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March 7, 2007 

 Q&A: George Filley of NAVTEQ in Chicago on Digital Mapping 3/7/2007
The mission of Going Global, which appears on MidwestBusiness.com on most Tuesdays, is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.

NAVTEQ's logo CHICAGO Ė George Filley is the vice president of product management for Chicago-based NAVTEQ, which provides digital map data. His responsibilities include managing the firmís current product portfolio as well as defining future products and services.

Prior to his current role in product management, Filley had responsibility for the consumer business unit of NAVTEQ and supported the location-based content needs of companies like Microsoft, AOL, Garmin, Google, Sony, Yahoo! and AAA.

Filley joined the company in Oct. 2000 after 15 years with Motorola. He holds an M.B.A. from DePaul Universityís Graduate School of Business and a bachelorís from North Park University. He sat down with MidwestBusiness.com to discuss NAVTEQís global organizational structure and its plans for growth.

Organizational Structure, Management

Michael Muth: What is Navteqís global organizational structure?
George Filley: Itís a portfolio. We have acquired local companies to get access to markets as well as their capabilities. We do have joint ventures (i.e. in China) to accelerate our deployment there. Due to local regulations there, itís easier to do business if you work with local entities.

We do a combination of sourcing local content providers and outsourcing technology capability from local consulting groups that do map specification. There is a difference between mapping the road network and local content provided from local consulting groups that do map collection. We have to differentiate the map from the road network.

We have to make a make or buy decision wherever we go. We need to maintain local knowledge and quality wherever we go. We make a decision based on the time frame and whatís already there. The bottom line is there are two main requirements: quality and the specification. One of the basic benefits NAVTEQ provides is a single specification for the navigable map.

Quality is a generic term. Quality is accuracy and standardization. The quality of the map has multiple issues. From the eyes of a customer, we provide a standard understanding.

If we offered a map based on local ways of doing things, weíd have to modify or do a different build for each country. As our customers have become global, we have created a standard specification that can be used anywhere because we have to from a company standpoint and a time-to-market standpoint.

MM commentary: Iím surprised at a portfolio organizational structure. The typical transition is to first sell through partners and then either to open sales offices (which lead to service and support offices) or leave these functions to partners to minimize costs and resource drain.

While a preferred method of operations usually becomes apparent, there is no one prescribed way to grow the business.

MM: Where are NAVTEQís resources located?
GF: If done right, itís actually a mix. People need to understand that the mapping world is not static. As soon as a version is done, itís changing. Maps change all the time. Depending on the level of business, size of the population and maturity of the market, we have to allocate resources to maintain our commitment to continue with the same level of quality.

What does it take to effectively maintain that quality? It has to do with the size of the population, intensity of the road network, number of kilometers of roads, concentration of population and the amount of driving that is centered around major metros with higher density. If all of those line up, itís likely weíll create an office there.

If itís an island like Bermuda or the Bahamas, we periodically bring people in to drive the island. Our resources in mature areas are based on maintaining quality as well as the expectations of our customers. Looking at new areas, this year weíre launching in India. We need individuals who have local knowledge. We take advantage of that.

We use the highest level of expertise available. Weíre opening an initial six cities this quarter in India and up to nine in the third quarter. We use individual consultants to do that. Weíll open a local office soon due to the size of the business opportunity. It depends on the expectations, level of business requirement and expectations for growth.

There isnít a pat answer. It depends on the requirement and expectations of our customers. Weíll sometimes take a leadership position for strategic purposes and develop the market before itís mature.

MM commentary: NAVTEQ is different from many businesses. In addition to just offering a database, they need to update that database on a regular basis. This requires local human intervention. The question is who does it: NAVTEQ or a partner?

They canít just open a few sales offices and claim to be international. They have to back it up with new data supported by people everywhere.

MM: How does NAVTEQ cover 60 countries from offices in 27?
GF: If you take into account our newest release called Entry Map, which will be introduced soon we have a global map with global coverage. We will cover the world. It depends on the level of requirement. When you have contiguous states, you can concentrate resources and handle a region.

MM commentary: Covering BeNeLux (Belgium, the Netherlands and Luxembourg) and the Far East from Hong Kong or Singapore are good examples.

MM: How do you manage 2,200 employees located in 140 offices in 27 countries?
GF: Itís broken into a logical organizational structure. We have a map division with responsibilities for product management, production and field activities. The headquarters resides in Chicago and that organization is broken out regionally based on our focus.

We have a hierarchy that manages at a country level, which reports to a regional level and feeds into the global headquarters. Local knowledge must be there. Itís the difference between an adequate versus an inadequate map. Understanding the nuances can make all the difference in the world. You canít get that in Chicago.

When you look at our customer base Ė the automotive industry, Internet, wireless, new devices and portable navigation devices Ė the vast majority are international or global. They expect us not only to provide the product but also the local knowledge. They base the success of their products on the accuracy of our database.

We canít afford to be myopic from a Chicago or Americas perspective. Our organization is broken up regionally to make sure that doesnít happen.

MM commentary: It appears as if there is a defined organizational structure.

NAVTEQ gets almost 60 percent of its revenues from EMEA (Europe, the Middle East and Africa). My impression is while they need to maintain standardization from top to bottom, they still need to be somewhat decentralized to address differences in different countries.

International Business Development

MM: How have you prioritized which countries to enter when?
GF: That is not an easy question to answer. Itís a battle. You have to juggle strategic priorities, customer-specific priorities and customer-segment priorities versus whatís right to do from a business perspective. No one has infinite resources. At a minimum, we have to maintain our commitment to quality.

We get RFQs and RFPs. When we go into a contractual agreement with a customer, thatís the highest level of commitment we can make. We have to be a part of their product plan. That prioritization happens as well. For example, letís say thereís a strategic requirement to enter Australia, but from a regional standpoint, to do Australia isnít enough.

You have to do New Zealand, too, or even Singapore and then Indonesia. Our priorities depend on the commitments weíve made and where we need to go. It is clear to us that Eastern Europe is a significant opportunity. We know we have to prioritize Hungary, the Czech Republic, Slovakia and Poland.

We have to do that whole band of countries. It comes down to economics as well. Where is the biggest bang for the buck for the next 12 to 24 months?

MM commentary: It appears as if theyíve already covered most of the developed world. The question now is where they can get the most profitability growth with the least risk in the developing world.

Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at muth@midwestbusiness.com.
Click here for Muthís full biography.

Previous Columns in 2006:
Q&A: Robert C. Meltzer, CEO of VISANOW in Chicago, on Electronic Passports (12/19/2006)
Q&A: Robert C. Meltzer, CEO of VISANOW in Chicago, on H-1B Visas (12/12/2006)
Q&A: Robert C. Meltzer, CEO of VISANOW in Chicago, on Online Immigration (12/5/2006)
Q&A: Morningstar CEO Mansueto on Role in International Investing Scene (10/31/2006)
Q&A: Morningstar Founder, CEO Joe Mansueto on Mutual Funds, Investing (10/17/2006)
Q&A: World Business Chicago on Chicago as a Success Story (9/19/2006)
Q&A: World Business Chicagoís Tom Bartkoski on Chicago vs. Other Cities (9/12/2006)
Q&A: World Business Chicagoís Tom Bartkoski on Economic Development (9/5/2006)
Q&A: Robert Noe, CEO of 1SYNC in Chicago, on Enforcing Data Standards (8/15/2006)
Q&A: Robert Noe, CEO of Chicago-Based 1SYNC, on Data Standards (8/8/2006)
Q&A: Robert Noe, CEO of Chicago-Based 1SYNC, on Data Synchronization (8/1/2006)
Q&A: Mike Jakob of Sportvision in Chicago on Creating Sports Innovation (7/11/2006)
Q&A: Mike Jakob of Chicago-Based Sportvision on Whatís Coming Next (6/27/2006)
Q&A: Mike Jakob of Sportvision in Chicago on Enhancement Technologies (6/20/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Japanese Culture (6/6/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Japanese Expansion (5/30/2006)
Q&A: Christos Fotiadis of ProtoGroup in Chicago on Compliance, Partners (5/16/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on Trade Shows (4/4/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on International Partners (3/28/2006)
Q&A: Lakeview Technology Founder Bill Merchantz on Overseas Expansion (3/7/2006)
Q&A: Steven Ganster of Technomic Asia on Chinese Readiness (2/7/2006)
Q&A: Steven Ganster of Technomic Asia on Chinese, U.S. Differences (1/24/2006)
Q&A: Steven Ganster of Technomic Asia on Approaching Chinese Expansion (1/17/2006)
Click for 2005 column archive.
Click for 2004 column archive.

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