Staying Ahead of the .redshift. Curve:

Staying Ahead of the
“Redshift” Curve:
Lean Enterprises Rely
on Speed and Flexibility
in Changing Markets

About Accenture Process &
Innovation Performance
The Accenture Process & Innovation
Performance service line takes an
end-to-end, process-based approach
to address key business challenges
such as complexity reduction, lean
manufacturing and operations, process
innovation, strategic cost reduction
and growth through innovation, in
order to create competitive advantage
for clients globally. We help our
clients become high-performance
businesses by enhancing the internal
capabilities needed to continuously
improve operational and innovation
performance. Accenture enhanced its
longstanding operations and strategy
expertise with the 2007 acquisition
of George Group, a recognized
market leader in process, operational
and business transformation, and
innovation strategy, whose capabilities
and offerings form the foundation
of this new service line.

“Redshift”
If one is standing on a sidewalk and a police car races
in his or her direction, the standing listener will hear
a far and distant sound. The wail of the siren, however,
will grow more intense as the car approaches. The siren
will reach its maximum intensity when the car is right
in front of the person, and then, the sound will begin
to fade, losing intensity as the police car goes away.
This scenario is an example of astronomical concepts
known as the “blueshift” and the “redshift”—which
determine if objects are approaching (blueshift) or
moving away from us (redshift).
Organizations are faced with a
constantly changing set of stimuli,
and remaining a high-performance
business is increasingly challenging
due to the ongoing market turbulence.
Limited access to capital, irrational
market swings and wholesale lack
of consumer confidence make the
executive’s role even more difficult
today than in the past. We believe
organizations that can stay ahead
of the “redshift curve“ through
executional speed and flexibility
can actually capitalize on market
challenges rather than merely
reacting to them.
Maintaining this position is the
culmination of many actions
management takes, but one of the
most significant factors is the ability
of an organization to have “executional
muscle memory.” The analogy is the
training and preparation that top
athletes go through—they train
so that they can react to situations
without the need to consciously
think; this speed of reaction is what
differentiates the winners from the
rest. Similarly, organizations need
to build an “institutional or execution
muscle memory” to allow them to
quickly and flexibly react to stimuli.
2

Figure 1: Leading companies stay ahead of the redshift curve
Speed
How the redshift
applies to business
This same redshift concept can
be used in business. Competitors
and market forces can continuously
affect a company’s performance.
If a company is in a place where it
can preempt the impact of changing
market conditions and competitive
movements, we can say that it has
reached a position ahead of the
redshift.
High levels of speed and flexibility
are required to stay ahead of the
redshift curve. For example, companies
that have acted with speed and
flexibility tend to stand out in their
entire industry (for example, Virgin
Airlines) or capture market share from
well-entrenched rivals (for example,
Apple’s iPhone versus Research In
Motion’s Blackberry). Moreover, in the
past, staying ahead of the redshift was
simpler, while in today’s environment,
shifts are happening faster and more
3
High
Low
Laggards
Low
Redshift
Flexibility
Leaders
High
frequently. It is akin to the idea of
a small town with one fire truck,
when the siren sounds and the fire
truck is moving it is relatively easy
to anticipate the direction of travel.
However, as the town grows to a large
city, more and more fire trucks are on
the streets making it very difficult to
predict the direction, this complexity
is illustrative of the challenges that
management faces today in the
current environment.
Sustainable success
beyond the redshift
However, stunning moments of
marketplace success do not make a
company a high-performance business.
Accenture’s ongoing research into the
characteristics of high-performance
businesses indicates there are three
building blocks: market focus
and position, which defines where
and how to compete; distinctive
capabilities, which refers to the
critical interplay between capabilities
and value creation; and performance
anatomy, which relates to the
elements of culture, leadership and
the workforce. As part of performance
anatomy, we’ve identified five major
levers that help create sustainable
mechanisms for companies.

Figure 2. Rationalizing products, continuing new product roll-outs
Attribute 2002 2003 2004
Product Portfolio
Product Development Projects
Results
New Products Introduced
Lever No.1
Customers’ perception
of value
Understanding what customers value
is vital to a company, as it directly
links the process and assets that a
company will use to deliver such value.
Rationalizing a company’s product
portfolio is important because it can
help reduce the cost of operational
complexity. But alone, rationalization
is not sustainable. That’s because
companies need to introduce new
products and create new market
offerings. The balance is struck when
companies have efficient and welldesigned
processes to help them
rationalize their product portfolio
and continue to innovate and
introduce new products to meet
customer demand (see Figure 2).
3500
120
0
2079
22
8
499
20
14
Benefit
Figure 2
In this example, a communications
equipment manufacturer reduced
its product complexity by 75 percent—
while its efficient and well-designed
processes enabled it to introduce
new products. For example, in 2002,
120 product development projects
yielded zero new products. In 2004,
that process improved: 20 projects
yielded 14 new products.
Reduced complexity across
the entire value stream
Improved R&D process and
focused development efforts
Combined complexity reduction
and process improvement allowed
the company to be more effective
in new product development and
introduction
4

Figure 3. Better Understanding through a holistic view of processes
Lever No. 2
Process excellence
Executives need a holistic view
of processes (across all business
functions) to gain an understanding
of the total progression of value
throughout the organization and
enable the company’s leadership
to mitigate non-value-added
activities. To stay ahead of the
redshift, companies need to move
from a “function-centric” to a
“process-centric” operating model
(see Figure 3). Decisions such as
investing in solutions, consuming
cash and capital and addressing
punctual issues can then be made
in consideration of the entire
process, not just in limited,
individual function areas.
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Process 1
Process 2
Process 3
Function 1 Function 2 Function 3
Figure 3
With a better view of the company’s
processes (and therefore, a complete
view of the company’s capabilities,
limitations and gaps) the leadership
can focus on creating a roadmap
to achieve process excellence.
A company in the metals and
packaging business deployed a global
operational excellence program across
more than 50 countries. This company
focused its transformation efforts in
all parts of its organization, including
operations as well as service and
support functions. Leadership focused
on identifying and prioritizing the
highest benefit opportunities across
the globe and rapidly executing to
get results. This enabled the company
to deploy the initiative well ahead of
plan, more than pay for its investment
in less than 12 months, and achieve a
very substantial EVA contribution in
the first two years of the operational
excellence program.

Figure 4. The ROIC lens can illustrate areas of poor asset effectiveness
Economic Profit
90%
70%
50%
30%
10%
-10%
-30%
These Business Units
have high margins
and low capital base
These Business Units are
large capital consumers
with nominal returns
These businesses
are not making
their cost of capital
0 1 2 3 4 5 6 7 8 9
Invested Capital
Lever No. 3
Asset management,
ROIC focus
To support execution of processes
and services, companies should focus
on simplifying their assets base
to increase asset productivity and
maximize return on invested capital
(ROIC). Impacts on ROIC may also be
reflected in a non-financial situation.
For example, when automation
and IT are misaligned, it can create
unwanted complexity for leadership,
thereby indirectly affecting the ROIC
(see Figure 4). In the example in
Figure 4, IT and automation were
installed across the organization
to drive visibility and transparency
with rationalization of reports and
structure. In many cases, thousands
of reports were created daily. But
systems were not compatible and
decisions were made using ad hoc
and independent excel spreadsheets.
Shareholder
Value
* Green indicates direct impact from
the levers to the shareholder value
Capital
Employed
Market
Realization
Operating
Costs
For one major pharmaceutical
company, focus on asset effectiveness
and ROIC added a new value lever
for their global manufacturing
strategy. Analyzing asset return
as well as latent capacity has
provided this company with another
low-cost sourcing option to support
their global supply chain network.
Aquisitions
(M&A)
Expansion
Improvements
Marketing
And Sales
Hedging
Fixed Costs
Variable
Costs
Invested
Capital
Overriding Themes
Prudently use
capital on both
tangible planet
efficiencies and
profitable reserve
expansion
Alleviate and
exploit market
risk through
intelligent
management
of fluctuations
Relentlessly drive
costs out of
operations through
determined
improvement
programs
Figure 4
The equipment economic profit
against invested capital analysis
shows the current utilization and
effectiveness of the asset in the
network, maximizing value to
the shareholder.
6

Lever No. 4
Leadership and
organizational capability
Three aspects of an organization
impact speed and flexibility:
1. Decisions are made at higher levels
than is really necessary because of an
inability to delegate and the lack of
appropriate data.
2. Roles in departments are unclear
with critical operations being cut up
over many people and functions. This
fragmented execution results in low
quality and speed.
3. Culture can be defined as
“the integrated pattern of human
knowledge, belief and behavior that
depends upon a person’s capacity for
learning and transmitting knowledge
to succeeding generations.” 1 Culturally
strong corporations tend to act and
communicate uniformly; processes
7
flow smoothly and everyone knows
what to expect from the leadership,
peers and reports.
How quickly a company can learn
and then implement its learning is
directly related to the pace at which
it will transition from the “change”
to “sustain” phase. Capability building,
therefore, is a process that works
hand in hand with process change.
Having the right people with the
most appropriate skills to execute
not only the day-to-day activities,
but also support the transformation,
is very important.
1 “Culture.” Webster Dictionary.
2008. Merriam-Webster Online

Figure 5. Effective performance management is characterized by three overarching themes
Cascade value-focused drivers
throughout the organization
Lever No. 5
Performance
management
Performance management is the
instrument that allows for change.
The appropriate performance
management mechanisms must
be in place to motivate and guide
employees through the change and,
thereafter, sustain the competitive
advantage. Performance management
is not just the process of setting up
metrics, it defines the dialogues and
discussions that support the right
metrics and, more importantly, the
problem solving that exists when
a change or a problem occurs (see
Figure 5).
Perhaps one of the best examples
of how performance management
has driven speed and flexibility
is in the Danaher Corporation.
Its focus on policy deployment and
rigorous performance management
has delivered spectacular growth and
performance over a sustained period.
Set Stretch targets based
on known opportunities
Known
Opportunities Stretch
Target
Figure 5
Performance management evaluates
the capabilities of an organization by
identifying significant gaps and pain
points when initiating change.
Constantly review and enhance
the business’s performance
8

How to assess an organization’s
shift position
The traditional approach is balancesheet
focus. But to get a holistic
view, a series of diagnostic tools
and techniques can reveal:
• Readiness and cultural assessment—
Evaluate the current status of the
organization against cultural and
operational readiness to transform
and accept the new, fast and more
flexible organization.
• Technical limits—Assess how the
company is operating against the
technical limits of capability as
well as the market and competition.
• Value stream mapping—Create
maps of major processes within
the organization, evaluate its
efficiencies and constraints.
After the diagnostics phase and
initiative prioritization, a company
can begin a “sequencing” phase.
Because of the size and complexity
of business, not all initiatives can
be implemented at once. Sequencing
allows for initiatives with higher
impact and lower efforts to be
rolled out first. Then, subsequent
implementation waves are instituted
over a longer period.
Transformational journey
to high performance
The market dynamics in today’s world
are constantly changing. Companies
need to maintain their competitive
advantage within their current
market and products while planning
for the future. Speed and flexibility
are critical to staying ahead of the
redshift, firstly by preempting market
and competitors’ moves, and secondly
by responding rapidly to these moves.
The journey to become fast and
flexible is not simple. It requires
a complete change of the cultural
aspects of the business. Strategy,
9
people, process and systems should
be aligned to generate the actions
needed to transform. Companies
must have leadership involvement
and, more importantly, the leadership
team must not only participate in the
transformation, but lead by example.
In other words, leadership needs to be
both the sponsor and a major cultural
transformation agent.
Finally, the execution should be well
planned, involving the right levels of
the organization. A transformational
effort is the work of everyone in
the company, not only the senior
leadership and management. It
must involve the person who cleans
the floor in a plant all the way to
the board of directors. A successful
transformation is not the one that
only changes process and structure
of a company, but the one that also
modifies the “mental model” of the
entire organization.
By becoming a lean enterprise with
speed and flexibility, a company can
stay ahead of competition in changing
markets, which helps to achieve high
performance.
About the Authors
Damian Morgan is a senior
executive in the Process &
Innovation Performance service
line. He has extensive experience
in designing and implementing
major operational change and
transformation programs in a
wide range of organizations and
industries, including automotive,
chemicals, consumer packaged goods,
construction and pharmaceuticals.
Mr. Morgan has worked in more
than 20 countries including several
in the European and Asia-Pacific
regions. Prior to joining Accenture,
Mr. Damian worked at several
leading consulting firms as well
as at a major car manufacturer.
He is based in Cleveland.
Fabiano Lopes has expertise in
financial analysis, organization
design, product development,
operations and process redesign.
He has worked with senior executives
to develop and implement corporate
growth strategies and achieve top-
and bottom-line objectives. Mr.
Lopes is part of the Process &
Innovation Performance service
line, and his experience spans
work with Fortune 500 companies
to start ups, in such industries as
energy, telecommunications, consumer
products, government and healthcare.
He is a senior manager based in Dallas.

About Accenture
Accenture is a global management
consulting, technology services
and outsourcing company.
Combining unparalleled experience,
comprehensive capabilities across
all industries and business functions,
and extensive research on the world’s
most successful companies, Accenture
collaborates with clients to help them
become high-performance businesses
and governments. With more than
186,000 people serving clients in over
120 countries, the company generated
net revenues of US$23.39 billion for
the fiscal year ended Aug. 31, 2008. Its
home page is www.accenture.com.
Copyright © 2009 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture.
Contact us
To learn more, go to
www.accenture.com/
processandinnovationperformance
or contact:
Damian Morgan
+1 (216) 403 3320
damian.j.morgan@accenture.com
Fabiano Lopes
+1 (972) 900-2234
f.lopes@accenture.com