Ideas that create the future
Point of View
Beyond process-centering: Emerging capability- and
alliance-based business models
Martha M. Batorski and William J. Hughes
The considerable rewards of process-centering, as experienced
by 15 organizations in the United States, Canada, and Europe,
were recently uncovered by the Accenture study, "Process-
Centering: New Relevance for the eEconomy".1 The study shows
how these organizations achieved considerable performance
improvements and gained access to new competitive
opportunities by making the monumental shift required by
process-centering.
Process-centering is the shift from a vertical orientation with
distinct functional areas—such as marketing and
manufacturing—to a horizontal orientation with end-to-end,
cross-functional business processes—such as order fulfillment
and product development. This shift permeates all the
components of business process performance—strategy,
organization, performance measures, skills, culture, and
systems—to create an environment that measures and
reinforces process behavior.
But this transition—as dramatic as it is—is not the end to
the story. Many process-centered organizations discovered
that the process-centered organization model, while a
worthwhile destination in itself, can also be a stepping
stone to emerging capability-based and alliance-based
business models.
Emerging capability- and alliance-based business
models
Figure 1 represents the typical progression of traditional
Process 1
Process 2
Process 3
Stovepipe, traditional Process-centric
Figure 1: The evolution to new organization models enabled by process-centering
organizations beyond process-centering. In many cases, their
continued focus on process resulted in new or greatly
improved business capabilities: that is, a collection of
interrelated process components that deliver high
performance and value. Whereas the replication of an
organization's redesigned processes may be simple, the
configuration of components that make up a targeted
capability is much harder to orchestrate. Consequently, well-
designed capabilities represent the building blocks of
competitive advantage. Armed with such an advantage, some
capability-driven organizations uncovered new competitive
opportunities and began to divest themselves of capabilities
that did not create value.
These capability-driven organizations were able to form
alliances to address market opportunities they would not
have been able to address effectively alone. Consider Los
Angeles-based New Energy. Following its first year of
operations in the deregulated California market, New Energy
redesigned its processes to build the business capability of
providing reliable, low-cost energy with timely and accurate
bills. New Energy's strategy—to maintain a first-mover
advantage in providing integrated, high-value energy
solutions—prompted it to seek out alliance partners with
complementary capabilities.
One such alliance partner was Johnson Controls, which has
the capability to monitor and switch energy equipment
remotely. This capability, combined with New Energy's
capability, provides customers with a high-value energy
Capability
2
Capability
Capability 1 1
Capability 2 Capability
3
Capability 3
Capability-driven
Alliance-based
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solution, called "peak shaving." During peak hours, New
Energy's customers are automatically switched off the
electricity grid onto customer-owned site generators—
which New Energy also sells—resulting in total energy
savings. New Energy is not only targeting consistently
high levels of performance through its redesigned
processes, but also creating new markets for its energy
solutions by partnering with capabilities that together
create previously untapped markets.
New Energy is part of a growing number of process-centered
organizations competing on capability and attracting alliance
partners with complementary capabilities to create value for
their customers. For New Energy, an end-to-end process
orientation was a prerequisite to delivering high performance
as part of its partnership with Johnson Controls. The resulting
business model is an alliance-based organization comprising
multiple, complementary capabilities.
Eastern Electricity (a wholly owned subsidiary of TXU known
as TXU-Europe) is another example. Through process-
centering, Eastern developed a formidable business capability:
the dynamic management of energy production in an
environment of fluctuating demand at consistently high
performance levels. This capability is so effective, Eastern now
performs this service for its competitors. As part of its choice
to compete based on capability, Eastern unbundled
nonstrategic capabilities. In this way, Eastern Electricity
continued its progression from a process-centered
organization to a capability-based organization. Eastern is
now preparing for entry into the eEconomy by building
alliances with companies with complementary capabilities
to create new markets for their services via the Internet.
Eastern Electricity embraced a process-centered organization
model as a means to achieve high performance. For other
organizations similarly committed to process-centering, that
story is similar: developing process excellence delivers
significant, sustainable performance improvement and
new competitive opportunities. Of course, these results do
not happen overnight; they are a result of a multistage
transition.
Bridging the old and new economies
In the eEconomy, previously internal, cross-functional
processes, such as order acquisition and order fulfillment, are
in full view of customers and suppliers alike, engaging
both in an extended, end-to-end process. As processes
extend beyond the organization to include these entities,
the design and effective implementation of end-to-end
processes becomes critical.
The eEconomy is challenging traditional and start-up
organizations alike to think differently, to find the new
fundamentals for success. Alliance-based, complementary
capabilities are the building blocks of emerging eCommerce
models that require the collaboration of intermediaries
(companies that enable delivery), complementors (companies
that add value to the product or service), suppliers, and
customers. Process-centering—with the opportunity to evolve
beyond the process-centered organization to emerging
capabilities- and alliance-based models—forms the basis
for sustained high performance—a fundamental for
developing a competitive advantage that bridges both old
and new economies.
The trail has already been blazed, and the payoffs continue
for the pioneers of process-centering. Organizations stalled
on the path toward process excellence can create the
foundation for eCommerce success by reviving their
commitment to process maturity.
If you found this Outlook Point of View of interest, you might
also be interested in the Outlook Point of View entitled
"Process-centering: New relevance for the eEconomy."
Martha M. Batorski, associate partner – Process Excellence, is
based in Los Angeles (martha.m.batorski@accenture.com).
William J. Hughes, partner – Resources, is based in Houston
(bill.j.hughes@accenture.com).
1This Outlook Point of View is based on the study, "Process-
Centering: New Relevance for the eEconomy." The organizations
studied represented a sample of energy, chemical, utility,
government, consumer products and pharmaceutical organizations
at various stages of process-centering.
Please contact us at pointofview@accenture.com or visit us at
www.accenture.com
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