"Most of our managers are happy sitting on a shrinking business" bemoaned a senior executive the other day. Sound familiar?
I hate to say this, but too many senior executives I talk to these days adopted this survival mechanism during the economic crisis, and are clearly struggling to change their mind-set now it's clear that armageddon has been averted. And the main reason seems to be that the last year has exhausted them, preventing fresh, bold decisions to be made. Hey – it's exhausted everyone.
Smart business leaders are now trying to re-energize their staff, take that deep-set panic out of the daily job, and find reasons to celebrate, like a not-so-bad-quarter.
I clung to the forlorn hope that a year-long economic crash, a transformative president, and new approaches to business ideology would encourage businesses to start thinking differently. But, in many cases, I appear to have been naïve . The result is that many businesses are going to have to force real change upon themselves to escape this malaise.
From wanting change… to embracing it
In reality, most businesses are coming out of recession having already cut visible costs to the bone, for example areas where cost can be directly extracted from the business without any form of arbitrage such as travel feezes, headcount reductions from non-critical areas, budget reductions across departments in areas such as marketing or IT, and so on. The next steps are to explore cost arbitrage through labor (i.e. outsourcing), and ultimately process transformation that should accompany any form of outsourcing. Simply put, it's nigh-on impossible to dig out further pockets of cost, without re-wiring the guts of business operations to find new efficiencies.
Global sourcing provides one of those vehicles where businesses
can effect progressive shifts in their business models to approach things differently. It can provide the change agent to make this happen, but only when our management talent has the energy and determination to look at things differently – and refuse to settle for sitting on that shrinking P&L.
This malaise affecting many businesses resembles the one affecting the United States, where the majority voted for change, but now the President is actually trying to enact some, we're seeing a great deal of negativity and resitance from many who voted for him.
I recall the recent survey (see chart below) we ran with Global Services media, where the main drivers behind outsourcing – after cost reduction – are the desire to globalize business operations, effect process change (innovation) and access new skills and acumen. However, when push-comes-to-shove, will business managers really embrace such disruption from their "old normal", or will they resist it, rather like many US voters now resist the change their President is pushing?
So many of our businesses, rather like many United States' voters, have reached an impasse. It's one thing to want change, but a completely different rationale to accept it. It's time to brush off the fatigue, accept this "new normal" and make some bold decisions to start growing again. That ultimately means focusing on where you add value and finding global partners and resources to work with you on maximizing that focus. Not protecting your shrinking fiefdom.
Posted in : Sourcing Best Practises