Cogny cogitates on a new industrial revolution

Patrick Cogny is Genpact's Global Business Leader for Manufacturing (Click for Bio)

I think it was back in 2006 sometime that I was working with a major global enterprise which was deliberating a wild swathe of BPO deals, and there was this upstart little Indian company, which had just shed its weird name (“Gecis”), and was vying to win the F&A business, in spite of fierce competition from the likes of the traditional establishment that included Accenture, ACS, IBM et al. The conversation quickly turned to “which one of these providers can actually do supply chain accounting for multiple European destinations”.

“Not to worry everyone, we have ze perfect set up in Romania for you” piped in a dashing young Frenchman. And there closeth the deal, at the time one of Genpact’s largest, and I first met Patrick Cogny.  Since then, Patrick has quietly developed a very strong reputation as a deep thinking and very personable executive, helping first grow Genpact’s European capabilities before taking on the role of leading one of G’s largest industry practices, manufacturing and services,almost three years’ ago.

Anyhow, we managed to lure Patrick away from his newly-formed habit of wandering aimlessly around the streets of his adopted New York City to get some lowdown on the crazy early days of Genpact, and how the firm is approaching the manufacturing sector with what he calls the “New Industrial Revolution”…

Phil Fersht (CEO, HfS): Hi Patrick, thanks for spending time with HfS today. You’ve been one of the real characters behind Genpact’s rapid growth, both in Europe, and now in the States. However, before we get into your current role and plans, can you give some insight into your background – how you started your career and why you found your way into the Genpact organization.

Patrick Cogny (Genpact): I started my career with GE a long time ago – disclosing details would betray my age – I spend 12 years in the Healthcare business of GE, most of them in a high-tech division designing and manufacturing X-ray sources. I held roles there in supply chain, sourcing, manufacturing, Six Sigma, Quality and After Market Services, and worked both in beautiful Paris, France and Milwaukee, Wisconsin.

So I was a real industrial guy, and then a phone call from an ex-boss got me into a role at GE Corporate in Brussels to lead the back-office optimization initiative for GE Europe, across all of the GE businesses. Genpact – then known as Gecis, the then captive unit of GE – thus became a key supplier and partner. I loved what I saw, so when Genpact was spun-off as an independent business, I immediately accepted the offer to join them as their CEO for Europe in early 2005. It was lots of fun to build that business from the grounds up, getting our first clients, recruiting folks, training them in the arts and science of our trade, and setting up new sites in Bucharest, Cluj, Rabat, Lublin…

In the summer of 2011, I took on a global role leading our Infrastructure, Manufacturing and Services vertical, leading a global team of about 15,000 associates. I’m now based in (really beautiful) New York, after having lived in the past 10 years in Paris, Brussels, Budapest and Bucharest.

Phil:  So tell us a bit about the crazy early days when Genpact was still a little upstart frightening the life out of the established BPOs. Looking back, you guys really changed the industry and brought a whole new competitive bit to BPO, as we know it today. What was it like to be part of it?

Patrick: Loads of fun is the obvious thing that comes to mind! It felt like being in a start-up – albeit a large and well-funded one. But it was also scary – we were going up against the big boys, competitors who had literally decades of relationship with their clients, who knew everyone on their leadership teams. But as my first client in Europe said – “having an established relationship works both ways” – his company was simply fed up with being taken for granted by their large incumbent, tired of a track record of poor execution, and for them like many others we were a breath of fresh air.

Phil: And how different is Genpact today? Have you gone all “corporate” now, or do you still have some of the old spirit, attitude and values?

Patrick: Some things have not changed at all: the absolute maniacal focus on customers satisfaction, the hunger for growth, the curiosity and the passion for bringing new solutions to life, and a very hands-on “get it done” culture that comes from our deep operational roots. At the same time, we have changed a lot of things, every year. This market has been everything but static, and year after year has presented new challenges and opportunities.

When I look back, I see a huge evolution in the way we do things compared to 10 years back. Labor arbitrage is not a topic anymore, productivity and business impact are. We’ve gone from being IT agnostics to having strong points of view on technology solutions that drive process transformation. We used to rely extensively on Subject Matter Experts experiential knowledge, we now leverage the Smart Enterprise Processes compendium of benchmarks, practices and best in class designs. We would only do outsourcing and offshoring, we now do design of end-to-end processes and help our clients setup captives and GBS models.

So, along the way we’ve become more sophisticated but I see the same basic principles on how we operate on a daily basis in terms of culture and values. There is one tradeoff though we had to make – due to the growing sophistication of our offerings and solutions, we had to focus – focus on select verticals, where we have folks who grow their deep understanding of client context, and focus on key solutions where we can invest and provide transformative solutions.

Phil: You talk a lot about the New Industrial Revolution. Can you share your vision with our readers – and how your role plays into this?

Patrick: Well the industrial world is becoming sexy again ! There’s a lot happening in Manufacturing itself, such as nanotechnologies, 3D printing of parts, that will make new types of products possible, and will enable unprecedented levels of flexibility and customization. This will require a reshaping of supply chains, and an entire new level of Analytics there, for which we are very well positioned.

But the piece that most excites me is that products are becoming intelligent and communicant. You just read the papers today, we are just starting to realize how much data our phones, but also large pieces of equipment such as aircrafts, are constantly collecting and broadcasting. And we are just starting to realize that few organizations (apart from the NSA!) are equipped to handle and leverage that information. We have been associated with the most advanced manufacturing organizations for a long time, and have worked side by side with them to Connect their equipment, Collect the data they gather, Compute the information to gain insights, and use it to Control the equipment and improve its reliability, output, or profitability. We are bringing this experience and the tools and methodologies we are developed there to the field of Industrial Machinery in a big way, and we are doing this with a combination of Engineering depth in understanding the equipment’s applications and features, Analytics skills to exploit the Big Data that is collected, and Process management skills to setup industrial strength reliable and repeatable control and feedback loops. This Machine to Machine, or Internet of Things space is very fascinating, at the intersection of engineering, after market services, big data, cloud, and we believe Genpact can bring tremendous value and impact there, so watch this space for more!

Finally, as all these changes take place, I think that large industrial conglomerates will realize they have an opportunity to drive the next generation of outsourcing. Most large industrial organizations went on the SSC journey very early on, and have established already a footprint of back-office centers, often captive. There is still huge value to be realized for them by moving to modern outsourcing constructs. See when they were setting up their captives a decade ago, the game was labor arbitrage, and industrial companies had already started setting up plants in lower cost locations.

The BPO providers landscape was also not mature, with little competition among very few large providers, so it was a very logical step to build captives at the time. The situation has changed a lot, there is a healthy competitive BPO offering now, and the game going forward for back-office is one of automation, analytics, which frankly is completely outside of industrial companies’ core expertise. We can now build solutions for a company that has already a low cost SSC footprint, that save them 30%-50%+ on costs, whilst giving them the flexibility they need in a rapidly changing environment, and freeing up investment capacity for their core areas of focus.

Phil:  Our latest research into the future of BPO and its technology-enablement is quite startling – namely 50% of BPO buyers expect to move into a transformational environment within two years, where they have re-engineered and standardized their processes and engaged in some degree of tech-enabling them. What’s more, providers are even more confident that their clients will “cross this chasm”. Do you think this is realistic, or are you skeptical?

Patrick: No I’m not skeptical at all. Of course we are going through the usual cycle of over-hype and over-selling on expectations and capabilities, but it is happening and the process of the future will be IT enabled. Where I would offer a different point of view to what we hear today in the market is really how it will play out. Large legacy IT providers are finding themselves in a pickle as the large ERP implementations are losing steam. They have delivered on implemented a single platform of record, but the costs have been huge, and these ERPs have largely failed in being effective platforms of engagement – they have poor workflows, weak and cumbersome reporting capabilities, and don’t have any flexibility to adapt process flow and business rules to new requirements.

So we believe the future is in cloud-based platforms of engagement, and that’s effectively a new space for everyone, where legacy SAP or Oracle knowledge is not that relevant, but instead understanding of business process design and configuration is the key relevant skill. We have a huge advantage there, with our experience driving Smart Enterprise Processes and process re-engineering over the past decade with our clients.

But we also needed to upgrade our tools-set – tools which again the IT providers don’t have as they have been focused on the platforms of records, and with our acquisition of Akritiv and the subsequent investments we have made in technology and partnerships, we are now extremely well equipped with the suite of best in class, cloud-based platforms of engagements that we are bringing to the table in the areas of F&A and Industrial Asset Optimization.

Just to give you an example: Genpact’s cloud-based F&A BPaaS solution helped a large door manufacturer drive growth and accelerate expansion in emerging markets – this involved successful completion of three acquisitions in less than 6 months and a fully operational back office in 12 weeks’ timeframe.

Phil: And finally….if there were two things you could change about BPO today, what would they be?

Patrick: Our ability to drive business impact to our client has gotten to be really strong, but it is still hugely under leveraged. We have to find ways to work through political agendas of various stakeholders to unlock these big projects that will make them and us successful in the eyes of the CxO suite. We also have to convince clients that giving more end-to-end responsibility to your partner is a good thing, not a threat, so that we can drive more impact. I would also wish that some consultant’s “Source to Stay” push for captives would abate. Captives have their place, but too often the reason for them being set up are the wrong ones : a few internal stakeholders looking to preserve their jobs, or consultants wanting a steady multi-years revenue stream.

Phil: Thank you for your time today and for sharing some of your views and thoughts with our readers. 

Patrick Cogny (se bio) is the Global Business Leader for Manufacturing at Genpact. On a more personal note, he enjoys reading, especially about technology, economy and social science. He also loves walking around New York, which remains an amazing place to discover after 3 years. He would like to have time for other hobbies, but these will have to wait till an elusive retirement, as in between business trips he prefers to spend time with his family and friends.

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2 Comments

  1. Posted April 21, 2014 at 6:02 am | Permalink

    Good interview Phil.
    RE: New industrial revolution

    To Patrick’s response on the new industrial revolution and pervasive computing, some VCs are claiming 2014 is the year we will finally see noteworthy investment in Internet of Things-defined startups and businesses. Plus, a 2013 report by The Economist, Intelligence Unit, indicates manufacturing leads the way among industries. Specific to manufacturing, comments from Peter Marsh, author of ‘The New Industrial Revolution: Consumers, Globalization and the End of Mass Production’ are below:
    https://www.ventureoutsource.com/contract-manufacturing/webinar-qa-manufacturing-opportunity-new-industrial-revolution/

    Plus, as CES earlier this year, Cisco’s John Chambers said the IoT with connected products ranging from cars to household items — could be a $19 trillion market opportunity and, this (emerging?) market could boost Cisco global corporate profits by 21% by the year 2022.

    Cheers,

    Mark Zetter
    CEO, VentureOutsource.com

  2. Dave S
    Posted April 22, 2014 at 7:40 am | Permalink

    Really good interview. I agree that more clients need to give suppliers more end-to-end process responsibility. It’s the only way they can really add more value in terms of analytics, innovations to processes etc.

    Dave

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