Smarter, swifter, safer

New imperatives for achieving high performance in a multi-polar world

Remapping the world Todays high performers in transport and logistics1 owe their accomplishment to exceptionally astute global growth strategies and mastery of internal process techno logiescore capabilities that will retain their importance well into the future. The evolution of globalization, however, is remapping the world economy. And this paradigm shift is changing the way we assess high per formance in all industries.
Research from the Accenture Institute for High Performance2 confirms that high performers from both developed and emerging markets confront new imperatives in a multi-polar and increasingly complex and competitive global economy that is changing at unprecedented speed. The intensifying battle for resources, customers, talent and capital now requires not several but a multitude of geographic options. The talent that drives innovation, for example, resides today in markets worldwide. To leverage it successfully, companies need to become authentically local in different environments. Just being there is no longer good enough. Ironic as it may seem, in order to really master the operation of global markets, companies must increasingly embed themselves in the customs, regulations and politics of local markets, working closely and collaboratively with external stakeholders in those markets to ensure that their value proposition attracts both talent and customers.

Companies also need to develop exceptionally flexible and networked organizations. Superior execution across multiple locations requires the ability to move people, resources, capital and know-how to the right place at the right timeand very quickly. The old, top-down approach to governance will not facilitate this flow, or ensure understanding of the risks inherent in such high-speed networks. A multi-polar world requires a multi-polar mindsetand multi-polar leadership. To achieve high performance companies will need to look consistently outward, constantly re-assessing their business priorities in a vastly expanded value chain. They will need to make fact-based, focused choices about where and with whom to engage or compete. And this will mean expanding their horizons to include broader based, external capa bilities. The most important of these capabilities are: Intellectual Leadershipto sustain smarter and more adaptable ways of thinking Network behaviorto enable swifter more synchronized operations Understanding of inherent risk to ensure safer network management All industries will need to create these capabilities. But thanks to its historic role as an enabler and facilitator of inter national trade, transport and logistics is writing the new multi-polar play book earlier than most. The industrys efforts to tackle the new challenges and achieve high performance will be well worth watching.

is second nature to an industry that has been effectively globalized since Roman times. Today, as global markets enter a radically different era, truly transformational intellectual leadership is more important than ever. It hinges, as it always has, on deep customer and market insight. But the unprecedented speed of change in modern markets also demands an outstandingly rapid response. Transport and logistics operators need to think dynamically, continually reappraising both customers and conditions. They must not only understand the relevance of their business to the shifting cultural and social conditions created by global integration. They must also seize every opportunity to re-define their value proposition. A.P. Moller-Maersk group, for example, has built on the dramatic productivity gains made possible by containerization since the 1970s to become a leader in combining the speed and efficiency of containers with fast ocean freight, integrated port facilities and an international network of empowered managers. In the first phase of globalization, Maersk led the development of integrated plat forms for the production, organization and transport of goods. The Danish company then took advantage of the explosion of global economic activity after 1990 to develop its own network of harbors and logistics concerns, as well retailing and oil productiona global network of more than a dozen business units in 135 countries. A new global service center located in Chengdu, China, is helping tie the network even closer together. By identifying with local needs and aspirations while defining a new global marketplace the worlds largest shipping, harbor and logistics group has become a household name in the countries in which it operates. Maersk runs its own management training school, tailoring programs to the needs of individual company units while stressing multicultural skills and cooperation across

Intellectual leadership
As the essential link between providers of goods and services and their con sum ers, transport and logistics operators have always been pioneers. Whats more, their farsightedness, the ability to discern practical challenges ahead of others and act swiftly to resolve them, has always been sustained by a deep appreciation of conditions, both global and local, likely to affect business. Indeed, todays mantraact global, think ocal

Achieving high performance in the freight forwarding & logistics industry, Accenture 2008 for achieving high performance in a multi-polar world, Accenture 2009

2 Strategies

the network. Meanwhile, the flexibility of its organization has enabled Maersk to adapt swiftly to the challenges of the global economic downturn. In November 2009 the company announced a redeploy ment of resources away from ocean shipping and toward energy production, logistics, ports and retailing.

of expanded participation, choice, and improvements in the ultimate levels of opportunities for all participants. Synchronizing information with service across the network and treating information technology as a core enabler supports FedExs role as a pioneer of net work behavior. The companys unparalleled tracking systems, for example, enable customers around the world to see every detail of a packages move ment from the moment a label is prepared until the package arrives on the doorstepa capability that for many customers has become as essential as actually receiving it.

Network behavior
In a multi-polar world value chains are effectively endless. Transport and logistics operators need to be able to operate beyond established categories of time and space. And that requires dynamically integrated solutions and new, more decentralized concepts of network behaviorideas that borrow from other industries, and specifically the successful example of the World Wide Web. The Web, of course, empowers many rather than just a fewa challenge for companies wedded to centralized command-and-control structures. If looser structures also establish uniform standards for corporate governance, however, relinquishing central control can actually enhance operational efficiency. FedEx, for example, has developed a network of logistics distribution centers world wide that is helping to revolutionize the efficiency of its global supply chain. From its headquarters in Memphis, Tennessee, FedExs global reach now extends into 220 countries and territories worldwide under one unifying theme: Whatever it takes to meet the customers needs. Network behavior in the form of sharing information and collaborating to sustain a single brand identity for workforce, customers and investors is second nature to everyone working for the company. FedEx calls this knowledge-sharing The Power of Access. As defined by FedEx, access is a catalytic process that enables interactions, contacts, and exchanges among people, businesses, and nations. As time, space, and information converge toward perfect access, these constituencies derive increasing benefits in terms

operated by the national rail companies of the countries through which the service will move. It will require meticulous advance planning to overcome major differences in railroad infrastructure and hugely divergent regulatory systems, as well as ongoing investment challenges. Already, however, several ad hoc container trains have completed the journey successfully. Transport and logistics operators have greased the wheels of commerce for centuries. But in an increasingly inter dependent global economic geography the relationship between trade and transportthe twin pillars of the world economyis changing rapidly. In the future, as globally integrated supply chains replace traditional huband-spoke networks and local authen ticity becomes the measure of success, high performers will require truly exceptional powers of intellectual leadership, much more flexible concepts of network behavior and a deep understanding of inherent riskas well as the internal efficiencies that have driven their per formance to date. A few leading transport and logistics operators are showing the way forward. But all companies aspiring to achieve high performance can learn from their example. They will need to adapt to a new kind of value chain, recruit and foster talent right across their networks and find new models of command and control.

Understanding inherent risk

In a multi-polar world, where the growing complexity of global networks requires high-speed systems and equally swift decision making, and where performance pressures are mounting, inherent risk is a growing and probably intractable problem. But while it may not be possible to eliminate inherent risk altogether, it can be better understood and managed. Deutsche Bahn, for example, which is building a rail freight link from Germany to China that will pass through six national jurisdictions, has formed a joint venture with the Russian railroad operator RZD to help manage the considerable inherent risks involved. The rail option is actually more expensive than moving cargo by sea, but it is also considerably fastera transit time of 17-20 days, compared with up to 30 days by sea. Improvements in the rail corridor, including a large-scale expansion of inter-modal container infrastructure now underway in China, promise to boost demand for the service. And eventually many other logistics providers are expected to participate. The Russo-German joint venture, Trans Eurasia Logistics, owns most of the containers that will be shipped along the approximately 10,000-kilometer route, though the rolling stock is owned and

About the authors

John Kornblum, a former United States ambassador to Germany and now an Accenture strategic advisor who helps clients achieve high performance in a multi-polar world. He can be reached at john.c.kornblum@accenture.com Marcus Fromm, an Accenture strategist who helps clients across the transportation and travel industries to improve their performance. He can be reached at marcus.fromm@accenture.com

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 176,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, 2009. Its home page is www.accenture.com.

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