Rohit Talwar - ERA Presentation Oslo - 16 05 12


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Rohit Talwar - ERA Presentation Oslo - 16 05 12

  1. 1. Driving Future Growth ERA Convention 2012 – Oslo – May 16th 2012 Rohit Talwar CEO - Fast Future Research Twitter @fastfuture
  2. 2. Contents• Presentation p3• About Fast Future p 57• Presentation image sources p 66• Background notes p 71• Background image sources p 160
  3. 3. ‘Future Proofed’ Organisations Work on 3 Horizons in Parallel1-12 Months 1-3 Years 4-10+ YearsOperational Drive for Creating theExcellence Growth Future
  4. 4. The World in 2020
  5. 5. Choosing a FutureMarkets Capability Mindset and and and BehavioursModels Technology
  6. 6. Future Proofing the BusinessMarkets Mastery Muscle MagicMessage Models Management Mindset
  7. 7. Markets
  8. 8. Markets – Growth Poles 2 billion more people in 40 years –Demographics is Driving Economics 448 739 691 5231 344 1998 4157 729 1030 585 2010 2050 Source : United Nations
  9. 9. Markets - Life Redefined Lifespans are IncreasingUnder 50’s have 90% chanceof living to 100.Aubrey de Grey suggests wecould live to 500 or 1000What are the health, housing,consumption and resourceimplications?What kind of opportunities willbe created?
  10. 10. Adjacent Markets –Build on your Core Strengths
  11. 11. Markets –Focus on Growth Industries
  12. 12. Rising Infrastructure Spending• CIBC projects up to $35 trillion in public works by 2030• Annual spend: – North America $180Bn – Europe $205Bn – Asia $400Bn – Africa $10BnGreen Buildings - $600Bn by 2015
  13. 13. Green Transport Revolution
  14. 14. Mastery
  15. 15. Mastery – Foresight and Insight e.g. ‘Horizon Scanning’ and Timeline Development by Sector
  16. 16. Mastery -Service is the ‘Killer App’
  17. 17. Mastery – Data and TechnologyNew Analytics and a New Knowledge Infrastructure
  18. 18. Convergence and PersonalisationTelephony Connectivity• Voice • Cellular• Messaging • Up to 14 bands• SIM card • WLAN/BT• Phonebook • GPS• Ring Tones • NFC• Security • FMData/ MultimediaEnterprise • Camera 8-16M • Camcorder• 100Mbps • 24M Color Display• Email • Memory (160GB)• IMS • Multiformat A/V• Browsing • HD Video/TV out• VPN • Games• PIM• Ecommerce Software (50-100M Tps) • Protocols • DRM• Payments • Middleware • Applications • User Interface • Minimize fragmentation
  19. 19. Next Generation Interfaces
  20. 20. Augmented Reality
  21. 21. Mastery – Rapid Innovation e.g. Naspers New Media Lab (“Fail fast and cheaply” – Koos Bekker, CEO) “We are doing research on next-generation technologies that will influence the ways in which humans interact with computers, the web and other forms of electronic media” Research at ‘cutting edge of technological media innovation’ e.g. human-computer interaction, augmented reality, online gaming, internet television and semantic text processing
  22. 22. Mastery - New Construction Practices e.g. Neapo Pre-Fab Apartments
  23. 23. Muscle
  24. 24. Muscle – Rapid Decision Making
  25. 25. Muscle – Speed of Executione.g. Ultra-Quick Construction
  26. 26. Muscle - Sustainability
  27. 27. Muscle - Eco Materials for ConstructionE.g. Meco Brics – 30 Sec construction
  28. 28. Utility Lessons from Nature
  29. 29. Wool and Seaweed Bricks
  30. 30. Self-Healing Concrete
  31. 31. Magic
  32. 32. Magic – Ideas that DelightE.g. Virtual Grocery Shopping – Tesco South Korea
  33. 33. Magic - 3D Printing of Houses (Contour Crafting)
  34. 34. Message – Engaging the Customer e.g. Open Innovation
  35. 35. Models - Multiple Streams and Pre- emptive Solutions
  36. 36. Models –Access and ‘Usership’ vs. Ownership
  37. 37. Shell – From Asset Ownership to a Zero Fixed Cost Model
  38. 38. Person to Person Rental
  39. 39. Usership e.g. Movie Digitisation - Digital Development
  40. 40.
  41. 41. Models - Continuous Innovation E.g. Auctions£3088 £8791.50 £81
  42. 42. Management
  43. 43. Management – Celebrate Successes
  44. 44. Management -Make Time and Space for Change
  45. 45. Management - Lead or Follow?
  46. 46. Performance Management - Maximising Employee ContributionSupporting lifelong learning - continuous re-skilling - 61%Implementing real-time learning / developmentsolutions - 49%Improving training / delivery effectiveness - 40%
  47. 47. Management - Tackling Complexity• Customer Interface• Process• Organisation• Information / Systems• Regulatory• Human
  48. 48. Mindset
  49. 49. Mindset - 3 Horizon Thinking• 12 Months• 1-3 Years• 4-10 Years
  50. 50. Mindset –Broad Scans and Deep Dives
  51. 51. Mindset - Tolerant of Uncertainty Encourage Experimentation
  52. 52. Mindset –Curious, Sticky and Magnetic
  53. 53. Future Proofing the BusinessMarkets Mastery Muscle MagicMessage Models Management Mindset
  54. 54. Conclusions• New Turbulent Era• Future is a Journey• The Door is Open
  55. 55. Fast Future – Core Services• Live Events - Speeches, briefings and workshops for executive management and boards of governments, investment funds, development agencies , companies, airlines, airports, hotels, venues, CVB’s and associations• Future Insights - Customised research on emerging trends, future scenarios, technologies and new markets• Immersion - ‘Deep dives’ on future trends, market developments, emerging issues and technology advances• Strategy - Development of strategies and business plans• Innovation - Creation of business models and innovation plans• Engagement - Consultancy and workshop facilitation
  56. 56. Fast Future• Research, consulting, speaking, leadership• 5-20 year horizon - focus on ideas, developments, people, trends and forces shaping the future• Clients – ING, ABN Amro, Laing O’Rourke – Marks and Spencer – Airports - Aeroports de Paris / Schiphol Group – Vancouver Airport Services – Industry Associations – ICCA, ASAE, PCMA, MPI – Corporates - GE, Nokia, Pepsi, IBM, Intel, Orange, O2, Siemens, Samsung, GSK, SAPE&Y, KPMG, Amadeus, Sabre, Travelport, Travelex, ING, Santander, Barclays, Citibank, DeutscheBank – Governments - Dubai, Finland, Nigeria, Singapore, UK, US – Convention Bureaus – Seoul, Sydney, London, San Francisco, Toronto, Abu Dhabi, Durban, Athens, Slovenia, Copenhagen – Convention Centres – Melbourne, Adelaide, Qatar, QEIICC – Hotels - Accor Group, Preferred, – Intercontinental – PCO’s - Congrex, Kenes
  57. 57. Hotels 2020 – Objectives• Identify key drivers of change for the globally branded hotel sector over the next decade• Examine the implications for:  Hotel strategy  Brand portfolio  Business models  Customer targeting  Innovation
  58. 58. Convention 2020• Global strategic foresight study to help the meetings industry prepare for the decade ahead - Industry-wide sponsors• Multiple outputs Nov 2009 – December 2011• Current studies on future strategies for venues and destinations
  59. 59. Rohit Talwar• Global futurist and founder of Fast Future Research.• Award winning speaker on future insights and strategic innovation – addressing leadership audiences in 40 countries on 5 continents• Author of Designing Your Future• Profiled by UK’s Independent Newspaper as one of the Top 10 Global Future Thinkers• Led futures research, scenario planning and strategic consultancy projects for clients in telecommunications, technology, pharmaceuticals, banking, travel and tourism, environment, food and government sectors• Clients include 3M, BBC, BT, BAe, Bayer, Chloride, DTC De Beers, DHL, EADS, Electrolux, E&Y, GE, Hoover, Hyundai, IBM, ING, Intel, KPMG, M&S, Nakheel, Nokia, Nomura, Novartis, OECD, Orange, Panasonic, Pfizer, PwC, Samsung, Shell, Siemens, Symbian, Yell , numerous international associations and governments agencies in the US, UK, Finland, Dubai, Nigeria, Saudi Arabia and Singapore.• To receive Fast Future’s newsletters please email
  60. 60. Designing Your Future Key Trends, Challenges and Choices• 50 key trends• 100 emerging trends• 10 major patterns of change• Key challenges and choices for leaders• Strategic decision making framework• Scenarios for 2012• Key futures tools and techniques• Published August 2008• Price £49.95 / €54.95/ $69.95• Email invoice request to
  61. 61. Our Services Bespoke research; Identification & Analysis of Future Trends, Drivers & Shocks Public Speaking, In-Company Briefings, Seminars and Accelerated Scenario Workshops Planning, Timelining & Future MappingPersonal Futuring for Leadersand Leadership Teams Expert Consultations & Futures Think Tanks Identification of Design & Facilitation of Opportunities for Innovation Innovation, Incubation & and Strategic Investment Venturing Programmes Strategy Creation & Development of Implementation Roadmaps
  62. 62. Example Projects• Public and private client research e.g. : – Development of Market Scenarios, emerging trends and strategies for key clients – Government and OECD Scenario Projects – e.g. Migration 2030, Future of Narcotics, Chemical Sector, Family 2030 – Scenarios for the global economy for 2030 and the implications for migration – Designing Your Future (Published August 2008) – book written for the American Society of Association Executives & The Center for Association Leadership – Global Economies – e.g. The Future of China – the Path to 2020 – The Shape of Jobs to Come – Emerging Science and Technology Sectors and Careers – Winning in India and China – The Future of Human Resources – Exploiting the Future Potential of Social Media in UK Small to Medium Enterprises – Convention 2020 – the Future of Business Events – Future Convention Cities Initiative – Maximising Long-term Economic Impact of Events – One Step Beyond – Future trends and challenges for the events industry – Hotels 2020: Beyond Segmentation – Future Hotel Strategies – The Future of Travel and Tourism in the Middle East – a Vision to 2020 – Future of Travel and Tourism Investment in Saudi Arabia – Aviation and Airports e.g. Aviation 2030
  63. 63. Example Clients
  64. 64. Presentation Image SourcesPage1 - - - - -
  65. 65. Presentation Image Sources7 - - - - - - - - - - - -
  66. 66. Presentation Image Sources22 - - - - - - - - - - - - - - - - -
  67. 67. Presentation Image Sources40 - - - - - - - 800wi.jpg48 - - - - - - -
  68. 68. Presentation Image Sources55 - - -
  69. 69. Background Data
  70. 70. Global Long Term Forecasts• North America: The ARA Rental Market Monitor™ current five-year forecast calls for continued annual growth in rental revenue to reach a total of $53.1 billion by 20161.• Growth of the major rental revenue sectors is forecast as follows:• Construction and Industrial Equipment Rental revenue will grow 7.6% in 2012 and 81.4.0% by 2016.• General Tool Rental revenue will grow 6.8% in 2012 and 73.0% by 2016.• Party & Event Rental revenue will grow 2.5% in 2012 and 17.4% by 20162. Sources: 1 Mfr Tech, 13/02/12 ( accessed 10/05/12) 2 Alert Management Systems, 2010 ( accessed 10/05/12)
  71. 71. Global Long Term Forecasts• UK: Although only limited market recovery of around 1-2% is expected for 2012-2013, marginally more positive growth of around 2-3% is predicted for the period 2014-20151.• India: The construction equipment rental industry is very small as compared to other Asian countries, such as China and Japan, but its growth prospects are immensely bright.• With US$ 1 trillion investment planned in infrastructure development during FY 2013-17, the construction equipment rental business in India is expected to receive a gigantic boost, and grow at a CAGR of around 33% by 20152. Sources: 1 Business Wire,31/08/211 Report (accessed 10/05/12) 2 RNCOS, 01/02/2012 (accessed 10/05/12)
  72. 72. ‘Rental Attitudes’ Survey
  73. 73. ‘Rental Attitudes’ Survey Proportion of the IRN’s survey 800 respondents who will significantly grow use of rental in next five years 30% 25% 20% 15% 10% 5% 0%Source: International Rental News, March-April 2012 ( accessed 30/04/12)
  74. 74. ‘Rental Attitudes’ Survey Which factors are important in leading you to rent more? Western North East/Cen Middle Asia South Australia Central Brazil Europe America tral East Pacific Asia /NZ & South Europe America & Russia Rental supply has 32% 42% 38% 44% 62% 53% 58% 69% 70% grown We save money 36% 63% 75% 57% 68% 70% 59% 55% 68% by renting Reduced 50% 62% 76% 57% 66% 75% 75% 59% 74% management time for own fleet Difficult to finance 31% 37% 76% 43% 74% 45% 33% 35% 31% purchasing own equipment Gives flexibility in 60% 72% 87% 72% 78% 70% 75% 67% 57% uncertain economic times Focus of capital 54% 60% 50% 72% 64% 85% 58% 67% 70% on own businessSource: International Rental News, March-April 2012 ( accessed 30/04/12)
  75. 75. ‘Rental Attitudes’ Survey Proportion of the IRN’s survey 800 respondents who said financial crisis made it more likely to rent 80% 70% 60% 50% 40% 30% 20% 10% 0%Source: International Rental News, March-April 2012 ( accessed 30/04/12)
  76. 76. ‘Rental Attitudes’ SurveyProportion of the IRN’s survey 800 respondents willing to pay more for latesttechnology machines 80% 70% 60% 50% 40% 30% 20% 10% 0%Source: International Rental News, March-April 2012 ( accessed 30/04/12)
  77. 77. Outlook: North America
  78. 78. Outlook:North America• ARA and IHS Global Insight forecast North American equipment rental revenue growth of 6.9 percent in 2012, to reach $33.5 billion (the revenue totals include construction, industrial, general tool, and party and event — in the United States and Canada).• In the US alone, total equipment rental revenue is forecasted to increase by 7 % in 2012 and reach $30.6 billion, more than 3 times the expected GDP growth.• Demand is driven by the recovery of the construction industry.• Tight credit availability and uncertain job prospects influence contractors and construction companies to turn to rental in order to meet equipment need.• More manufacturers expect to sell a higher percentage of their equipment into the rental channel in 2012. Source: Rental Management, 05/03/12: ult%2FNo+Skin&ContainerSrc=%5BG%5DContainers%2F_default%2FNo+Container ( accessed 30/04/12)
  79. 79. Outlook:North America• National, publically traded equipment rental companies are focusing on expanding rental into a variety of niche markets as well as industrial equipment rentals.• Many equipment rental companies, including United Rentals and Greenwich, Conn. say they are seeing a “secular shift” in North America as customers — including contractors, construction businesses and homeowners — recognize the advantages of the fixed cost of renting, which also covers maintenance, storage and delivery.• Christine Wehrman, ARA’s Executive Vice President and CEO says: “Equipment rental businesses have a significant opportunity to gain further market penetration by aggressively selling the value of equipment rental at this point in the economic recovery.”Source: Rental Management, 05/03/12 ( accessed 30/04/12)
  80. 80. Outlook:North America Consolidation on the US Market:• United Rentals’ has announced plans to acquire RSC Equipment Rental for $1.87 billion, plus $2.3 billion in net debt, creating a mega-firm that is expected to hold about 15 % of the US rental market. The combined company will be three times the size of rivals Sunbelt and Hertz.• Rebecca Mallett of Hoover’s suggest that the merger highlights the consolidation and increasing competitiveness in the rental industry over the past few years. While top companies account for half of the industry revenue, local and regional companies still struggle to compete with giant firms1.• Murray Pollok, Editor of International Rental News, claims that further consolidation on the US market is likely, United sketching the picture of the equipment rental market in decades to come, with a relatively small number of global giant players2. Sources: 1 Hoover’s, 20/04/12 ( accessed 30/04/12) 2 International Rental, January-February 2012 accessed 27/04/12)
  81. 81. Outlook: Europe
  82. 82. Outlook: Europe• The combination of tightening government spending and companies with massively overstretched balance sheets is likely to create difficulties in countries such as Greece and some of the rest PIIG countries. “Zombie businesses” – dead but still walking might be unable to reinvest in the business and might gradually reduce in size and importance over a 5-10 year horizon.• In other parts of Europe businesses are more likely to undertake a sensible reinvestment provided that they make a clever choice as for how to use their capital.• Radical reallocation: repositioning in the market and capital shifts from troubled regions into the sectors and geographies that are, or can become, clear market leaders is key to future success. Source: International Rental, March-April 2012 2f666fed5b28&skip= (accessed 30/04/12)
  83. 83. Outlook: Europe• Promising future is expected for businesses that have solid balance sheets and a rational and progressive approach to capital allocation in the right product and geographies.• A five-year decline is projected in the number of rental companies owned by private equity or short-term investors. Get-rich-quick investors are expected to get out and the ‘zombies’ to die1.• Although Europe is hindered in its attempts to create a pan-European market by national boundaries and cultural differences, recent deals by Loxam, Kiloutou, Bouls, Cramo and Ramirent reveal that consolidation is starting up in Europe again2.Source: 1 International Rental, March-April 2012 30/04/12)Source:2 International Rental, January-February 2012 (accessed 30/04/12)
  84. 84. Outlook: Russia • RusRental estimates that the Russian rental market grew by almost 35% in 2011, reaching an estimated value of €700 million. It is expected to triple its size by 2015. • The rental market is projected to grow at a faster rate than other sectors of the Russian economy such as mining, construction and utilities. • Growth is expected in Eastern Russia.Source: International Rental News, 27/04/12: (accessed 30/04/12)
  85. 85. Outlook: Russia• Revenues generated by tools and small equipment – on-site equipment, power and temperature control equipment, portable accommodation, scaffolding, concrete pumps is predicted to grow from 6% of the total in 2011 to closer to 18% in 2015. That would mean revenues expanding from around €40 million to more than €370 million in just four years.• Rental in Russia is currently dominated by lifting equipment (cranes and aerial platforms) and large construction machines. High growth of smaller equipment is expected as contractors progressively switched to rental.• Realizing that small equipment and tools might be more profitable than large machines, companies are adding more of this equipment to their fleets. As a consequence there is likely to be a shift towards non-operated plant, which is expected to increase to 45% by 2015 from 30% in 2012. Source: International Rental News, 27/04/12: by-2015says-report/ ( accessed 30/04/12)
  86. 86. Outlook: MENA
  87. 87. Outlook: MENA• The Middle East and Africa is set to be an area of flourishing growth for rental power companies in 2012.• Saudi Arabia is an important priority for rental power companies, primarily because of the lack of infrastructure. However, North Africa offers the biggest opportunity for growth. The huge demand for rental power in the African region is driven by the need to renovate the cities recently devastated in the political unrest as well as by the economic uncertainty prevalent throughout the region. Source: Construction Week Online, 09/01/12 (accessed 30/04/12)
  88. 88. Outlook:Brazil
  89. 89. Growth Rate of Construction IndustriesSource: Roland Berger, 2011 ( accessed 30/04/12)
  90. 90. Outlook:Brazil • The construction equipment market is experiencing strong growth. It is expected to continue to grow at 15 % per year. • Main driving factors: - government investment program PAC ( Growth Acceleration Plan) - government support schemes and regulation favour local investment - strong long term demand is driven mostly by residential and infrastructural construction - FIFA World Cup 2014 and Olympic Games 2016 drive further investments in infrastructure and civil constructionSource: Roland Berger, 2011 ( accessed 30/04/12)
  91. 91. Outlook:Brazil • Strong market dynamics offer a window of opportunity to enter and expand while Chinese players are still in a niche position. • Rental business within construction equipment market is increasing in attractiveness.Source: Roland Berger, 2011 ( accessed 30/04/12)
  92. 92. Outlook:Brazil Eight strategic aspects for successful growth strategySource: Roland Berger, 2011 accessed 30/04/12)
  93. 93. Outlook: Brazil• According to the Roland Berger report (2011), the rental business suits the needs of the Brazilian market very well. This is an opportunity which rental companies should consider.• Reasons: - easier financing - good and regular service - flexibility offered by rental as the operator is not responsible for the transport along the long distances between construction sites - some of the biggest construction projects are developed by syndicates for which rental is less complicated than buying (valuation issues, attribution of wear on handover etc.)Source: Roland Berger, 2011 accessed 30/04/12)
  94. 94. Outlook: BrazilSource: Roland Berger, 2011 accessed 30/04/12
  95. 95. New Construction Practices• A multi-story modular apartment complex that can be prefabricated indoors and shipped by barge to other locations has been created by Finnish construction company NEAPO.• In order to produce the complex, innovative steel core panel technology and the tested modular construction methods used in the shipbuilding industry have been combined.• The design’s structure incorporates advanced FIXCEL steel core panels which enable relatively large modular sizes without requiring supporting beams or trusses even while en route to future destinations. Due to FIXCEL’s unique load-bearing capabilities, an entire apartment complex can be assembled indoors on the factory floor and then shipped. Source: PFSK 11/09/11 technology.html#ixzz1tkwXMrge ( accessed 12/05/12)
  96. 96. From Asset Ownership to Rental• Enabled by networking, tracking and embedded intelligence technologies and encouraged by cost cutting and environmental concerns, new forms of shared ownership, shared access, usage and ‘rental’ are creating a move from ownership to ‘usership’ in a growing number of markets.• In transport, ‘usership’ may encourage new models of publicly owned transport enabled by intelligent systems.• Instead of having to pay more to travel at peak times on trains, we could move to a model where we pick up a car and pay to access the road network with relative pricing according to time of day, location and number of passengers. Source: Shaping Tomorrow, 06/07/2011 ( accessed 10/05/12)
  97. 97. From Asset Ownership to Rental• Daimler: from manufacturer to a service provider• Reflecting the trend of manufacturers becoming service providers, Daimler launched the car2go pilot project in 2008.Car2go is a subsidiary of Daimler and provides highly personalized, flexible car sharing service.• Launching the project required a transformation of Daimler’s business model – the company now operates both as a manufacturer and a service provider.• The model, if implemented successfully, can enable manufacturers to focus more on providing innovative, high-quality services – and, as a result, become more competitive and increase revenues.• Peugeot and BMW have also initiated similar schemes. Source: SAP, 06/05/2011 ( accessed 10/05/12)
  98. 98. From Asset Ownership to Rental• Car2go is currently available in the German cities of Ulm and Hamburg, as well as in Austin (Texas).• The service in Austin: there are 300 Car2go Fortwos. Customers can locate an available vehicle by using one of the third-party Car2go smart phone apps. No reservations are required.• Operation: Driving a car2go costs 35 cents per minute or $12.99 per hour. The vehicle’s doors are unlocked by putting a membership card (one-time cost: $35) up to the window near the device on the dashboard. Then, an input of a 4-digit PIN follows, confirming that there is no damage or a massive mess in the car. The car does not need to be brought back to the location where it was picked up.Source: Autoblog Green, 24/03/11 ( accessed 10/05/12)
  99. 99. From Asset Ownership to Rental• SaaS is the service enablement of all three primary software markets: applications, application development and deployment (AD&D) and system infrastructure software (SIS).• Currently all software vendors are at various stages in transition as for how they build, sell, and deliver their products as services. SaaS delivery is expected to significantly outpace traditional software product delivery, growing nearly five times faster than the software market.• According to IDC, by 2015, about 24% of all new business software purchases will be of service-enabled software with SaaS delivery being 13.1% of worldwide software spending. IDC further predicts that 14.4% of applications spending will be SaaS- based in the same time period.Source: IDC, 2012: ( accessed 10/05/12)
  100. 100. From Asset Ownership to Rental• Fast adoption of cloud computing in enterprises:• Forrester forecasts that the global market for cloud computing will grow from $40.7 billion in 2011 to more than $241 billion in 2020.• The total size of the public cloud market is expected to grow from $25.5 billion in 2011 to $159.3 billion in 2020.• Deloitte predicts that cloud-based applications will replace 2.34% of enterprise IT spending in 2014, rising to 14.49% in 2020.• Cisco forecasts that global cloud IP traffic will increase twelvefold over the next 5 years, accounting for more than one-third (34 %) of total data centre traffic by 2015. Source: A Passion for Research, 17/01/12 estimates-2012/ ( accessed 10/05/12)
  101. 101. From Asset Ownership to Rental• Digital movies are expected to be a $61.6 billion global market by 2015. An innovative company – Digital Development Group is taking advantage of this trend:• The company has proprietary software which converts movies to digital format for 1/10th cost of competitors. This means that Digital Development could have the world’s largest library of films within 12 months.• The innovative business model enables film libraries and archives to convert the films at zero cost upfront, which is already attracting hundreds of film owners. It has been estimated that Digital Development will make huge profits by receiving 40- 50% of every dollar spent renting their movies, with little fulfilment costs. Source: Stock Market Watch, 10/05/12 months/ ( accessed 10/05/12)
  102. 102. From Asset Ownership to Rental• Peer-to-peer rentals:• The disappearance of the sense of ownership, the financial crisis, and other factors have given rise to peer-to-peer rentals:• Peer-to-peer rentals allows people to rent out various items in their household that they dont use every day, from circular saws to cars.• Several sites function as the middlemen to make the transaction as fail-proof and risk-controlled as possible such as Zilok, Rentalic and Irent2uSource: Daily Finance, 01/05/2011 (accessed10/05/12)
  103. 103. From Asset Ownership to Rental• Zilok started in Europe but has recently spread to the U.S.• People can go onto the Zilok site and offer items for rent at whatever rate they chose. Potential renters pay a fee for the service .• In France there are around 200,000 items available for 100,000 members (owner of stuff or just renter). More than 1,500 professionals have joined Zilok . The transactions/contacts per month are around 6 000 (by phone, by quote request, or by direct booking with the payment of a retainer fee).Source: Daily Finance, 01/05/2011 (accessed10/05/12)
  104. 104. Shell – From Asset Ownership to a Zero-fixed Cost Model • In 2010 Shell designed a 3-year strategic plan, which aim was to drive forward its investment programme, deliver sustainable growth and provide competitive returns to shareholders. • From asset ownership to a zero-fixed cost model: in 2009 a substantial corporate reorganization simplified the company, reduced costs, and created a platform for faster delivery of Shell’s strategy. • Divestments are expected to be $2-3 billion in 2012, with $17 billion of asset sales completed in 2009-11, signalling Shells intent to move towards a zero-fixed cost model.Source: Shell, 2012 : ( accessed10/05/12)
  105. 105. Shell – From Asset Ownership to a Zero-fixed Cost Model• Shell’s IT strategy also reflects the shift to a zero-fixed cost model:• The cloud infrastructure was the solution for the company’s rising energy costs driven by high energy use in Shell’s 3 worldwide and 400 regional data centers as well as to the need for agile deployment of IT services across various locations.• Today, the companys in-house server infrastructure is 60% virtual. The other 40% is made up of physical servers because the companys legacy applications cant be supported on a virtual infrastructure. Shells end goal is to eventually create a hybrid cloud model, where some applications run in a public cloud and others in an on- premises private cloud. Source: Computerworld 04/04/12 ageNumber=1 ( accessed 10/05/12
  106. 106. 3D Printing of Houses• A new construction technology – Contour Crafting – could make the printing of a house in a day possible.• Contour Crafting is a form of 3D printing that uses robotic arms and nozzles to squeeze out layers of concrete or other materials, moving back and forth over a set path in order to fabricate a large component.• The technology has a great potential for low-cost, customized buildings that are quicker to make and can therefore reduce energy use and emissions.• The aim is to build curves and domes as easily as straight walls. Compared to a conventional house, the speed of construction will be increased 200-fold and the building costs will be reduced to a fifth of what they are today. Source: PFSK, 07/02/12: ( accessed 01/05/12)
  107. 107. Eco Materials for Construction• An innovative hydraulic press developed by French company Meco’Concept turns ordinary clay into structural blocks.• Using only mud mixed with a binder material, the hydraulic press creates a brick similar to those found in boxes of Lego in less than 30 seconds1.• The Meco Brics are compact and solid with low carbon footprint2. Sources: 1 PFSK , 21/01/11 : ( accessed 1/05/12) 2 Meco’Concept 2012: ( accessed 01/05/12)
  108. 108. Utility Lessons from Nature • Buildings can look after themselves with the help of bacteria: • Bacilla Filla are bacteria genetically programmed to seek out cracks in the concrete. The bacteria secrete a combination of calcium carbonate (one of the most basic and widespread building materials) and a "bacterial glue" to fill in the cracks. • When these secretions harden, they have properties essentially matching those of the concrete.Source: Material Science and Engineering, 27/01/11 ( accessed 01/05/12)
  109. 109. Strategy Examples
  110. 110. Successful Partnerships• An unconventional business model based on partnership turns Hunan Zhengdao from a housing construction company with a few dozen employees to a road, bridge and earthworks company with annual revenues of more than RMB1 billion (US$156 million)1.• Having realized the benefits of renting, Hunan Zhengdao has been partnering with Cat dealer China Engineering Ltd. (CEL) since 2007.• Zhengdao doesn’t own the Cat machines, but it has the right to use them while CEL maintains ownership and management authority. The machines are replaced every two years, or if they reach 5,000 hours of service. Zhengdao provides the warehouse, while CEL provides professional teams and parts to repair machine failures on-site2. Sources: 1 CAT, 2012 accessed 10/05/12) 2 CAT, 2012 accessed 10/05/12)
  111. 111. Successful Partnerships• The partnership helped the company reduce investment in fixed assets. Renting a full- set of Cat machines enabled it to eliminate the need for maintenance, repair teams and a spare parts warehouse. The resulting savings in human resources, material and capital costs allowed Zhengdao to focus on road and bridge construction and project quality improvement which helped it win more projects.• The innovative equipment rental solution has allowed Zhengdao to maintain excellent quality in its operations and become an industry pioneer in equipment rental, which is becoming a development trend in China.• Zhengdao has expanded to participate in projects across the country, such as the Xinjiang-Tajikistan expressway.. Source: CAT, 2012 ( accessed 10/05/12)
  112. 112. Successful Partnerships• In order to respond to the demand for dust control business in South Korea, Mitsui & Co., Ltd. and Duskin Co., Ltd. have developed a cleaning equipment rental business in South Korea in partnership with the South Korean company Pulmuone Holdings Co., Ltd.• Mister Donut Korea Co., Ltd. ("MDK"), a joint venture established by Mitsui and Duskin, and Foodmerce Co., Ltd., a wholly owned subsidiary of Pulmuone, founded a joint venture company, Pulmuone Duskin Co., Ltd• Pulmuone Duskin will act as the headquarters for the dust control business. It will develop a franchise business by recruiting local companies to become franchisees. Source: Mitsui & Co., Ltd, 05/03/12 ( accessed 10/05/12)
  113. 113. Successful Partnerships Capital StructureSource: Mitsui & Co., Ltd, 05/03/12 ( accessed 10/05/12)
  114. 114. Successful Partnerships• Pulmuone has already built a strong consumer support base in the natural food market, and by combining the Pulmuone and Duskin brands, the new business aims to attract 400,000 household customers and achieve customer-level sales of ¥4,000 million by 2020 (total sales at company-owned and franchised shops).• The business further aims to open 90 outlets and to popularize the household cleaning equipment rental business in South Korea. Source: Mitsui & Co., Ltd, 05/03/12 ( accessed 10/05/12)
  115. 115. Caterpillar’s Strategy on European Rental
  116. 116. Caterpillar’s Strategy on European Rental• Caterpillar has changed its approach to the development of its Cat Rental Store network in Europe.• Unlike dealers like Zeppelin and Avesco, who have separate rental operations, Cat has opted for more integrated policy encouraging dealers to focus on key segments. The strategy aims to respond to customers’ preferences for one-stop- shop.• Flexibility: two of the European markets where Cat dealers have sold their rental businesses - Finning in the UK and more recently Bergerat Monnoyeur (BM) in France are each taking particular approaches to rental. Sources: Rock and Dirt, 02/05/12 ( accessed 10/05/12)
  117. 117. Caterpillar’s Strategy on European Rental• In France, BM rents from its own locations, targeting the smaller and medium sized rental companies who are facing tough competition from national renters.• BM aims to partner with these smaller rental firms not as a franchise, but as a part of an allied network, which could display the Cat Rental Store brand.• Such partnerships are believed to be suitable for locations where BM does not already have branches. Sources: Rock and Dirt, 02/05/12 ( accessed 10/05/12)
  118. 118. Caterpillar’s Strategy on European Rental• In the UK, Finning is already renting heavy equipment through its Finning Rents operation.• Finning would also target partnerships with smaller rental companies as well as try to maintain contacts with certain key customers, such as Select Plant.• David Picard, Director of product support and sales operations for Europe, Africa and the Middle East, expects higher investment in equipment by the rental channel in Europe this year, which Cat Rental Stores should take advantage of. Sources: Rock and Dirt, 02/05/12 ( accessed 10/05/12)
  119. 119. Hertz
  120. 120. Hertz Venturing into new territories:• Rental broadening its footprint in terms of the equipment that it provides:• Hertz Equipment Rental Co. and its parent, Hertz Corp., Park Ridge, N.J., have purchased a handful of companies to expand its entertainment services division, bringing rental more forcefully into the movie and television production space.• Currently, Hertz Equipment Rental provides full line of products and services Sources: Source: Rental Management, 06/04/12: to the Entertainment Industry. eftab/685/t/Default.aspx
  121. 121. HSS Hire Innovative partnership approach: HSS confirms the trend of negotiating rental contracts with ultimate clients:• HSS Hire has won a contract with Londons Gatwick Airport to supply all tools and equipment used on the airport, covering not just equipment used by the airport operator but also by contractors working on the site.• HSS said the contract will offer one point of contact and a 24 hour service to any and all onsite contractors at the airport.• The online management system of the company, HSS Live Hire, will be available to Gatwick to manage its rentals giving an unprecedented transparency and control over Gatwick’s equipment portfolio. Source: International Rental News, 10/04/12 (accessed 30/04/12)
  122. 122. HSS Hire • Liz Townsend, head of procurement at Gatwick, says the contract would help the airport improve in the most sustainable way. • HSS chief executive Chris Davies claims that the partnership would provide Gatwick with more transparency and operational efficiency.Source: International Rental News, 10/04/12 30/04/12)
  123. 123. Neff Rental
  124. 124. Neff Rental Improving operation through technology:• Neff Rental utilizes SmartEquip software.• SmartEquip provides a software platform that links fleet owners to their suppliers, allowing for efficient transactions on parts, warranty, servicing, training manuals and technical support. Many of the largest rental companies in the US - including United Rentals, RSC and Sunbelt Rentals - are already members of the network.• Neffs system will help support service and parts personnel, fleet managers and procurement activities across all its 64 locations.• Graham Hood, Neff Rentals President and CEO says that SmartEquip will further raise the efficiency of the service operations and increase the utilisation of the fleet, while also reducing the transactional costs of doing business across all suppliers.Source: International Rental News, 24/04/12 ( accessed 27/04/12)
  125. 125. Lifting Gear Hire•UK based Lifting Gear Hire – growing lifting equipment hire in USA, Holland andGermany.•In order to effectively address attitudes to rental and overcome the prevailing ownershipculture in those countries, LGH adopted an active agile business model, identifyingprospective early adopters and persuading key decision makers within each segment ofthe benefits of equipment rental.Source: Communisage 2012: ( accessed 02/05/12)
  126. 126. Lifting Gear Hire• The resulting integrated sales and marketing programme in the US yielded $6.6 million revenue growth over three years.• Over a 4 year period, the German business grew 194%.• Insightful marketing planning and market education programmes, aligned with country business culture, helped underpin demand creation activity via an effective marketing campaign.• A twelve-month direct mail campaign sold the rental concept and competitive differentiation for LGH. The subsequent implementation of rolling year-on-year national awareness and multi-state customer acquisition programmes in support of distribution and field sales activity consolidated the company’s gains.Source: Communisage, 2011: ( accessed 01/03/12)
  127. 127. RSC Equipment Rental
  128. 128. Expanding in Recession: RSC Equipment Rental• RSC Equipment Rental, one of the largest equipment rental providers in North America, leads its industry with operational, financial, service and leadership excellence.• The company recorded more than $1 billion in revenue during each of the past three years. In the second quarter of 2011, it increased rental volume 15.2 percent year- over-year.• RSC excels in several industry sectors, servicing a host of industrial firms, non- residential construction contractors, federal, state and municipal governments with $2.5 billion of equipment at original cost. The company’s unique value proposition includes premium fleet, industry leading reliability and service, and a long history of innovation. Source: Grading and Excavation Contractor, 01/03/12 accessed 01/05/12)
  129. 129. Expanding in Recession: RSC Equipment Rental• Key to success: Rather than tightening its business model during the downturn, RSC invested to better position the company. By continuing strategic investment in dozens of new branches, RSC experienced a net location reduction of just 4 %from 2007-2010, far lower than any other operator in the industry. In 2011, the company enhanced its customer centric service and delivery model by adding more than 250 new employees last year.• Focus on the customer: The company uses a third party vendor to conduct more than 23,000 customer surveys annually to ensure it is exceeding expectations, the results of which are used to calculate a globally recognized Net Promoter Score. Source: Grading and Excavation Contractor, 01/03/12 accessed 01/05/12)
  130. 130. Expanding in Recession: RSC Equipment Rental• Innovation: Total Control® (RSC’s proprietary) is a web-based fleet management system which allows customers to reduce consumption, control costs and maximize profitability of equipment assets. With Total Control, customers are afforded complete visibility into their equipment utilization to ensure maximum productivity. Customers can save as much as 35 percent of overall rental costs on an ongoing annual basis.• Sustainability: RSC is focused on sustainable initiatives that benefit customers and the environment. E2T, RSC’s groundbreaking emissions tracking solution, enables customers to precisely calculate greenhouse gas and criteria pollutant emissions from rental equipment. In addition, RSC enables customers to be carbon neutral on their equipment rentals through available carbon offsets. Source: Grading and Excavation Contractor, 01/03/12 accessed 01/05/12)
  131. 131. Volvo Rents Shift in strategy:• Volvo Rents, Shippensburg, Pa., part of Volvo Construction Equipment, shifted its strategy in 2011 and has been buying up independents to build a company-owned network of rental stores instead of its previous Volvo Rents franchise model.• Volvo is hiring and building a regional management team in order to build a highly polished network.• According to Dan Kaplan, a rental industry expert and founder of Daniel Kaplan Associates ‘’ the new approach will take time, but this way, they [ Volvo ] do have an advantage as a manufacturer-owned rental company because Volvo can mandate to its own consistency.” Source: Rental Management, 04/06/12 (accessed 30/0412)
  132. 132. Ramirent
  133. 133. Ramirent • Ramirent – a leading general equipment company in the Nordic countries and Eastern Europe, operating in 13 countries. • Strategy: focus on growth opportunities and outsourcing deals. In 2011 the company made two outsourcing deals in Finland (Destia) and one in Denmark (Phil & Søn) and nine acquisitions in Sweden, Norway, Finland, Denmark and Czech Republic by which the company extended its geographic presence, product offering and came closer to its customers.Ramirent, 2012: ( accessed 01/05/12)
  134. 134. Ramirent• The acquisition in Norway, Rogaland Planbygg A/S, helped Ramirent strategically move into a new customer sector (oil &gas). With Rogaland, Ramirent partly entered a new business area, high-class modules the rental agreements which are a bit longer than those of Ramirent’s other product groups. The acquisition also supported our goal of extending the average rental period.• In order to be closer to the customer, Ramirent continued improving its outlet network - the number of outlets at the end of the year was a record high - 406, an increase of 28 compared to end of 2010.• In 2011, Ramirent’s net sales totalled 650 million Euros. At the end of the year, the company’s market capitalisation was 594 million Euros. Sources: 1Ramirent, 2012: ( accessed 01/05/12) 2 Ramirent, 2012 ( accessed 01/05/12)
  135. 135. Aggreko
  136. 136. Aggreko• Aggreko – a global leader in the rental of power and temperature control. The company’s customer base is very diverse both in terms of geography and market segment.• Two business models:• Local business: In the local business Aggreko hires the equipment to customers who operate it for themselves, although the company retains responsibility for servicing and maintenance.• The local business runs with high volumes of generally quite low value transactions, renting equipment to enable customers to respond quickly to requirements for power and temperature control. Average contract sizes range from £10,000, £200 to over £1,000,000. Source: Aggreko, 2011: ( accessed 03/05/12)
  137. 137. Aggreko• Although most of this business has a lead-time of 24 hours or more, about 25% of the revenue comes from responding to emergencies.• The local business operates from 165 service centres in North, Central & South America, Europe, the Middle East, Africa, Asia and Australasia. The service centres in the various locations look after customers who are normally within a radius of 200 miles, ensuring that a complete range of products and services is being offered.• In 2011, the local business had revenues of £734 million which is 57% of Aggreko’s total revenue excluding pass-through fuel.Source: Aggreko, 2011: ( accessed 03/05/12)
  138. 138. Aggreko• International Power Projects business: The business is run from 165 service centres located in 39 countries. It sells power which is delivered using power plants built, owned and operated by the company. Most of the contracts are for providing a defined amount of electrical power, for which customers pay a fixed monthly capacity charge. Customers also pay a variable charge for each MW-hour they take.• Most projects in this business are worth over £1 million a year. Over 80% of revenue comes from power utilities in developing countries, but Aggreko also serves governments, armed forces, as well as oil and gas and mining companies.• In 2011, the International Power Projects business generated revenues of £554 million, or 43% of Aggreko’s total revenue excluding pass-through fuel revenue.Source: Aggreko, 2011: ( accessed 03/05/12)
  139. 139. AggrekoSource: Aggreko, 2011: ( accessed 03/05/12)
  140. 140. Aggreko• Comparative advantage: Aggreko builds the majority of their fleet on their own in newly purpose-built manufacturing facility in Scotland. The benefits of this are several: 1) optimizing the equipment to meet particular operational requirements 2) cost advantage over competitors 3) ability to react extremely quickly to customer requirements.• Unlike most rental businesses which have a model of buying assets and then selling them on at a relatively early stage in their useful life, Aggreko builds longevity into its equipment.Source: Aggreko, 2011: ( accessed 03/05/12)
  141. 141. Green Business Models
  142. 142. Green Business Models• A common denominator to all green business models is the that the companies applying those can change their core business strategy from selling products to selling service systems which includes their products ( known as Product Service Systems).• Under the product service business model the provider often retains ownership of the physical product, but a sales contract can include maintenance, repair and end-of-life consideration into the service of the product. Source: FORA, 2010: (accessed 08/05/12)
  143. 143. Green Business Models• Green business models have a lower environmental impact than traditional business models.• Classical green businesses (e.g. cleantech) are usually focused on a green product which is more energy efficient, produced with less material and energy use.• A company making use of ‘green business models’ focuses on the management of the customer’s production and is paid according to the result in the customer’s production.• Thus the producer who also owns the product is given the incentives to design it in a way to optimally perform in terms of the products life-cycle costs. Source: FORA, 2010: (accessed 08/05/12)
  144. 144. Functional Sales Business Model• Functional sales business model: focuses on the function and benefits of the product instead of the physical product as such.• Instead of paying for the product per se, a part of the payment is for the function of the product – the provider offers the customer to pay for the functionality or result of the product instead of the product itself.• In that model the ownership of the physical product often stays with the provider. Maintenance, repair and end-of-life consideration can be included in the offer.• Key characteristic: 1) the model is designed for remanufacturing and re-use of the product; 2) the provider takes over the control of the use-phase of the product. Source: FORA, 2010: (accessed 08/05/12)
  145. 145. Functional Sales Business Model• Functional sales improve competitiveness by reducing the consumption of material resources and energy and more efficient working routines throughout the products use-phase.• Products that are designed to be remanufactured may contribute to savings as the need for new resources to manufacture new products is reduced.• Advantage for the customer: payment per use/function of the product and transparent cost – the customer does not have to bear the investment cost and the operation cost are known in advance. Source: FORA, 2010: (accessed 08/05/12)
  146. 146. Functional Sales Business ModelSource: FORA, 2010: (accessed 08/05/12)
  147. 147. Volvo Aero
  148. 148. Volvo Aero• Volvo Aero, a subsidiary of AB Volvo & the functional sales business model:• Apart from the traditional services (developing and producing components for aircraft and gas turbine engines and selling engine maintenance) the company also offers flight hour agreement – selling flight hours to clients.• According to the flight hour agreement Volvo Aero is responsible for the performance of the engine it sells. The engines maintained according to this agreement perform 1½-2 pct. better and the fuel consumption is 1½ - 2 pct. lower than the consumption of engines maintained in a traditional manner.• Over the last three years the maintenance service based on the business model of flight hour agreement has increased from 30 to 50 pct. of the company’s maintenance business. Source: FORA, 2010: (accessed 08/05/12)
  149. 149. Sharing Business Model• Sharing business model: instead of private ownership, the product is shared between a number of users, whenever the individual users need access to the product.• Product sharing makes expensive products available to users without the users having to take the risks and liabilities related to owning the product.• The sharing of the product may entail the use of fewer resources as fewer products have to be produced to satisfy the consumers’ demand for the product. Source: FORA, 2010: (accessed 08/05/12)
  150. 150. Sharing Business ModelSource: FORA, 2010: (accessed 08/05/12)
  151. 151. Move About
  152. 152. Move About• Move About (Norway) launched the first corporate electric car sharing fleet and now operates the largest fleet of electric vehicles in the world1.• Move About delivers the cars, the insurance, the reservation portal, washing and cleaning and a complete mobility service package. There is a fixed price for the service each month whatever the use of the car.• The booking system of Move About allows the companies to cover the mobility requirements for 20 - 30 people for each car in the fleet.• The annual turnover of the company which operates in Norway, Sweden and Denmark has grown from EUR 150 000 in 2008 to an expected turnover of EUR 6 million in 20102. Source: 1 Move About,2012: (accessed 08/05/12) 2FORA, 2010: (accessed 08/05/12)
  153. 153. Cradle to Cradle• Cradle to cradle: an emerging green business model that stimulates innovation through the development of new products with a competitive edge.• The cradle to cradle concept is based on a bio-inspired approach to the design of products and systems where nature is seen as a closed loop production system with solar energy as the only external input.• The vision of the concept is to shift from traditional sustainability looking to minimize the negative environmental impact to strive for a positive environmental impact.• The model calls for designing industrial systems to be commercially productive, socially beneficial, and ecologically intelligent. Source: FORA, 2010: (accessed 08/05/12)
  154. 154. Cradle to Cradle• Two core principles: 1) Waste represents a cost in production which has no value to the customer and that waste equals food. Therefore waste should be avoided or reused as a production input/nutrient. 2) All materials used in industrial and/or commercial processes are “technical” or “biological” nutrients. Technical nutrients can be used in continuous cycles. Biological nutrients can be disposed of in any natural environment and decompose, providing nutrients for the soil. Source: FORA, 2010: (accessed 08/05/12)
  155. 155. Cradle to Cradle •In this business model the supplier commits to extend his responsibility of the product when it is no longer in use. •The supplier has an incentive to design and produce his products in a way that allows them to be disassembled and reused as technical or bio nutrients.Source: FORA, 2010: (accessed 08/05/12)
  156. 156. Schüco
  157. 157. Schüco• Schüco (Germany) is a worldwide leader for energy-efficient buildings and window manufacturer.• The company no longer sells windows but rather sells a lease-like “see through” insurance for the benefit of both customer and producer.• Business model: the customer owns the rights to the windows, while Schüco owns the materials. Windows are replaced or upgraded when this is economically reasonable.• The customer is guaranteed the latest in window technology e.g. (embedded solar technology etc). At the same time Schüco get their materials back and are able to reuse them in the next generation of windows. Source: FORA, 2010: (accessed 08/05/12)
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