Sharing or Streamlining?

Recently, Risk Head of a fortune 500 company, a top global confectioner, asked me on how to approach monitoring of their accounting shared services function which had been outsourced a year back to a global BPO firm and had not been monitored since then. It came as surprise to me; as they had no prior plans to monitor and manage the risks involved with the new business model.

Nowadays many Companies are looking to implement shared services for driving scale to reduce cost and increase efficiency by combining their common back office functions dispersed across various business units. This could be anything from Human Resource to Quality Assurance and even Finance which could either be in-sourced or outsourced to a BPO firm.

Many difficult decisions are to be made before shared service function may start delivering desired results. Some of these decisions are irreversible in short term and thus risks have to be better understood beforehand.

It's a bad strategy to impose a centralized control function at an operational level in the belief that centralization will straight away provide a stable platform for achieving best value results.

Majority of share service champions both at the client and vendor level have come from an era of proprietary protectionism and therefore are having some difficulty in grasping the new processes that reflect today's technology convergence practices. In essence, they are making decisions based on technological limitations that no longer exist instead of the operational imperatives that are required.

Unfortunately in most of the cases, the people, who are too busy working in a standardized process environment, think that working in it is going to make them better at working on it. It's like they don't identify the destination before they start peddling the bicycle. Many choose shared services as they are too busy doing things and do not have time for improving or streamlining the processes and the functions aren't getting any better to provide them with substantial cost benefit advantage.

When Companies choose a new business model without considering non-confirming information and the associated risks; it is like they leap in their car and take off; knowing that they have a pretty good idea where their destination is, but they haven't timed it. They don't get into the business specifics that are part of the route to get to the goal or destination.

Visualizing as to how risks can be perceived differently is one of the weakest points for anybody getting involved with in a shared service situation. Bear in mind; if you operate out of need, rather than opportunity, you will always make poor decisions.

Let's understand it from two brief stories from NASA.

Scientists at NASA have developed a gun for the purpose of launching dead chickens. It is used to shoot a dead chicken at the windshield of airline jet, military jet, or the space shuttle, at that vehicle's maximum traveling velocity. The idea being, that it would simulate the frequent incidents of collisions with airborne fowl, and therefore determine if the windshields are strong enough to endure high-speed bird strikes.

British engineers, upon hearing of the gun, were eager to test it on the windshields of their new high-speed trains. However, upon firing the gun, the engineers watched in shock as the chicken shattered the windshield, smashed through the control console, snapped the engineer's backrest in two, and embedded itself into the back wall of the cabin. Horrified and puzzled, the engineers sent NASA the results of the experiment, along with the designs of the windshield, and asked the NASA scientists for any suggestions.

The NASA scientists sent back a brief response: "Thaw the chicken."

In another story, when NASA began the launch of astronauts into space, they found out that the pens wouldn't work at zero gravity (ink won't flow down to the writing surface). To solve this problem, it took them one decade and $12 million. They developed a pen that worked at zero gravity, upside down, underwater, in practically any surface including crystal and in a temperature range from below freezing to over 300 degrees C.

And what did the Russians do...?? They used a pencil.

Remember, it is the application and the purpose that drives value.

It is better to expand the context which could reveal win-win options / opportunities of changing business model and would not amount committing to unnecessary and impractical process re-engineering, standardization and benchmarking across the business units.

Thus it is critical to create a community of diverse talent committed to shared results and not so called sharing services merely to reduce cost. It is critical to ensure a shared responsibility among all players that adds uncommon opportunities.

In reality, the adaptive capacity of a new business model reflects a collaborative process in which key stakeholders work toward identifying and achieving a collective, best value outcome. In practical terms, the unique operating strengths of different stakeholders are actually leveraged to achieve both stability of processes and consistency of outcome.

~ it is the application and the purpose that drives value.

~ ~ taste the difference.

Bench Racing

Recently, one Company had sacked one of its director on disciplinary grounds but it was shown as an amicable parting away. Now, what kind of example it is setting for its employees?

Let's talk about business controls from a different perspective today. What is the purpose of having good brakes on a car when you don't realize when you should use it? Some people say having brakes on a car is good control which help you innovate, introduce and advance. They say, like brakes, business and technology controls too allow you go faster.

But imagine the adventure of driving at breakneck speeds of the Grand Prix race. Don't just get excited about sleek blue racing suits and colorful helmets; Listen to your instructor's first lesson about the controls. It's a bad idea to straight away get out on the tack and immediately drive fast. It is time to do a lot of bench racing. Now what the hell is this bench racing? It's sitting on an empty bench and imagining oneself driving the car around the track.

Your ability to bench race determines your success as a race car driver. You have to rehearse braking, downshifting, and steering long before you run the course and immediately thereafter. You correct your mistakes off the track, as there is no time to do it when you are flying around the curves. If you don't bench race, you will repeat the same mistakes over and over again. At that speed you don't have the time to think so take advantage of your time off the track.

At incredible speeds of a car racing if you lose control once, you will become more conscious either to smash the car out of fear next time or to drive it like a snail. This is a right time to reflect and do some bench racing. Find a bench, close your eyes and deliberately run a new script in your mind. See yourself executing the necessary moves to make a turn. Never look where you don't want to go.

As a result of bench racing you will be able to hit the brakes gently, downshift and move the steering wheel at the right time. You will turn smoothly with double-clutch and will fly into the straightaway perfectly with super speed, soon to get the flag for finishing as a winner.

Similarly, in business, the key to effective strategy and execution is having correct thoughts and values upfront. The speed with which you achieve your goals and objectives directly relates to how clearly and how often you visualize them. Unless there are correct thoughts, there cannot be action; and when there is correct thought, the right action follows. You create your reality twice; first in your imagination and then in the world. When dream is grand enough, incredible amount of energy surfaces, whether it is selling a new product or starting a new business, the way you visualize the outcome determine the direction, ease, and speed with which your move.

Now, from above, draw an analogy to understand business controls as well. Companies typically assume risk-averse approach after a control failure or a control crisis. They throw fortress of rules and procedures to fight enemy that got in once. Most efforts are spend on mainly to hide it or to do some reputation damage control.

Most companies mainly adopt following two ways to deal with the crises that happened. The first is to have super tight controls i.e. disciplined financial and accounting system with tough internal and external auditing processes and, line managers are required to review and act on every audit's findings. The second way is to have good internal processes, such as rigorous hiring procedures, candid performance reviews, and comprehensive training programs. However, when it comes to acceptable behaviors, rules, and regulations, one cannot train people too much.

There is one more way although less common - vision and culture of integrity, honesty, transparency, fairness, and strict adherence to rules and regulations. Never focus on what you don't want but, visualize successful confrontation with your team about objectives, ethical values and vision of a culture, where there can be no head fakes or winks. People who break the rules do not leave company for personal reasons or to spend more time with their families but they are hanged publicly and the reasons are made painfully clear to everyone.

If you have got the facts right and have a vivid vision of how you will deal with a situation which you don't want to see it happen again, you should be comfortable laying out who broke the rules and how.