Brand owners decentralise operations

20 February 2012

LONDON: Most brand owners believe business practices are becoming more "decentralised", in a trend likely to have a major impact on operating models, innovation and the use of data.

Ricoh, the document management company, and the Economist Intelligence Unit, the insights provider, polled 567 executives, and found that 63% thought enterprises were adopting a less "top-down" model than before.

"This [trend] will mean decision making can be less hierarchical and allow employees, who are collaborating directly with customers, to make important business decisions, without delay," said David Mills, EVP, operations at Ricoh Europe.

Whole Foods, the grocery chain, has embraced decentralisation, handing considerable autonomy to its individual branches but creating online systems to share best practices.

John Mackey, Whole Foods' co-CEO, said: "The way Whole Foods is structured is a decentralised model with a great deal of power at the regional store level. With the internet connection ... [when] we make improvements in one store, it can easily be spread other stores and you can do that across 317 stores."

A further 86% of respondents the Ricoh/EIU study suggested project teams will increasingly incorporate representatives from outside a company, be it customers, business partners or communities.

This type of innovation has been championed by firms like Mattel, the toy group, which held an internal competition asking staff to supply "big ideas" late lat year, while also tapping third party experts.

"The continued success of Mattel will be based on finding the optimal balance between continuity and change," said Bryan Stockton, the firm's CEO. "Our open innovation initiatives always start with the company priority as outlined by senior management."

Effectively sharing knowledge will be equally vital, offering common access to information irrespective of location, an area where many brand owners have fallen behind.

In Europe, for example, 43% of corporations still rely on physical, hard copy systems, whereas only 22% primarily use fully automated alternatives, Ricoh's analysis revealed.

The Global Business Services of Procter & Gamble, the consumer goods giant, has built "Decision Cockpits" premised on overcoming this problem.

"Decision Cockpits support fast, real-time decision-making across all brands and business units." "All the data that had been collected through emails, letters, phone calls and reports resides in this system," said Filippo Passerini, P&G's CIO.

Data sourced from Ricoh; additional content by Warc staff