Truth or myth – Accelerated GBS growth

Introduction

Enterprises worldwide have diverse shared services setups. Some are beginning with a single-function unit, others operate multi-function Shared Service Centers (SSCs), and a few have genuine Global Business Services (GBS) organizations. Cost-savings is still the primary goal across all these setups. However, as cost reduction is a finite journey, the industry has started exploring strategic value addition. For instance, Tesco Business Solutions is venturing into the entrepreneurial zone to offer solutions to other Consumer Packaged Goods (CPG) industry companies. Shell has established a world-class Financial Planning & Analysis (FP&A) organization. Similarly, a leading non-public Polish company in the renewable energy sector plans to leverage its GBS organization as a strategic enabler to support accelerated growth.

Turning Global Business Services (GBS) into a strategic growth enabler is a priority for enterprises, but the path to success is yet to be determined. Many GBS leaders face challenges, leading to a re-evaluation of past initiatives and operating models. Some GBS are returning to traditional back-office functions or are even being dismantled. Additionally, leadership roles have high turnover, and the Technology Revolution – Generative AI – has already impacted the industry. In this context, with heavy cost pressure and the “mega VUCA” world, it is crucial to establish criteria for GBS program initiation, expansion, cancellation, or revolution. Experienced GBS leaders argue there is no better time to initiate a GBS initiative, yet we are not witnessing a GBS build-out and expansion tsunami.

Rethinking GBS Maturity Models

For the past two decades, GBS Maturity Models have provided a reference and guideline for building and improving GBS organizations. These models assess operational maturity across dimensions such as strategy, operations management, service management, people, customer satisfaction, or control frameworks. However, their relevance in the current context of growing GBS needs evaluation. As the market evolved, GBS Maturity Models became overly complicated, risking a loss of the big picture and hindering operational efficiency. While these models are valuable for establishing a solid operating foundation, they should not overshadow the need for strategic and tactical focus. Before deciding which definition of maturity you are after, consider the following questions: What is my scope? How dynamic is my enterprise regarding process changes, reorganization, C-suite priorities, or leadership turnover? What do I want to achieve?

In 2008, Accenture deployed the Maturity Model as part of a larger program called Operational Excellence. The scope was transactional, and as a Business Process Outsourcing (BPO), it operated in a back-office setup. The environment was stable, and even frequent change requests from clients did not result in significant shifts in operation. The contract and commercial arrangement were the key drivers for operation, and it was a relatively predictable environment with reasonable time to deliver the expected outcome. With its complex model aimed at building a healthy and compliant foundation, Accenture educates delivery teams so that they can see the bigger picture so that people engagement can increase and tangible business outcomes for clients can be identified and delivered. This program started the BPO transformation we experienced during the last decade, with a change from SLAs only to a Business Outcome approach.

In contrast, Discovery’s GBS environment was different. It was dynamic, fluid, and extensively exposed to business with clear expectations for relevant and quick solutions. Hence, I used the model inverse of the one at Accenture. There was no time for complex maturity models and programs; the focus was on starting with business outcomes to make an impact and prove value to the C-suite. In parallel, foundations were assessed, and we began fixing the core at the Operational and, most importantly, at the People level. Team restructuring focused on ensuring great talent in each region was a critical success factor. Operationally, our primary focus was cost via work consolidation into GBS hubs and accounting compliance enhancements, e.g., the 5R project focused on Balance Sheet reconciliation quality. However, in sync with the enterprise’s C-suite expectations and strategic goals, a key expected Business Outcome for us was Cash Flow generation. Working closely with procurement, business, and treasury, along with great support from the global CFO, the GBS co-built a very efficient cash flow engine where CTC and PTP teams played a key role – contributing significantly to $3bn free cash flow generation in 2019.

What is your definition of maturity, and does it even matter today? Business outcome is the king, and obviously, maturity can be a path – BPO example and it is not a must prerequisite – Discovery example. Which model is better suited for your operations? Step by step, based on heavy and complex methodology or the one that starts with the business outcome – leapfrogging the traditional steps to build operational maturity or expected business outcome.

Four Strategic Elements for GBS Growth

To foster strategic GBS organizations, consider the following four vital strategic elements:

a) Establish Trust with C-Suite Sponsors
GBS leaders must establish trust with C-suite executives to secure their support and sponsorship. This involves demonstrating the value and potential of Global Business Services (GBS) in achieving the organization’s strategic goals. Leaders can gain confidence and support by aligning GBS initiatives with broader business objectives and building strong relationships. Credible and knowledgeable teams are vital in setting up and protecting a healthy foundation of operations and driving high-quality transformation. Communication and stakeholder management are essential in implementing changes if conditions or dependencies change. Intimacy is about being seen as a C-suite peer, a colleague they would want to spend time with outside of work, who shares similar goals and values. Finally, the lower the self-orientation, the better. The formula is simple – Trustworthiness = (Credibility + Reliability + Intimacy) / Self-orientation.

b) An Entrepreneurial Mindset
The role of a Global Business Services (GBS) leader is similar to that of an entrepreneur, and they must sell their services to internal stakeholders. They must continuously convince functional leaders to migrate their operations under the GBS umbrella, making effective navigation of corporate politics essential. Understanding organizational dynamics, power structures, and individual motivations can help leaders build positive relationships and navigate potential obstacles. Being seen as easy to work with and adaptable is crucial for gaining stakeholders’ cooperation and support.

c) Tangible value for shareholders and sponsors
Global Business Services (GBS) organizations must consistently deliver tangible value to shareholders and C-suite sponsors. Beyond cost reduction, this includes providing innovative solutions, driving process improvements, and delivering measurable outcomes that eventually contribute to the organization’s bottom line. GBS leaders should continuously monitor and communicate the value generated by GBS operations to maintain support and secure future investments. Tangible value can be delivered with operational value creation and how we react to a crisis. For example, one of the strategic transitions went totally off track. Transition Lead, including overall governance, failed to manage local businesses and stakeholders properly. It all resulted in severe operational performance issues. This led to a negative business case hit and, worse, significant damage to trust and reputation towards new stakeholders, mainly HR. When the issue was discovered, a top-notch team was mobilized to deep dive into the root cause, mobilize a recovery plan, and execute it. It took many long days and evenings, but eventually, the issue was fixed. Stepping into fire mode and managing escalation with a positive outcome, ensuring no further noise, undoubtedly delivered tangible value to senior stakeholders. We all would want to avoid this situation in the first place, but undoubtedly, we are an industry of escalation and challenges. Paradoxically, this case enhanced our brand image as the one who can act with courage during a crisis and the one who will deliver what was promised at the end of the day.

d) Move beyond a cost-centric approach.
While cost reduction is fundamental to Global Business Services (GBS), leaders must move beyond a solely cost-centric approach. GBS organizations should focus on driving value, enhancing capabilities, and becoming strategic enablers for the business. They need to expand the scope of GBS to include strategic functions, leverage technology advancements, and actively contribute to business growth and transformation.
At Discovery, besides global CFO operational expectations mentioned earlier, i.e., working capital or Financial Close compliance and timelines, Finance was to lead the way in Transformation for the whole enterprise. GBS – aligned to global CFO – became a transformation pioneer, setting an example for others. The Warsaw hub, established in 2016 as a greenfield project, was the first near/offshore location for Discovery Operations. Later, a presence was established in New Delhi and Mexico City. This initiative aimed to enhance cost position and improve the quality of operations through standardized, process-based work focusing on Customer Experience (CX). Plus, it built a global foundation for a new way of operating in the company. After GBS’ success, other functions followed, including FP&A, HR, and Controllership. Today, Warsaw remains a key strategic hub for Global Operations.

In the second season of the GBS Mastermind Podcast, Mattijs Backx, the global leader of PepsiCo GBS, emphasizes the importance of rebasing costs within a grace period of 1-3 years. He highlights that GBS is about services, capabilities, and solutions. Understanding the company’s DNA and aligning GBS initiatives with broader strategic goals is crucial. Mattijs encourages GBS leaders to collaborate, innovate, create, and celebrate, as these are critical components of GBS’s mission to fuel growth.

Steps to Drive GBS Success

When “selling” the GBS concept or expanding existing GBS operations, leaders should consider the following steps:

Step 1: First things first – Basics of GBS operations

Before seeking strategic growth or expanding GBS operations, leaders must ensure that the foundational elements of GBS, including robust processes, efficient operations, clear governance structures, and a strong talent pool, are in place. A solid operational foundation is crucial for effectively scaling GBS. Often, GBS leaders encounter operational challenges when they assume their new roles. These should not be ignored; a healthy foundation must be built before embarking on the value journey.

Step 2: Stay current with problems and timely to solutions

GBS leaders should engage with shareholders to understand their pain points, challenges, and strategic goals. By addressing these issues with tailored and realistic solutions, leaders can demonstrate the value and relevance of GBS in driving business success. In her episode of the GBS Masterminds Podcast, Cindy Gallagher, SVP of Shared Services, emphasizes the importance of listening. “GBS needs to start listening to internal business partners and understand what they’re looking for while anticipating their future needs.

Step 3: Foster a culture of curiosity and courage

Leaders should foster a culture that embraces curiosity, innovation, and continuous improvement. Encouraging employees to think beyond cost reduction and explore new opportunities for value creation can drive GBS growth. Leaders should provide the necessary resources, incentives, and support to empower employees to contribute their ideas and expertise. Operating in a global environment creates fantastic opportunities to leverage cultural diversity. During the first season of the GBS Masterminds Podcast, Angela Mangiapane, President of Mars Global Services, boldly stated: “I refuse to call GBS a back-office and to look at it only from a cost perspective. Our Mantra from Day 1: Create value and insights through scale, technology, and unique skills.

Step 4: Focus on effective stakeholder management

Effective stakeholder management is crucial for GBS leaders. This involves understanding stakeholders’ needs, motivations, and influence within the organization. By actively engaging and building positive relationships with stakeholders, leaders can navigate corporate politics, gain support for GBS initiatives, and overcome potential obstacles. Leaders who grew from operations may struggle here. They tend to focus excessively on operational excellence and may not focus enough on checking the pulse of key stakeholders. A subjective pulse can sometimes be as important as objective facts and figures.

Step 5: Embrace a servant leadership approach

GBS leaders should adopt a servant leadership approach, emphasizing the leader’s role in serving and supporting their team members. This creates a collaborative and empowering environment. Leaders can unleash their full potential and drive GBS’ success by valuing and developing their team members. Leaders need to appreciate the unique journey of GBS growth, celebrate milestones, recognize achievements, and maintain a positive and enthusiastic mindset.

Conclusion

To grow GBS, leaders must prioritize building trust, being easy to work with, delivering relevant and acknowledged value, and moving beyond cost reduction. While GBS maturity models have their place, they should maintain a strategic focus and clearly defined outcomes. Transformation can be complex, and GBS is at the core of change. Many say GBS is the change. A bold and ambitious goal differentiates us and inspires our associates. However, every promise we make must be delivered with tangible solutions. By following these steps, GBS leaders can navigate the industry’s complexities and cultivate a thriving GBS organization. Let’s embrace the opportunity to grow GBS further and unlock its potential.

Maciej “Magic” Piwowarczyk

Global GBS Executive | Career Coach & Mentor | Shared Services Senior Advisor

www.transformwithmagic.com

Thanks to Abhinav Shrivastava and Raj Basotia for their efforts in putting together this article.