Student ID University of Portsmouth Business School Richmond Building Portsmouth Hampshire PO5 0AN Key Words Market Orientation, Competitive Advantage, Customer Value, Implementation, Change, Obstacles Abstract This paper analyses PricewaterhouseCoopers Middle East (PwC ME) recently adopted “go-to market” operating model. The paper suggests that the market oriented strategy implemented by PwC ME will help it sustain an enduring competitive advantage if it was updated regularly baring in mind that market conditions and competitive threats never stand still.
The paper proposes that PwC ME can minimize the effect of the obstacles associated with the implementation of their new model by embedding the change into the culture of the company. Introduction Every organization must be in sync with its operating environment. In order to have an optimal strategy, firms usually apply the SWOT analysis in order to point the external (strengths & weaknesses) and internal factors (opportunities and threats) affecting them.
These forces might be pulling the firm in opposite directions, as there is a gap between market demands (or external factors) and internal firm resources, this is known as the paradox of market and resources (De Wit, Meyer, 2010, p. 250). As the competition is becoming fiercer and customers are seeking the maximum value, PricewaterhouseCoopers Middle East (PwC ME) recognized the need of becoming more market oriented. This required shifting from a competency-focused strategy to an industry-focused strategy.
The go to market model implemented by PwC ME will help it reach its targets if it was applied properly taking into account that the adoption of that model is a significant change management challenge that requires a qualified and mature leadership team that is able to lead a practice. The paper details the components comprising PwC ME new go to-market operating model, analyses aspects of the change process and explains the issues associated with the incurred change. Go to Market Operating Model Objectives The foremost goal for market-driven firms is creating superior customer value (Day, 1994).
A market-driven firm that focuses the processes and capabilities resulting from its market orientation on strategically important opportunities and problems achieves superior profitability (Day, 1994). As Hunt and Morgan (1995, p. 13) state, “knowing its customers and competitors should allow the firm to respond to changes in consumer preferences and competitor strategies in an informed, perhaps even optimal manner”. PwC ME go to market operating model is a transitioning tool used to help it shift from being competency led to becoming industry focused resulting in increased value to clients.
This model is designed to: ? Increase revenues and improve margins ?Identify and respond to opportunities quicker and with higher quality ? Increase levels of coordination and collaboration between and within the lines of service ? Maximize ability to respond to bigger and more complex projects and opportunities by availing industry and deep functional expertise ? Place the right resources on the right project/opportunities regardless of where they are located, “Borderless Network of Resource Pool”
Key Model Attributes 1. Chosen Industry Sectors and Client Segments Finding attractive markets, determining customer needs, and developing goods and services to meet those needs are the key capabilities for strategically focused market-driven firms (Day, 1990). Based on research and analysis of various markets, experience, clients’ needs, PwC ME decided to focus on specific most active industries including; oil and gas, real estate, financial services, private equity, telecommunication and healthcare.
PwC ME segmented its clients into 4 tiers and will actively target the top 3 tiers with increasing levels of planning, coordination and management as indicated in Figure1: Figure 1: PwC ME Client Segmentation Source: PwC ME strategy transformation presentation (March 2010) PwC ME works within the framework of the Middle East priority accounts (clients and industries) and markets strategy irrespective of location and line of service affiliation, deploying the top industry and competency people on the priority clients. 2.
Employees Firms need to adapt themselves to market developments they need to build on strengths of their resources base and activity system. Immediate action in developing the products/services and resource base is required to remain in constant alignment with the fluctuating external environment (De Wit, Meyer, 2010, p. 250). The process of generating knowledge and applying it in ways that support delivering superior customer value helps the firm develop the basis for a competitive advantage (Vorhies, Harker and Rao, 1999).
As a general guideline, PwC ME employees will start as generalists and then grow their functional and industrial competencies as they progress in their careers. The objective is for people to become industry and functional subject matter experts (SMEs) in the areas that are strategic to the Middle East. The targeted progression is for the people to move from generalists, to functionally focused, to industrially focused, and to ultimately become SMEs as illustrated in the figure below Figure 2: PwC ME Career Development Matrix
Source: PwC ME strategy transformation presentation (March 2010) PwC ME recognizes that their employees are their major assets; they are committed to investing in human capital initiatives that attracts develops and retains talents mainly through specialized industry & competency training programs and a transparent approach to performance feedback & compensation. 3. Inter-functional coordination The third component of the model is the coordination of PwC ME resources to create value for their clients. As Porter (1998, p. xii) explains: “Every department, facility, branch office, and other organizational unit has a role that must be defined and understood. All employees, regardless of their distance from the strategy formulation process, must recognize their role in helping a firm achieve and sustain competitive advantage. ” To accomplish this, PwC ME has developed a horizontal structure that delivers an integrated complete solution to meet all their clients’ needs providing the required expertise based on the clients’ specific industry.
They manage projects through multifunctional teams that would identify additional opportunities for value creation, and consequently generate greater revenue for PwC ME. This opposes PwC ME‘s previous model, where departments use to operate in silos. For example, the valuation team would go to the client for a valuation project, never trying to cross sell other services that could be provided by other departments and would also add value to the client. The following chart illustrates the relationship between the level of PwC ME inter-functional coordination and the perceived value to their clients:
Figure 3: Go to Market Approach vs. Perceived Value To Clients *The list of competencies/services in the figure do not include all the services provided by PwC ME Source: PwC ME strategy transformation presentation (March 2010) 4. Consistency Across the Region PwC ME operates in 12 different countries, where their structure reflects the same dynamics. PwC ME developed systems and processes that enables and supports consistent delivery across the region, which includes: ?Centralized staff deployment and scheduling with a small team of schedulers deployed across the key markets ?
Integrated financial planning, reporting, key performance indicators’ measurement and reporting platform ? A single HR policy across the region ?Harmonized and streamlined risk and quality policies to support and enable the business and mandate compliance ? Knowledge management infrastructure to capture and deploy best practices and experiences ? Marketing and business development function that will support their go to market model Market Orientation and Continuous Learning
To maintain its competitive advantage, a market-oriented company must revise its market sensing, customer linking and coordination capabilities to fit the recent market conditions and competitive threats (Slater and Narver, 1994). As market conditions and competitive threats never stand still, PwC ME’s operating model should be annually reviewed and updated based on various factors including; trends and growths in the Middle East market, competitors’ activities, changes in clients’ preferences, the introduction of new laws and regulations in the region, and most importantly the achievements of their objectives.
Obstacles in Implementing the Change “Wisdom lies neither in fixity nor in change, but in the dialectic between the two. ” Octavio Paz (1914-1998); Mexican poet and essayist Change is a process, not just two steps starting with planning and ending with the realization of this change. Forcing a ready-made solution will more often result in the rejection of the change. In order to have a higher chance of success, the change must be carefully implemented and integrated into the organization while being accepted by its environment (De Wit, Meyer, 2010, p. 222).
PwC ME has implemented its go to market model recently (March 2010). The early stages of the change implantation process are usually the most difficult and stressful ones. PwC ME has faced several obstacles during the implementation process, which are analyzed as follows: 1. Resistance: One of the main obstacles that faced PwC ME in the beginning of the implantation phase is resistance from some of its employees. This was principally due to not understanding the change, management needs to deliver the point and explain to the employees the details behind this change.
They need to show the employees how it affects their job and what’s in it for them. Another obstacle was the resistance from long tenured employees; these employees were used to things being done a certain way, and so were uncomfortable with the proposed changes. 2. Job Security: Accompanied with this change is the fear of losing control or ownership of certain work processes, managers and middle management were faced with losing certain projects they have worked on due to an incurred change on the schedules and allocated teams.
Concerns of job security, employees were worried that if they didn’t attain certain skills by a certain period of time they would lose their job. An example of that would be higher managers who if they do not have a specialization in a certain industry then they wouldn’t be allowed to progress and might be asked to leave. These employees might find it hard to gain certain industrial competencies after being in the same “functional” skill for many years. 3. Coordination and Communication “Every organization, of course, has some separation of planning and doing, of formulation and execution.
However, when such a separation becomes dysfunctional – when planners see themselves as the smart people and treat the doers as ‘grunts’ – there clearly will be execution problems. When the “elite” plan and see execution as something below them, detracting from their dignity as top managers, the successful implementation of strategy obviously is in jeopardy” (Hrebiniak, 2005, p. 7). Most importantly and probably the biggest obstacle in change management is the lack of support from senior management.
If PwC ME management isn’t able to stand behind their plan and provide required resources, then this change is most likely doomed to failure. The owners of this change should be persistent in the plan and fight hard for its success. Minimizing the Effect of Obstacles Associated with Change Implementation Spreading awareness and emphasizing on the main drivers behind a change are principle factors that strengthen the likelihood of a positive outcome to that change (De Wit, Meyer, 2010, p. 222).
PwC ME can minimize the effect of the obstacles mentioned above by embedding the change into the culture of the company through regular meetings that emphasizes on the objectives that initiated this change and communicates the company’s status allowing the employees to feel more engaged to the change process, for example communicating early wins would give the employees a sense of achievement and would motivate them to work harder towards achieving the company’s main goals behind this change.
PwC ME management should try to dispel rumors around the lack of job security associated with the incurred change by answering its employees’ inquiries openly and honestly, and insuring that relevant training programs would be given to them when required. Summary and Conclusion Market Orientation is an externally focused corporate culture that makes creating superior customer value its top priority. That value comes from successfully utilizing core competencies and skills that can be developed in any functional area (Slater and Narver, 1994).
For PwC ME to succeed as a market oriented company it has to maintain an enduring competitive advantage by constantly updating its market knowledge and retaining profitable clients through value creation. Without the backing, dedication and commitment of all the employees, weather junior staff or senior managers PwC would not be able to sustain and successfully implement their market-oriented model. Opportunities to business success are maximized when all members of the organization recognize that they can contribute to the creation of customer value and are motivated and trained to do so.