Globalization Wisdom Series: Secret #2
Posted on October 27, 2009 by Atul
This
is the third in a series of an excerpt from the newly published book by Atul
Vashistha, Globalization Wisdom: The Seven Secrets of Great Globalizers.
transformation is one way that great globalizers leverage services
globalization to create competitive advantage. Services globalization should
now constitute an important part of the strategic plan of any firm. As I have
said before, if your three-year or even one-year business plan doesn’t include
the globalization of services, throw it out and rewrite it or you’ll be written
off. That may sound harsh, but in today’s competitive business world services
globalization is no longer an option that a few elite companies take; it is a
business imperative for any company that wishes to survive and flourish,
especially in this economy.
discussed in Secret #1, services globalization is much more than offshore
outsourcing. It is the complete embracing of cross-border operations as a means
to reduce costs, improve quality, and enable business growth. It is also a
means for business transformation.
that’s the second secret of successful globalizers: Welcome globalization as a
transformation lever. Companies
that have really embraced the idea of globalization as a transformation lever
see it as a way to do business differently. They use it as a lever to, for
example, change the way they keep in touch with their customers, launch new
products, and even treat their employees.
globalizers see that globalization is about more than cost savings and they ask
themselves: What can globalization do for my business in addition to reducing
costs? How can I leverage it to
build competitive advantage? Once they figure out the answer, they act quickly
to realize it.
are six steps to leveraging transformation opportunities in services
globalization:
o Generating
solid leadership commitment. A
successful business transformation—especially one as highly visible and
potentially disruptive as globalization—requires the cooperation, buy-in, and
commitment of an organization’s employees, from the top to the bottom.
o Developing
a new organizational design and structure. Specifically, the organization must define the new roles for the
global delivery centers and redefine the roles for existing centers—developing
new operating models that account for new jobs and work structures, performance
management systems and governance teams.
o Collaboratively
mapping out and executing change management. Here, change management involves helping existing team members to
become resilient, enable knowledge transfer, engage resource planning and
communicate.
o Communicating
effectively. Effective communication
involves planning for the human impact of the change and identifying potential
points of resistance as well as developing a plan to accommodate that impact
and deal with that resistance.
o Educating
and developing new competencies. The
education process should begin with the identification of training needs and
development of a training curriculum for both the existing onshore and the new
global organizations.
o Redesigning
business processes to include
automation, new onshore/offshore interactions, knowledge management, and other
support systems and to manage increasingly complex business networks. Sometimes
process redesign involves thinking about business practices in an entirely new
way.
few years ago, Electronic Arts (EA) began to realize that they needed
innovation from outside the U.S. to address increasingly large client bases in
Asian and European markets. They asked: How do I grow my business in Asia where
the typical U.S.-type PC console mode doesn’t work? Globalization, for them,
was about addressing the market in a whole different way. Now, they have facilities
in China and India and leverage partners in Ukraine, Vietnam, China, India,
Russia and other such locations.
CEO
Ken Kannappan told me how he looks for
the unique advantages that each potential location will offer. “Europe, for
example, is at the forefront of Bluetooth® technology, so that’s where we
develop those products. China is a far more cost-effective location for some
processes, compared to California, so we have functions done there, too. It’s
natural to get those competency centers where you can get a rich trove of
talent of the most cost-effective process.” I heard similar stories from Yahoo,
Oracle and Google engineering executives.
formerly Gecis, succeeded in its global business transformation initiatives in
part because of the solid leadership commitment and buy-in that started at the
top with CEO Jack Welch. Gecis began in India as a small operation and became
one of the largest offshore operations in the world. Early on, top-level
managers created a governance team with clearly defined strategic and tactical
objectives to guide Gecis in its transformation process. Eventually the
governance team, still fully supported by top-level management, expanded its
focus to include increasing the company’s operational complexity. It was that
type of enduring commitment, combined with the leadership mandate handed down
from the top that allowed Gecis to leverage services globalization as a
business transformation agent and be the successful global services firm,
Genpact, today.
Holdings plc (HSBC) is a good example of an organization that developed a new
organizational design and structure in order to facilitate its global business
transformation. Six years after opening its first offshore operating centers in
China, HSBC had established offshore operations in ten Asian countries. That
globalization was coordinated by a group called the Global Processing Team,
which evolved from a small team reporting to the company’s UK Senior Manager
for Personal Financial Services to a strategic division of its own that reports
directly to the Group CEO.
emergence of an overarching governance group to guide HSBC in its newly
expanded global endeavors—and the flexible expansion of the group
itself—allowed HSBC to take full advantage of the business transformation
opportunities presented by the company’s globalization. As they undertook
global sourcing and transformation, leaders like P&G not only focused on
effective knowledge transfer but also worked to ensure that 99.5% of their affected
staff was placed with the outsourcers or alternate employers. Other firms such
as Schneider Electric made sure that cultural training was done at both ends to
enhance mutual understanding and collaboration.
communication is the fourth critical step to successful business
transformation. E-Loan
found that by communicating effectively, openly and honestly that it built
trust relationships with its clients and it educated them on the benefits of
services globalization, in turn allowing the company to reap the cost savings
and other benefits it had envisioned for its global business transformation.
many cases, the transformative opportunity in globalization is the ability to
focus on core competencies. Group VP and CIO Ron Kifer explains that
globalization allowed Applied Materials to transform his organization, by
becoming focused on those core competencies that added competitive value.
globalization provides us with the opportunity to take all those me-too
capabilities that don’t add any value to the business and move them to where
they can be most effectively supplied, where we can take advantage of the more
mature processes, metrics and capabilities of our strategic partners and
refocus our entire internal team on real value-added core competencies,” he
says.
globalization increases the complexity of an organization’s business networks
it is vital that those networks be optimally managed to ensure the highest
level of efficiency in the delivery cycle. Otherwise, the potential benefits of
a global business transformation could easily be eroded by new inefficiencies.
these six critical steps, many companies have demonstrated successful business
transformations through services globalization. What began as a purely
cost-saving proposition has now proven itself as a fully transformative
lever—provided that organizations use it as such.
other words, if an organization goes into a globalization initiative with only
cost savings in mind and does not take all of the six steps highlighted here,
the company may or may not achieve significant cost
savings, and likely will not see the
other benefits of a full-scale business transformation.
globalizers, in contrast, take on a globalization initiative with cost savings and other benefits—perhaps improved
efficiency, increased capacity and quality of service delivery—in mind. They
expect globalization to be a transformation lever for their business and they
take the six steps necessary to ensure the realization of that transformative
aspect.
globalizers understand that, as Andrew Grove (Former CEO & Chairman of
Intel) said, “A corporation is a living organism; it has to continue to shed
its skin. Methods have to change. Focus has to change. Values have to change.
The sum total of those changes is transformation.”
Vashistha is Founder & Chairman of Neo Advisory (formerly neoIT), a leading
management consultancy since 1999, focused on independent, objective and
actionable advice to enterprises that seek to transform their organizations by
capitalizing on outsourcing and globalization. He is also Founder of NeoGroup,
a firm focused on managing, monitoring and improving supply relationships. His latest venture is
BestOutsourcingJobs.com, an online job portal focused on outsourcing careers.
He can be reached at atul@vashistha.com.
Filed Under: Global Work
