HfS takes the view that the next steps in outsourcing evolution must embrace a firm commitment to automation while also pursuing a path that views everything that outsourcers offer 'As a Service.' This idea is well beyond simple process automation but has at its heart the idea that a combination of process and outcome-based delivery models will have a profoundly positive impact on the value outsourcers deliver. But it's not easy, and these are early days.
For background reading, check out:
Hello As-a-Service Economy, goodbye Outsourcing, Part 1
Research standoutsThe big question HfS leaves hanging in the air centers around what leaders say they want and what's actually happening on the ground. Over three graphics, HfS makes four important observations:
- Around two-thirds of leaders say they are actively pursuing strategies to reduce reliance on people. That's the automation piece.
- This is not reflected at the operational level where 53% of SVPs and up believe AaS is important/very important while only 29% of VPs and below share that same view. That is a massive delta.
- C-suite initiatives focus on driving cost out and improving service flexibility.
- Depending upon size, 29-36% of enterprise buyers are viewing AaS initiatives as near-term (within two years) opportunities. That leaves 64-71% taking a much longer view with a shocking 19% of representatives from companies in the $1-10bn range saying AaS will never be a planned initiative.
With two notable exceptions, healthcare and life sciences, the authors posit:
Simply put, most major enterprises still believe they have mileage in the traditional labor arbitrage model. There is clearly an absence of a burning platform—or capability—to drive change in the foreseeable future.
What is truly worrisome here, is the speed of change in today’s global environment and what could happen to many of the organization simply paying lip-service, when it comes to hauling their antiquated back offices out of the dark ages. And, heaven-forbid, we are struck by a renewed global downturn, with so many of our enterprises failing to adapt to the modern business environment.
HfS argues that:
One of the biggest obstacles to enterprises achieving progress towards achieving As-a-Service Ideals, is this huge delta between the desire of operations leadership to make the transition and the lethargy of the middle management layer.
I take the view that this analysis, while commendable and informative, doesn't strike at the root causes for resisting change at the operational level. Characterizing it as middle management lethargy is somewhat disingenuous because it fails to recognize the problems mid-tier managers face in today's environment. It also fails to recognize the role of the top tier leaders in driving change.
This discussion leads us down the road of discussing change management and what it takes to understand truly the barriers to change. There are plenty of theories on this topic. It is a perennial discussion in the context of technology introduction. For example, I recall vividly the uproar among Salesforce users when the company undertook a UI refresh and moved a particular button around on the screen. In the eyes of many users, Salesforce suddenly became clunky even though the change was designed to represent an improvement. Salesforce reverted, learning a powerful lesson about the need for pristine communication.
This is a trivial example, but it is part of the human condition that most people, not everyone, but most, do not like change, frequently responding to change badly. This is especially true where change is technology driven because that is a metaphor for job insecurity. We saw this when production was automated via CNC machines in the 1980s. We saw this again when ERP was introduced in the early 1990s. And here we are again with yet another shift that has at its heart the explicit desire to replace humans. Is it any wonder that people feel threatened?
Six things we must understand
I can make six foundational observations based upon experience and from numerous conversations with both leaders and those who think change will impact them in a negative way.
- Great inspirational leaders are not enough; leadership isn't a one person sport. Steve Jobs needed Tim Cook and many others.
- Impending corporate pain is a terrific motivator - for which the poster child has to be IBM and its near death experience in the early 1990s.
- Unraveling process ossification doesn't start with a technology fix. It starts with a changed mindset.
- The more management layers that exist, the more difficult it becomes to identify responsibilities.
- Culture gets hardened over time and becomes the moat that protects itself from unwanted invasion. Paradoxically, culture can kill you when it is too self-important.
- Antibodies will flood in to prevent any change faster than you can get a Uber driver on your doorstep. This behavior is true of any organization, is often hard to see but which is commonly met with passive resistance.
Dealing with these issues is tough and sometimes brutal work. Among the projects I have been involved with, many sessions had more of a therapist's feel than that of moving forward.
The tough stuff
Most frequently, I've found that the sense of demoralization that emerges is something managers fight shy of tackling. Simply pointing to a brighter future while dangling pink slips is not a recipe for success. Similarly, the relative powerlessness among some ranks makes for excruciating difficulty in getting action points to stick.
One problem I see in the HfS study comes from the C-Suite emphasis on cost efficiency. There is a clear law of diminishing returns on this topic that I have seen among some managers and which appears to be getting worse. The idea that automation solves all ills is not removing or easing the responsibilities that managers feel are imposed upon them. If anything, the heat is being turned up on the pressure cooker of management duties.
Yesterday I heard from one manager who is kicking back at increased reporting requirements. He's asking a basic question: "How does this help me add value to the company's activities?" There has been no answer so far.
A short while ago I was asked to comment on a particular initiative. The presentation was enthusiastic and novel, but the room went deathly silent when I asked: "How is this expressed for quality enablement purposes?"
Both these anecdotes have some measure of cost efficiency attached to them but those imposing had not thought through the problem from a multi-disciplinary or outcomes perspective.
On occasion, I've had business leaders bemoan the lack of progress in moving forward otherwise perfectly good initiatives. "Why don't they get it?" is a common question. The answer has little to do with their commitment, but everything to do with having the right people leading the changes. These people must be as committed as the leadership and who can communicate effectively with the remainder of the organization.
Leaders rarely see the extent of dysfunction that exists inside their organizations. It takes a very brave leader to acknowledge the failings of his or her baby and then act to fix the issues. Apart from the fact that individuals don't scale, C-Suite people have numerous pressing and competing problems to solve. Delegation ought to be the answer but if you're delegating to those who in turn will be the 'threat from above' then good luck with that one unless there is a Plan B and C in place.
The little things
Occasional contributor Euan Semple is firmly of the belief that change is something that happens on an individual basis. That is true, but even small changes among a few hundred self-organizing people in a 20,000 person organization rarely have a significant impact. (Prove me, wrong folks!!) Let's face it, it takes serious gobs of self-confidence and conviction to stand up and say 'no' and then articulate why. Or better still, disrupt from the inside out. In his most recent blog post, Semple says:
Usually we are not in a position to instigate wholesale change. We don’t have the authority or budget. Those above us, and who measure our performance, are stuck in the old way of doing things and have stopped listening to our attempts to paint an enticing picture of a different future. What to do?
Maybe that should be “What to don’t?”? Maybe we have to start saying no more often? Maybe we have to begin to exercise a degree of artistic interpretation of what we are asked to do? Maybe we have to act dumb and slow down things that maintain the status quo and put more energy into things that will bring about change?
Maybe we need to get used to asking for forgiveness rather than permission? Maybe we need to be careful while we are doing so?!
I know organizations that work on the forgiveness principle. They do not appear to have a better success rate at implementing change than those that have a top-down, strictly applied hierarchy.
Having said all that, I am encouraged by a memo sent by Howard Schultz, CEO Starbucks to all 190,000 employees. It was in response to recent volatility in the international stock markets and was reproduced by Inc:
Our customers are likely to experience an increased level of anxiety and concern. Please recognize this and--as you always have--remember that our success is not an entitlement, but something we need to earn, every day. Let's be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations.
We have written extensively about the changes Schultz is bringing to the company. When you see this type of memo, then it is relatively easy to see how Schultz is framing change in the context of the customer. Combine that way of thinking with the idea that happy employees will march to the visionary drumbeat and you have the bones of a change management solution to the problems business is trying to solve.
Disclosure: Salesforce is a premier partner at time of writing.
Image credits: Crushing it - @gapingvoid, C-Suite, via HfS