1. Al Delattre allen.j.delattre@accenture.com May 15, 2003 Innovating for the Upturn

2. © Accenture 2002. All Rights Reserved. 2  Late 1990s boom - a remarkable period of growth characterized by high business confidence. - global business models and strategies - A ‘new economy’ centered on information technology - A spirit of entrepreneurialism and innovation - Emphasis on knowledge and skills - “War for talent”  Today - Retreat to core markets - Cost cutting - New economy dismissed as hype 2 © Accenture 2002. All Rights Reserved. 2 A time of discontinuity

3. © Accenture 2002. All Rights Reserved. 3  Technology now integral part of business  Manufacturing and Supply Chain Operations have become legitimate “critical success elements”  Culture of innovation and entrepreneurialism in large and small organisations  New market possibilities 3 © Accenture 2002. All Rights Reserved. 3 Legacy of the 1990s

4. © Accenture 2002. All Rights Reserved. 4  Innovative business models and processes  Strategic acquisitions  New markets or customer niches  New relationships 44 © Accenture 2002. All Rights Reserved. What did companies do last time?

5. © Accenture 2002. All Rights Reserved. 5 Differences of this recession and recovery  Business investment hit hard  More synchronised downturn  Uneven impact on industries  Recovery will need to be investment led – business will need to make the recovery happen 5 © Accenture 2002. All Rights Reserved. 5

6. 6 GDP forecasts

7. © Accenture 2002. All Rights Reserved. 7 EHT Index Performance forecasts Source: Factset

8. © Accenture 2002. All Rights Reserved. 8 Worldwide Semiconductor Revenue, Unit Shipments and Aggregate ASP Source: Instat-MDR -Report No. IN030870SI Semiconductor Market Forecast Are we Recovered Yet? April 2003

9. © Accenture 2002. All Rights Reserved. 9  Bold leaders – Napster era  MP3 here to stay  Nimble navigators – Disney’s time-tested model of releasing titles for limited time  Market consolidators – HPQ – combined org on track for $3Bn a year in savings  Mature explorers – Intel, Applied Materials  Disruptive innovators – eBay still going, and going… 9 © Accenture 2002. All Rights Reserved. 9 Recovery strategies

10. © Accenture 2002. All Rights Reserved. 10  Be ahead of the pack  Build resilience through flexibility  Engage and connect  Be a leader of leaders  Seek discipline, not control 10 © Accenture 2002. All Rights Reserved. 10 Leadership Imperatives for the Upturn

11. © Accenture 2002. All Rights Reserved. 11  Get the right balance between short and long-term  Spend strategically  Look to tomorrow’s markets © Accenture 2002. All Rights Reserved. 11 Action 1 - Be ahead of the pack

12. © Accenture 2002. All Rights Reserved. 12 NA EHT market segment – Multimedia growth ($Bn) Sources: Jupiter

13. © Accenture 2002. All Rights Reserved. 13 EHT segment forecasts Medical electronics - The worldwide market for implantable medical devices, which currently stands at over $50 billion, is poised for continued growth over the next five years. Automotive - In the next five years the global automotive market is expected to grow by 3% per year. With more electronic per car Automotive electronics is projected to grow from $92 billion in 2002 to $144 billion in 2007-an annual growth of 8.5%. Security - The world security equipment market, currently at US $45 billion, will log rapid gains through 2006, bolstered by economic recovery and heightened fears of terrorism. Telecommunications equipment - shipment forecasts are illustrated in the figure below. Markets at $204.8 billion are expected to dip to $184.9 billion in 2002 and rise slowly to $344.1 billion by 2007. Wireless - Cellular phone handsets grow to 927 million units by 2006, PDA's reach 13.3 million units in 2002 - will grow to 34.7 million units by 2006.

14. © Accenture 2002. All Rights Reserved. 14 CE - Consumers still gaga over gadgets  Stand-alone DVD players are now in 35 percent of U.S. homes.  Sales of Digital TV (DTV) sets and displays exceeded CEA forecasts in 2002. By the end of 2003 consumers will have invested more than $15 billion in DTV products.  Consumer interest in flat panel televisions will result in strong gains in related categories in 2003. Sales of plasma sets will rise by 40 percent in 2003.  Rapid Adoption of Digital Audio: Despite continuing debates over home recording rights, MP3 players shot past all estimates.  In digital imaging, Digital Camera sales will total more than 11 million units in 2003, up 26 percent from 2002, on dollar sales of $2.9 billion.  Wireless telephones will increase by 6 percent to 60 million units on dollar sales of $8.8 billion.  Electronic gaming market will total over $12 billion in 2003 with sales of gaming software increasing by 17 percent to $9.2. Source: 2003 U.S. Sales of Consumer Electronics to Hit New Record, Kissing $100 Billion, Says CEA, 1/7/03

15. © Accenture 2002. All Rights Reserved. 15  Flexibility  Entrepreneurial working environment  Knowledge sharing  Shared values and direction 15 © Accenture 2002. All Rights Reserved. Action 2 - Build resilience through flexibility

16. © Accenture 2002. All Rights Reserved. 16  Connected corporations Diversity of thought Building trust New markets Knowledge and expertise Risk sharing Freedom to focus on core functions 16 © Accenture 2002. All Rights Reserved. Action 3 – Engage and connect

17. © Accenture 2002. All Rights Reserved. 17  Collaborate and be open  Give strength - foster leadership skills  Draw strength – from others  Set realistic expectations 17 © Accenture 2002. All Rights Reserved. Action 4 – Be a leader of leaders

18. © Accenture 2002. All Rights Reserved. 18  Cost control across the business cycle  Structured development of leadership entrepreneurialism innovation 18 © Accenture 2002. All Rights Reserved. Action 5 – Seek discipline, not control