not
necessarily because it makes snazzy,
buzz-worthy products like the
iPhone and iPad. Companies that
sell more mundane items, such
as laundry detergent and disposable
diapers, can also become powerful
magnets for serious talent. P&G is
one example.
What do Apple, P&G and other high
performers have in common? A
keen sense of purpose and constant
striving to be the best at what they
do, as well as an organizational
environment with demonstrated
capability, predictability and reli-
ability. These characteristics make
them worthy, in the eyes of highly
skilled and dedicated individuals,
of serious talent.
About the authors
Paul F. Nunes is the executive director
of research at the Accenture Institute
for High Performance. His work has
appeared regularly in Harvard Business
Review and in numerous other publi-
cations, including the Wall Street Journal.
He is also the coauthor of Mass Afluence:
7 New Rules of Marketing to Today’s
Consumers (Harvard Business School
Press, 2004). In addition, Mr. Nunes
is the senior contributing editor for
Outlook. He is based in Boston.
paul.f.nunes@accenture.com
Tim Breene is the senior managing
director of Accenture Strategic Initiatives
and the CEO of Accenture Interactive.
Since joining the company in 1995,
Mr. Breene has held a number of senior
positions, including Accenture’s chief
strategy and corporate development
oficer, group chief executive of Accen-
ture Business Consulting and managing
partner of Accenture Strategic Services.
Mr. Breene is based in Boston.
tim.breene@accenture.com
David Smith is the managing director
of the Accenture Talent & Organization
Performance service line. He has been
a guest lecturer at Wharton Business
School and Babson College and is a
frequent speaker at industry conferences
and events. Mr. Smith, who is based in
Hartford, Connecticut, has published
numerous articles and papers, has con-
tributed his viewpoints on the business
impact of human capital strategies to
various media and industry publications,
and is the coauthor of Workforce of One:
Revolutionizing Talent Management
Through Customization (Harvard Business
Press, 2010).
david.y.smith@accenture.com
For further reading
“Jumping the S-curve: How to sustain long-term performance,” this issue, page 8
“The talent to grow,” this issue, page 52
For these and other articles, please visit accenture.com/Outlook

Marketing
Harnessing the power
of social media
By Caroline Firstbrook and Robert Wollan

The impact of social media is embryonic today but could ultimately surpass
the predictions of the industry’s most daring visionaries. Companies that
actively experiment with embedding a social media mindset and capabilities
in their business processes will transform their relationships with customers
and create value in unforeseen ways.

Marketing
Facebook, Twitter, YouTube: To some executives, these
and other user-generated-content sites resemble little more
than social networking souflés—luffy, youth-focused
concoctions with more empty calories than real content.
Known collectively as social media, you may not associate
it with sweeping business change.
Think again.
Social media is a genuine game
changer for business. Companies
that invested early to harness the
power of social media claim returns
as high as 20 to 1, with even greater
gains predicted to be on the way.
Meanwhile, those on the wrong side
of this customer-driven uprising
have already learned the hard way
how quickly brands and reputations
can be built—or destroyed—by this
phenomenon.
Many companies have recognized
the potential of social media as
a new communications channel.
But the reality is that its impact
will be felt along the entire length
of the value chain. Companies will
be forced to reexamine outdated
business practices and create op-
portunities to leverage these new
capabilities in powerful ways.
The repercussions will be felt
throughout the organization.
Marketing
The business function most common-
ly charged with engaging custom-
ers through social media has been
the marketing department. However,
the growing prevalence of online
communities that allow consumers to
exchange information about products
or services, and to compare prices
among competitors, has also meant
that marketers have lost control
over how and where their products
are presented to potential customers.
Some of the more sophisticated
online retailers have used this trend
to their advantage, employing recom-
mendation algorithms, user reviews
and unique customer-generated
content to build trust and increase
a consumer’s propensity to purchase.
A variety of online players, including
Amazon.com, Netlix and Internet
radio site Pandora, are recognized
for having state-of-the-art recom-
mendation systems that effectively
match customers with the products,
movies and music they love.
Social networking also provides an
effective channel for introducing new
products and services to customers
while gathering real-time feedback.
Ford Motor Co. broke with tradition
by launching its 2011 Explorer cross-
over vehicle on Facebook, achieving
higher levels of customer interest
than an ultra-expensive Super Bowl
commercial (which ran to nearly $3
million for a 30-second spot in 2010)
for signiicantly less money.
Even minor brands can beneit from
viral marketing campaigns that
capitalize on user willingness to pass
on relevant or entertaining content.
One example from Europe: Tipp-Ex,
a brand of correction luid. In “A
hunter shoots a bear,” the company’s
interactive “tippexperience” video,
the hunter in the clip applies Tipp-Ex
to the word shoots in the title and
then asks viewers to type in a happier
alternative, such as hugs or dances
with. Each change generates a dif-

25
ferent ending to the video, giving it
an appeal that resulted in more than
10 million hits in the irst six weeks
after being posted on YouTube.
Other campaigns take advantage of
the immediacy of social media to
create a sense of urgency regarding
limited-time offers. Airlines includ-
ing JetBlue and United have begun
using Twitter to promote ixed avail-
ability or last-minute light deals—
tasks ideally suited to the dynamic
environment of social media. Online
store and community Woot, which
focuses on selling “cool stuff cheap,”
has built a strong following on the
basis of selling one and only one item
per day at a discount.
Customer insight
Social media creates opportunities
for companies to supplement tradi-
tional sources of customer insight
with a wealth of information gath-
ered by listening in to community
sites such as Facebook, LinkedIn
and Twitter, as well as customer
forums and product review services.
Social media monitoring gives com-
panies unique access to uniltered
feedback from customers—and at a
scale unavailable via other means
such as focus groups and surveys.
Technical challenges abound, how-
ever, such as the need to understand
the context in which comments are
being made and to distill key themes
and sentiments from unstructured
text. To help companies take advan-
tage of this growing data source,
new players have emerged, offering
technologies and services such
as web crawling, web scraping
(or extracting data from websites),
text mining and sentiment analysis.
Companies that want to experiment
with monitoring the Web can
outsource the entire process to
third parties, or build the capa-
bilities internally. However, the
technologies are evolving rapidly,
Source: The Nielson Company
2:10:27
3:03:54
5:35:05
211
242
307
The rising tide
The traffic to social networking sites and the time spent on these sites have grown steadily since 2007.
150
December
2007
December
2008
December
2009
December
2007
December
2008
December
2009
7:00
6:00
5:00
2:00
1:00
4:00
3:00
300
250
350
200
Time per person, per month (HH:MM:SS) Unique visitors (millions)

Marketing
so irms need to choose carefully
and avoid locking themselves into
a solution that constrains their
future capabilities.
Social media also opens ways to
conduct market research more
quickly and cheaply than ever
before, and to engage in a real-
time dialogue with a wide range
of customers, replicating the
insights traditionally provided
from direct customer feedback or
expensive and time-consuming
focus groups. Electronics retailer
Best Buy, for instance, engages in
about 5,000 customer dialogues
per week through online forums,
and has more than 1.3 million fol-
lowers on Facebook, with whom
it interacts regularly. This direct
interaction can also help companies
benchmark themselves against the
competition and gather valuable
input on what shoppers like about
them—and what they don’t.
Sales
The once clear-cut boundary
between marketing and sales
continues to blur as online ad-
vertising and links to third-party
comparison sites allow companies
to drive trafic to their retail web-
sites. As a result, irms can rap-
idly convert shoppers into buyers,
and those buyers into salespeople.
Computer maker Dell has experi-
mented with Dell Swarm, an ap-
plication that invited customers
in Singapore and Canada to enjoy
volume discounts by joining group
purchases. The results of these pilots
have led to plans to roll out similar
apps on the company’s website in
2011. Mobile apps such as Find Star-
bucks also allow customers to locate
physical outlets quickly, while oth-
ers such as Dunkin’ Donuts’ Dunkin’
Run make it possible to compile
orders from friends or colleagues
that can be picked up by one person
in the group.
Customer expectations regarding the
online purchase experience continue
to climb, as leading retailers such
as Amazon.com continue to raise
the bar by customizing recom-
mendations, providing intuitive,
straightforward online navigation
and minimizing the number of clicks
needed to complete a purchase.
Innovation
Social media has an increasingly
important role to play in helping
companies identify and address
unmet customer needs. Firms
can engage employees, customers,
suppliers and other third parties
as active participants in the in-
novation process, expanding the
range of ideas and gathering real-
time feedback on their potential
take-up. For example, Nokia oper-
ates an online lab that allows users
around the world to download beta
applications and provide feedback
to its product development teams.
This provides an early opportunity
to identify potential problems and
alerts the developers to customer
differences across geographic mar-
kets that need to be addressed.
Companies can also tap customers
directly for new product and
service ideas. Austrian crystal
and jewelry irm Swarovski has
developed a software tool that
customers can use to design and
then create their own jewelry by
stringing together crystal beads,
pearls, stones or pendants ordered
from Swarovski Elements. Energy
Brands (also known as Glacèau), a
US enhanced water manufacturer,
introduced a new black-cherry-
and-lime-lavored drink developed
and named (“Connect”) by Facebook
Social media has an
increasingly important
role to play in helping
companies identify
and address unmet
customer needs.

27
users—and awarded $5,000 to the
grand prize winner and each of
the four inalists for playing key
roles in the process.
Customer service and
problem resolution
Social media isn’t all upside, how-
ever, and its potential to dramati-
cally publicize poor performance
has been well documented. Blog
posts and YouTube rants can attract
wide readership and cause signii-
cant damage to brand reputations.
Musician Dave Carroll’s YouTube
video “United Breaks Guitars” re-
ceived more than 9.4 million views
and secured what nine months’
fruitless correspondence via phone,
email and fax with customer service
could not—an offer from the airline
to repair damages to his guitar, as
well as light vouchers worth $1,200.
At the same time, one of the larg-
est opportunities to tap the poten-
tial of social media is in customer
service. Innovative companies
are using social media to be more
proactive in seeking customer
feedback and engaging customers
to diagnose and resolve problems.
From Microsoft to Dell and from
Best Buy to Comcast, companies
are using social media to enable
customers to get answers directly
from other customers or specially
trained employees—empowering
their most knowledgeable customers
to serve as an informal ecosystem
of answer centers. Other innovations
include cloud monitoring services
such as those offered by RightNow
and Salesforce.com, which provide
the ability to track and respond
to Twitter-borne and other online
complaints customers make.
Information technology
The need to integrate information
from a wide range of immature and
rapidly evolving sources creates new
challenges for often poorly prepared
IT departments. For example, com-
bining unstructured customer data
from social media sites with the
structured information gathered
through billing and CRM systems
can be a daunting challenge, one
that requires IT managers to become
expert in the use of rapidly evolving
technology.
That’s a very different task from
installing and supporting mature,
stable systems. As a result, IT must
learn to cope with an unstable and
complex environment, one in which
new technologies and applications
sometimes emerge and then disap-
pear within a few months as strate-
gies change, and where data volumes
continue to grow exponentially.
Human resources
In the rapid-ire, real-time world
of social media, company represen-
tatives and other employees need
concrete guidance regarding how
and when to react—and when not
to. At the extreme, companies could
discover overzealous employees
revealing the organization’s most
Source: Accenture analysis
Overnight sensation
The rate of adoption of social media has been breathtaking. It took 38 years for
radio to have 50 million users, but it took Facebook less than four years.
Time to achieve 50 million users
0 5 10 15 20 25 30 35 40
Radio
Television
Years
Facebook

closely held secrets in online forums.
Concern about the potential for
industrial espionage is one reason
that one European carmaker is
blocking employee access to social
media like Facebook and Xing.
Organizations thus need new
policies to govern the use of social
media that outline what employees
can and can’t say on public websites,
and their authority to respond to
customer comments and queries,
all the while ensuring that data
privacy laws are upheld. Employ-
ers likewise will be compelled to
recalibrate their own responses to
the online musings of employees.
In the United States, for example,
the National Labor Relations
Board has accused an emergency
medical response company of
illegally terminating a medical
technician for critical comments
she made on Facebook concerning
a supervisor.
Social media also offers new
avenues for recruiting, allowing
companies to spread a much wider
net and to differentiate them-
selves to younger generations.
One company seeking a marketing
director with a strong background
in social media used Twitter to
identify and ultimately hire the
ideal candidate.
Driving cultural change
Integrating social media will compel
companies to make dramatic cultural
changes, shifts that will ultimately
become essential for any organiza-
tion hoping to thrive in this new
interactive environment.
Companies need to adopt new
attitudes and behaviors, and to
unlearn many of the lessons of
the past 20 years. Take customer
service interactions. In pursuit of
eficiency, companies have made
them increasingly structured
and scripted, allowing relatively
low-skilled, low-cost personnel to
perform these roles. Agents follow
strict escalation rules, and the
resolution of problems can take
days, weeks or even months.
While this was perhaps acceptable in
a world where customer support was
the irst, last and only place to get
help, today’s customers will instead
bypass the oficial systems, connect
with one another and take their
problems public in a lash. This high-
speed environment clearly requires
a much faster, more lexible response
from companies that want to avoid
disaster. Southwest Airlines Co.,
hoping to ground any social media
problems before they gain altitude,
rigorously monitors its Twitter
and Facebook pages, enabling the
company to respond promptly to
customer complaints. With more
than a million Twitter fans and close
to the same number of Facebook
followers, the company actively
uses social media to interact with
customers, drive sales and build
brand loyalty.
Furthermore, companies no lon-
ger have a monopoly on informa-
tion. Customers are much better
informed than in the past—and in
many cases, better informed than
even companies and their agents.
Conversations and situations that
once took place in private, with the
company in full control of infor-
mation, can now take place in the
public eye, with highly damaging
consequences if the company gets
it wrong. One passenger, trapped
aboard a grounded airliner at John
F. Kennedy International Airport,
decided to record the saga of his
light from London to New York,
which took 16 hours rather than
eight, and post it on YouTube.
After viewing the excruciating
documentary, the company’s CEO
personally called the passenger
to apologize, and then refunded
every passenger’s money for the
light and gave each $100 off their
next one.
Social media provides the infor-
mation companies can use to seg-
ment customer groups more inely
than in the past, along with the
tools to tailor products, services
and communication campaigns to
suit the needs and expectations of
individual segments. This spells
the end for standard responses
and one-size-its-all offerings.
Customers increasingly demand
to be treated as individuals—and
will give their business to suppliers
that provide either unique experi-
ences or superior value.
To leverage social media to its
fullest, organizations need to
become more nimble and entrepre-
neurial. Social media creates the
opportunity for much greater col-
laboration between departments,
engendering more experimenta-
tion, faster decision making and
more precisely tuned responses.
Some years ago, telecom giant
BT asked employees to begin
using a variety of social media
applications such as social net-
works, blogs, project-focused wikis
and podcasts to collaborate better
across different time zones and
locations. Today, the organization
routinely shares knowledge via
BT’s Blog Central, for example,
and provides tools that enable
employees to search all of the
intranet’s content from one place.
As a result, its people have boosted
their innovation productivity,
developing products and getting
them to market faster. The company
(Continued on page 30)
Marketing

29
Most of the news about business uses for online collaboration
has been about consumer products and services companies
(see story). But can wikis, blogs and social networks play a
signiicant role in a heavy industry like oil and gas?
The potential at irst glance seems enormous. Like any global
industry, oil and gas is driven by the need to unite far-lung
workforces, attract the best talent, create partnerships across
organizations and seek resolutions to problems in real time.
To better understand this issue, Accenture and Microsoft
jointly undertook a two-part study on the use of collaboration
tools in the oil and gas industry. The global study, which
covers the views of engineers, geoscientists, executives and
project managers from a range of companies, attempts to
quantify the industry’s perceptions regarding the business
value of social media and the readiness of oil and gas profes-
sionals to use it—both overall and geographically. The research
reveals an industry that broadly recognizes the business value
of collaboration technologies but is split along regional lines
regarding their use.
Nearly three-quarters of respondents see the business value
of collaborating via social media, and almost 40 percent say
its use has improved productivity by 10 percent to 25 percent.
Just about half indicate that social media tools have enabled
them to reduce travel expenses by anywhere from 10 percent
to 50 percent, while fully 95 percent assert the technology
drives greater work lexibility.
While collaboration plays an integral part in the daily work
lives of many oil and gas industry professionals, corporate
endorsement of collaborative technologies is less than
enthusiastic, with just over 10 percent of social media adop-
tion being driven by the executive suite. The main concern
behind this hesitancy is security—nearly 40 percent of those
surveyed were apprehensive about the ability to control or
secure collaborative environments, even though nearly 75
percent already had security policies in place.
Respondents from the Asia Paciic region lead the others
by a wide margin in using social media to do business.
When it comes to instant messaging, videoconferencing,
social networking sites, mobile phone text messaging, video
sharing and blogging, Asia Paciic professionals sometimes
surpassed other regions by 10 to 1. In fact, 37 percent of Asia
Paciic respondents say social media is “very valuable” for
work collaboration.
Nearly 70 percent of respondents, including many frontline
work groups and oil and gas asset management teams, view
the use of these tools as an effective way to boost work
performance. In fact, almost 80 percent of respondents
spend up to four hours of their workday collaborating, while
more than 30 percent indicate they collaborated more this
year than last. The study shows that collaboration is already
an integral part of an oil and gas professional’s daily work
environment and will only grow in importance going forward.
The survey shows that social media tools enable oil and
gas players to work smarter and more effectively across
companies and continents alike. Survey respondents value
them because of their ability to improve productivity and work
performance compared with more traditional collaboration
methods. In other words, social media gives workers the
lexibility to work the way they want to work.
Pipeline to collaboration: An energy industry perspective
By James Arnott, Craig Heiser and Brian A. Miller

Marketing
Players in a number of
information-sensitive
industries may decide
that that they need to
restrict their participa-
tion in social media.
claims that every £1 it spends on
its intranet provides a £20 return.
While opportunities for experimen-
tation and collaboration abound,
risk-averse cultures will beneit
far less, as will irms that engage
in lengthy and bureaucratic deci-
sion making or that have overly
siloed organization structures.
The newness of many of the social
media technologies and the speed
with which fresh ones are emerging
will require a highly agile response
from companies that interact
with them.
The IT function in particular must
alter how it interacts with other
parts of the organization, and adapt
its working style to incorporate a
higher degree of experimentation
and iteration instead of rigidly
adhering to tightly controlled build
and release processes.
Ultimately, players in a number of
information-sensitive industries
may decide that they need to restrict
their participation in social media.
Already, a majority of the blue
chip irms on Germany’s DAX
inancial index have banned the
workplace use of Facebook and
Twitter, with many companies
from other regions undoubtedly
ready to follow suit.
Broader reach, greater connectivity
and the emergence of special
interest communities with ever
more powerful online viral word
of mouth will allow customers to
quickly and easily ind products
that meet their needs. As a result,
genuinely successful innovations
will rapidly ind the customers
who value them the most.
Companies can use social media
to tap into the power and wisdom
of virtual crowds, enlisting them
in support of other users and
empowering employees to act as
agents for the company. Doing
so can generate a huge customer
service multiplier effect, allowing
organizations to more rapidly
identify, diagnose and resolve
problems while simultaneously
delivering exceptional value.
Netlix, the online movie purveyor,
literally took concerns about im-
proving its ilm recommendation
algorithm to the online “street,”
offering a prize of $1 million to
anyone who could boost the system’s
effectiveness by at least 10 percent.
In true social media fashion, the
winning entry (announced in 2009)
cracked the problem through crowd-
sourcing—the unorganized, infor-
mal joining together of a variety of
different teams, none of which had
the whole answer alone but came up
with it by working together.
The impact of social media on business remains embryonic today, but
it could ultimately surpass the musings of the industry’s most daring
visionaries. Despite such uncertainty, companies can safely make several
informed bets. First, the impact will be bigger, not smaller, than that
currently anticipated. Second, companies that actively experiment with
embedding a social media mindset and capabilities in their business
processes will transform their relationships with customers and create
value in unforeseen ways. And third, organizations stuck in wait-and-see
mode will face bruising competitive challenges when they do inally attempt
to catch up.
(Continued from page 28)

For further reading
The Social Media Management
Handbook: Everything You Need to
Know to Get Social Media Working
in Your Business, by Robert Wollan
and Nick Smith (Wiley 2011)
“Melding marketing and IT: Are you
ready for the digital revolution?”
this issue, page 32
“Oil & Gas Collaboration Survey 2010,”
Microsoft and Accenture 2010
About the authors
Caroline Firstbrook is the managing director of Accenture Strategy in Europe,
the Middle East, Africa and Latin America. Ms. Firstbrook has extensive experience in
M&A strategy and target evaluation, merger negotiation, positioning for privatization
and new market entry strategies across a wide range of industries. In addition to her
consulting experience, she spent ive years as an entrepreneur, setting up and later
selling Easychem, an Internet retailer of crop inputs to farmers, and partnering
with life sciences company Syngenta to explore biotech venturing opportunities.
Ms. Firstbrook is based in London.
caroline.irstbrook@accenture.com
Robert Wollan is the global managing director of the Accenture Customer Relationship
Management service line. With more than 20 years of experience, he leads a global
team of specialists in customer-centric marketing; sales, service and customer operations;
advanced segmentation; digital transformation/social CRM; multichannel customer
contact; and enterprise service delivery across the 19 industries Accenture serves
globally. He is based in Minneapolis, Minnesota.
robert.e.wollan@accenture.com
James Arnott is the global lead for the Accenture Talent & Organization Performance/
Resources group. Now based in Perth, Australia, Mr. Arnott previously headed Accenture
Energy in Spain, Portugal and South Africa.
james.arnott@accenture.com
Based in Houston, Texas, Craig Heiser is the North America lead for the Accenture Talent
& Organization Performance/Energy group. He has more than 20 years’ experience
working with oil and gas clients on change programs.
craig.heiser@accenture.com
Brian A. Miller is a senior executive in Accenture Energy in North America,
responsible for the group’s technology growth platform and its Avanade alliance.
Mr. Miller is based in Houston, Texas.
brian.a.miller@accenture.com
31

The ultimate promise of digital and interactive channels is personalization:
bringing timely and relevant offerings to customers wherever they are, at
that moment when opportunity and interest translate into a sale. But before
this can happen, leaders must make sure that marketing professionals work
actively with the IT department—and vice versa.
Melding marketing and IT
Are you ready for
the digital revolution?
By Tim Breene and Brian Whipple
Marketing II

Marketing II
The ancient Greeks had a word for it: kairos—the supreme
moment, the right time.
Right now, for many chief marketing oficers, that moment—
keyed to digitally bred real-time customer expectations—is
slipping through their ingers. Marketing’s former lock on
branding, messaging and positioning has been weakened by
the increasing inluence of peer-to-peer, crowdsourced and
afinity-based interactions.
Tech-savvy and endowed with a kind of digital omnipotence
regarding product and brand comparisons and deals, today’s
customers have vastly different expectations than they did
just a decade ago. Yet many marketers fail to grasp that they
need to respond to the profound changes ubiquitous connec-
tivity has triggered among consumers.
The emergence of massive online communities, social media,
mobile marketing and interactive advertising has changed the
ways customers want to deal with companies and, in turn,
how irms can respond to customer needs. These digital chan-
nels and capabilities mean organizations can reach customers
now—in real time, all the time, anytime. Just as the inventions
of the telegraph and telephone effectively shrank distance, the
digital revolution is compressing reaction time itself, forcing
companies to step outside long-established comfort zones.

35
The ultimate promise of digital
and interactive channels is per-
sonalization: bringing timely and
relevant offerings and experiences
to customers wherever they are, at
that moment—kairos, if you will—
when interest and opportunity
translate into a sale.
But many companies lack the
technologies, analytics capabili-
ties, leadership and organization
structures to capitalize on this
seismic shift. A recent global
research study, conducted by
the CMO Council and Accenture
Interactive, of more than 600
senior marketing and informa-
tion technology executives found
that just 11 percent felt very
prepared to exploit digital mar-
keting channels.
This article will examine the
challenges “real-time marketing”
presents and explore ways companies
can leap ahead of their competitors
in the use of digital, interactive
customer channels that can create
deeper and more proitable long-
term relationships.
The right data, the right time
It sounds fairly straightforward:
deliver personalized, relevant and
timely offers and information to
customers to inluence their loyalty
and buying patterns. But without
the right data at the right time,
this kind of real-time marketing
remains a pipe dream.
Data in this case includes contextual
information about the customer—
background, location, interests,
Talking past each other?
In a recent Accenture Interactive global research study, CMOs said the chief obstacle to implementing
digital solutions is that IT departments don’t see marketing as a priority. According to CIOs, however,
the biggest obstacle is that digital solutions are complex and difficult to integrate.
Source: CMO Council; Accenture analysis
CMO respondents
CIO respondents
Solution complexity and
integration difficulties
46%
Marketing bypassing IT and
working directly with the vendor
39
Insufficient budget and funding
for the project
38
46%
Marketing function not a
priority for the IT department
44
Insufficient budget and funding
for the project
41
Time and technical resources
not available to help

Marketing II
relevant communities and so forth—
that enables companies to adjust the
customer experience in real time.
Companies need to collect data,
integrate that information using
real-time analytics to synthesize
indings, and then use the knowl-
edge generated to support ongoing
relationships and more personalized
products and services.
In short, the company with imme-
diate access to the most relevant
customer data wins.
Becoming a diligent data miner is
one thing; making sure company
representatives have immediate
access to insightful customer in-
formation is quite another. Infor-
mation can’t remain packed away
in different organizational and
functional silos anymore. Compa-
nies need a uniied IT backbone
and infrastructure that link data
housed in the far reaches of the
organization, often in different
forms, as well as information held
outside the company.
Furthermore, leaders need to pur-
sue technology-based solutions—
sometimes across partnering
companies—that enable them to
crunch data better and faster, as
well as predictive analytics that
make it possible to personalize the
customer experience in as close to
real time as possible.
One online powerhouse that already
plays a leading role when it comes
to identifying customer interests
and actively generating product
Slow to commit
CIOs and CMOs indicate that companies have been relatively slow to adopt interactive
digital marketing strategies.
CMO respondents
Heavily committed and
invested in this area
Growing proportion
of marketing spend
Testing and evaluating
different directions
Still committed to more
traditional approaches
Not embracing digital
strategies
CIO respondents
35%
35
21
20
38%
25
8
14
1
3

37
recommendations recently raised
its game noticeably. The company’s
technological partnership with a
social media player makes it pos-
sible for customers to link their ac-
counts at both portals. As a result,
the online retailer has improved its
ability to suggest products by also
taking into account the interests and
activities customers list publicly on
their social media pages.
Focsed leadership
At irst glance, the biggest challenge
in meeting the needs of real-time
customers appears to be technologi-
cal. But strong, purposeful leader-
ship also plays a critical role. In
fact, the Accenture Interactive-CMO
Council research suggests that in the
crucial area of integrating marketing
and IT efforts, much remains to be
done (see chart, page 35). Unfortu-
nately, many companies fall short
in their attempts to meld marketing
and technology in this manner,
because leaders fail to ensure that
marketing professionals work
actively with the IT department (and
vice versa) to make the needed
changes happen.
The global study found that while
some marketing organizations and IT
departments are moving in the right
direction, most are falling behind
(see chart, opposite). The problem?
Digital marketing practices and
technology-based customer analytics
solutions are simply changing too
rapidly for companies to keep up.
Lacking the required vision and
leadership, the majority ends up
taking baby steps toward creating
an integrated and truly digital mar-
keting function; by the time each
step has been completed, it’s too late.
These organizations risk losing
out to more nimble and digitally
conident online competitors that
are led by savvy executives who,
much like the Native American
horseman an envious American
general once observed, seem born
to ride this bucking bronco.
To catch up, leaders have to make
new investments in the talent, tech-
nology and processes needed to forge
a new era of cooperation between
marketing and IT—and make this
transformation an organizational
mandate. This new, aligned strategy
must identify the investments
needed for businesswide growth
and optimized customer experience.
Filling the gaps
Our research also uncovered several
additional obstacles companies face
when attempting to use digital chan-
nels, social media and other interac-
tive capabilities effectively (see chart,
page 39). For example, spending often
fails to keep up with needs or, worse,
goes to the wrong areas. As a result,
while executives may loudly proclaim
the beneits of leveraging digital
channels, they often make little in
the way of coordinated investments.
One company’s experience perhaps
sums up the issue for most industries.
It proceeded reactively, inancing
one-off technology projects and
implementing programs incremen-
tally. But these moves actually
made the problem worse by creating
more complexity without a corre-
sponding increase in transparency.
Such uncoordinated efforts make
it harder to put together an inte-
grated, holistic solution to drive
relevant and real-time consumer
experiences.
Companies also face an expertise
gap. Most don’t have the talent
and leadership they need to solve
the problem. Bluntly, they need
fewer people with isolated IT and
marketing skills, and more general
business managers who really
While executives may
loudly proclaim the
beneits of leveraging
digital channels, they
often make little in
the way of coordinated
investments.

understand business recommen-
dations and the optimization of
customer relationships.
Companies that succeed at real-time,
digitally empowered marketing
are instantly recognizable. They
deliver personalized and relevant
experiences to customers through
the channels and in formats that
consumers demand. They work hard
to achieve consistent communica-
tions and brand experiences across
both digital and ofline channels,
and have the capacity to track and
respond quickly to customer behavior
across every point of contact.
Real-time marketers focus on
becoming more data-driven, and
on creating a more measurable
and transparent marketing depart-
ment, one where managers base
strategies, campaigns and budgets
on veriiable insights into markets
and customers. Such irms also
develop systems and processes im-
bued with the agility and lexibility
to respond to changing customer
preferences, business conditions
and market opportunities.
P shing the envelope
One consumer electronics retailer
is pushing the real-time marketing
envelope with a Twitter-based service
that allows it to quickly tap into
the expertise of its employees. As a
result, the organization’s own techies
and product experts can answer
customer questions rapidly, resolve
service issues and troubleshoot
problems, all in real time, whenever
customer concerns arise. The service
provides a signiicant competitive
advantage, one that effectively posi-
tions customer service as an impor-
tant element of marketing strategy.
One clear difference between
successful real timers and other
players can be seen in the manage-
ment team’s knowledge and under-
standing of online technologies.
A generation gap of sorts separates
those companies that get the prom-
ise of digital, interactive channels
in transforming how they conduct
business with customers and those
that don’t. As a result, even though
increasing numbers of people
now live and work in an always-
connected way, many companies
continue to treat the phenomenon
as a fad or minor issue.
First steps, lessons learned
As a critical irst step, companies
need to acknowledge and get a
feel for the size and heft of this
transformation. It’s big, compa-
rable in potential scale and scope
to other major market disruptions,
like television or the automobile.
Companies also need to map out
a detailed change path—one that
includes some immediate, short-term
paybacks but also plots a course
several years into the future. And
they should factor some experi-
mentation into this mix—pursuing
small, manageable chunks of digital
capabilities, which can enable them
to measure business returns before
making larger investments.
While no hard-and-fast rules exist
for successfully navigating the
digital world, six experience-based
suggestions can provide insights.
Nurture an appreciation
for ambiguity
Digital developments rarely proceed
in a straight line. Instead, winning
products and applications emerge
from a combination of vision, luck,
serendipity and sweat-drenched
effort. In such an environment,
doggedly adhering to a traditional
business strategy will virtually
ensure that a company gets continu-
ally blindsided.
Marketing II
Leaders need to create
new organizational
structures that are
nimble and responsive
to an environment
packed with uncertainty.

39
Underfunded
When CIOs and CMOs were asked why their organizations were not prepared to take advantage
of the opportunities provided by digital marketing, both groups listed “insufficient funding” as the
most important factor.
CIO respondents
Insufficient funding for
digital marketing channels
Lack of understanding of
opportunity from senior management
Solution complexity and
integration difficulties
CMO respondents
Insufficient funding for
digital marketing channels
Lack of understanding of
opportunity from senior management
Insufficient support from
internal IT
62%
46
39
59%
46
46
Instead, leaders need to create new
organizational structures that are
nimble and responsive to an envi-
ronment packed with uncertainty.
One leading consumer products
company is moving toward an “open
marketing” model by shrinking
its core marketing team, whose
members then lead a network of
specialized external partners. This
way, the company always has imme-
diate access to the latest thinking
and newest approaches regarding
real-time digital marketing.
Put digital decisions on
the board’s agenda
As the Accenture Interactive-CMO
Council study shows, many compa-
nies continue to fall short when it
comes to capturing digital’s promise.
For instance, one prominent com-
pany simply outsourced the issue to
a couple of vendor employees, with
predictably disastrous results. In
fact, the change required represents
a fundamental transformation in
the way business is done, mandating
nothing less than a CEO-level
endorsement of, and engagement
in, both the strategy guiding the
change ahead and its robust execu-
tion. Anything less will likely spur
a series of one-off efforts that
simply increase organizational
complexity and ineficiency.
Rethink investment approaches
Moving toward now marketing
requires companies to maintain a
delicate balance of risk, innovation
and learning. Although going

Accenture Outlook Journal February 2011

Accenture Outlook Journal February 2011

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Accenture Outlook Journal February 2011