This is the first of a 3 part series on how GIC (Global In-House Centers) can become a source of competitive advantage for their global organizations. This blog explores what World Class means, and why is it important for organizations.
Being World Class in India is a topic is very close to my heart. I have spent the last 13 years living this – 8 years building the McKinsey Knowledge Center and the last 5 years leading Fidelity’s Offshore operations. I have also had the opportunity of seeing this topic from an industry perspective. I have been involved in setting up the NASSCOM forum for multi-national companies, earlier called Captives, but we now call them GICs (Global In-house Centers).
Each GIC believes it’s unique. However, as we brought them together we realized that GICs even those across diverse industries, have so much in common. Most deliver solid value back to their parent enterprises and the stakeholders are very satisfied, but at the same time are also searching for answers on how to raise the game and deliver the next level of value. Over the last 3-4 years we have done a series of research projects to understand what various GICs are doing on value addition and how they can accelerate their value addition journeys.
Will try to explore the following 5 questions over 3 blog posts:
- What does being World Class mean for a service organization?
- Why is the World Class journey important?
- What are other service organizations doing?
- What are the key success factors?
- What do leaders need to do differently?
1. What does being World Class mean?Being World Class is not a destination, it is a journey. What was World Class just a few years back is now business as usual. Just a couple of years back, going beyond scale & delivery and building high-skill capabilities was a big aspiration. Thought leadership and business impact were the key buzz words. Today many GICs are already there or at least attempting to get there.The new benchmark for World Class for GICs is about breakthrough innovation. This is not just about incremental improvements, but how do you develop IP and new products and services that make a real difference to the company’s top line? How do you transition from being a Cost Center to a Revenue Center? How do you become a solution to the most pressing business problems the enterprise is facing? For example, how do you respond to tectonic shifts like digital disruption that is transforming so many industries?In summary, for me being World Class is about being the source of competitive advantage, the “secret weapon” for your firm.Many years back in the early stages of my journey at the McKinsey Knowledge Centre, we had set a visual picture for what success should look like. It was that in a few years’ time Harvard Business Review carrying a cover story on what makes McKinsey such a remarkable firm, and that the knowledge center was the secret to its success. That picture might still be a good aspiration for what being World Class means to a GIC!! 2. Why is the journey to World Class important?GICs have quite a unique opportunity to march forward towards being World Class and being the source of breakthrough innovation and competitive advantage for their enterprises. There are multiple factors coming together that make this journey not just feasible but also an imperative.
- GICs have matured and have a great platform to build on. They have built expertise, not just functional and technical knowledge, but domain and business knowledge. In most cases there are strong management teams that have credibility within the global organization. There is deep integration with the parent enterprise that facilitates knowledge transfer.They have built scale and often have multiple functions co-located. This is a huge opportunity for innovation, which is still under-tapped. Access to large customer data sets, which is an interesting opportunity for pattern recognition. And, proximity to local markets provides a great opportunity for building products and services for emerging markets that are so important for many global organizations today.
- That was the supply side, if you look at the demand side businesses are facing unprecedented velocity of change. Core markets are diminishing, new ones are emerging. Customer preferences are changing and customer delight is becoming a bigger imperative than ever before. Then there is the impact on the Technology megatrends – social, mobile, analytics and cloud. Combination of these trends means that traditional business models are getting disrupted and innovation is not a ‘nice to have’ but an imperative. This also means that enterprises are now more open for looking at new sources of innovation (for example the GICs) that might not have been on their radar earlier.
- Combinations of the above demand and supply side factors have resulted in enterprise raising their expectations from the GIC. A survey that McKinsey had done showed that while the current positioning of GICs might be that of delivery centers there is increasing expectation going forward of GICs making more value added contributions
- While we are talking about an upside, there is also a downside that GICs need to be aware off. Being stagnant can be the ‘kiss of death’. With just business as usual, you will lose relevance for the enterprise. Moreover, this is a very dynamic talent market, and thus it will be very difficult for you to retain your best talent. So, there is a fork in the road. If you move up the value addition journey you can create a World Class asset; however, if you stay stagnant, you might face terminal decline. Clearly, value addition for GICs is not just an opportunity but an imperative. Relevance and, in many cases, survival will depend on being able to forge a value addition journey that takes the GIC beyond cost arbitrage and scale & delivery as its raison d’être.
This blog has been slightly modified and published with permission from Nitin Seth. The original blog can be read here- http://bpoinsights.blogspot.in/2015/04/being-world-class-in-india.html