In the late 90’s, this Fortune 100 company and us began investigating a model for jointly creating a shared services entity (SSE) to reduce the client’s controllable costs in one of their business units. This investigation involves three main phases that will drive toward a decision on whether or not to implement the SSE. This decision will not be made until a business case can be developed. Each of the three phases of the initial investigation have a “Go/No Go” decision associated with them. Part of Phase 2’s due diligence process was to hold a collaborative workshop.
The purpose of the event was to gain an understanding of the options available to the client. The session focused on allowing the leadership teams from the largest four business units to begin considering the requirements for a successful SSE as well as the implications to their businesses.
The event educated the participants about the capabilities and uses of a shared service entity, and then had them explore how the concept could be applied within the Client.
The market based future state requirements for the session where defined for the participants as;
reduce the controllable costs by $40M on day one.
increase productivity of the system by 13%.
create a new operating model that includes an SSE.
bring clarity to the options associated with the SSE. Specifically, the participants were asked to consider:
what would be in scope of the SSE,
what a migration strategy would look like,
what infrastructure would be required, and
what the possible future state implications to the businesses.
highlight radical solutions.
The participants were specifically told not to focus on the selection of an Enterprise Resource Planning [ERP] package, or the validity of a joint venture as part of the solution. The participants worked through the exercises of the three days and had several in-sights into their businesses as they worked to answer the design challenge before them.
The participants met all of their defined deliverables, and a decision was made to continue with the due diligence on the SSE. Also, several of the unspoken questions where answered during the session for the project team.
1. The group defined the implications of what the business(es) would look like if the $40M cost efficiency and 13% productivity where met. To meet this challenge, the group realized that the majority of the processes would eventually be shared, leaving a smaller number of processes to be managed by a merged entity. This combined business would drive revenue growth for two reason, a focus on specific market/industry segments, and a focus on market offerings derived from the synergy’s among the different old products and services.
2. Participants defined what was in scope for the SSE based on the future state requirements. Working through several iterations of defining the scope, the participants realized that many of the processes they each believed were custom to their business unit actually where not that custom. The initial in-scope processes will not require merging of any of the business units and should produce $10-14M in cost reduction. On his point, the EVP with oversight of the SSE decided to continue the due diligence process.
3. The participants defined a three wave migration strategy to move the businesses to the new future state. The main differentiator between the waves was the technology implementation required to support the combined processes. These technologies include an as yet undefined ERP solution as well as other call center related infrastructure.
4. A communication and transition management architecture where created.
5. Agreement by the business unit CEO’s around the value of the SSE project was achieved. All of the CEO’s stated that the new merged business unit was the appropriate way for the company to go.
Client Cultural Notes
Two cultural notes about the client. First, the backbone of the clients business strategy is to have a large number of stand alone business units/profit centers that are only required to deliver the bottom line to the parent company. This business model has worked very well for the client during the 80 & 90’s throughout the world. By its design, this system is not as efficient as other business models, and the client knows and accepts this. They have decided to trade off business efficiency for the ability to grow rapidly. Secondly, the client also is used to coming together for three days in a session they call the “Workout.” Their ‘Workout Processes’ is designed so that an events sponsor(s) charges a group to solve a business problem in three days, then the sponsor leaves the space. The participants are then “facilitated” and a series of decisions are made by the group. At the end of the session the sponsor(s) return and listen to the decisions the group has made and immediately decides if the decisions are accepted or rejected.
1 8:00 - 9:00 Introduction
Word from Executive Sponsor
2a 9:00 - 9:45 Finding Synergies - Yellow Page advertisements.
2b 9:45 - 10:10 Report Out
3a 10:10 - 10:40 Take-A-Panel
3b 10:40 - 11:15 Share-A-Panel
3c 11:15 - 11:55 Synthesis
4a 11:55 - 12:45 Metaphors Read
How Buildings Learn
High Performance Teams
Speed to Delivery
4b 12:45 - 13:45 Discuss
4c 13:45 - 14:25 Apply
4d 14:25 - 16:00 Report Out
5 16:00 - 17:40 Trade Shows
6a 17:40 - 18:10 Leading Practices Read
Core Competency vs. Outsourcing
Organizational Development & Design
Building & Managing Relationships
Shared Service Centers & Finance Reengineering
6b 18:10 - 18:40 Discuss
6c 18:40 - 19:10 Apply
6d 19:10 - 20:00 Model Shop
6e 8:00 - 9:00 Report Out
7a 9:00 - 12:30 Design Challenges
7b 12:30 - 14:00 Report Out
8a 14:00 - 16:30 Build-A-There
8b 16:30 - 18:00 Report Out
9 7:00 - 10:00 Synthesis
10a 10:00 - 17:00 Go to Work
10b 17:00 - 18:00 Report Out
Lessons Learned [a.k.a. 20/20 Hindsight]
1. Give the client the session. Before the actual event, we told the engagement/deal partner who was paying for the event that the event should be in the clients name, and not some joint title with THE ENGAGEMENT TEAM. The point here was that Dan wanted the client to own the session, not THE ENGAGEMENT TEAM. It was a subtle, yet significant way to get the client to own the session. Only CLIENT sponsors spoke a the introduction. THE ENGAGEMENT TEAM took a back seat role from an executive sponsor role. The sponsor team was evenly made up of people from CLIENT and THE ENGAGEMENT TEAM.
2. Why would a client do a JV with THE ENGAGEMENT TEAM? The reason this company wants to do a JV with THE ENGAGEMENT TEAM is to get the efficiencies immediately, but pay for them over time as business expenses. This was a revelation to me, being someone who is business challenged. I’m not sure if this is a common reason for doing a JV, or if this is because this approach is identical to how CLIENT goes to market in the business sectors it serves. I also don’t think that knowing this up front would have made a huge difference in the design of the event. I would suggest figuring out what the win-win looks like for the client and THE ENGAGEMENT TEAM before the session.
3. Doing the back room deal. At the end of the second day, during the last module, several THE ENGAGEMENT TEAM people were sanctioned to go off and determine how much savings would be created using the latest iteration of the processes defines as “Within Scope.” This was done with the full support of the sponsor team. The team only reported out to the sponsor team. This was a very important fact to have as we began day three. The “Within Scope” document contained 95% of all of the things that we thought would be in there going into the session. It wasn’t until the participants could rationalize the fact that the SSE defined by the current “Within Scope” document did not meet the $40M savings challenge that they really challenged their operating assumptions. This lead to creation of a new business model for the group on the Act day, and a room full of insights.
4. Facing the unknown. During the Scan Day Metaphors Report Out, the participants defined the Focus day work. Coming into the event, there was allot of confusion and misunderstanding about the SSE, and all of the unasked questions came out during the Metaphors exercise. First of all, we had two of the business unit CEO’s give their teams reports. What we heard from them was that they were looking for help and understanding before they could act and make a decision. The other reports all had people saying that leadership was the most important characteristic, and that the leadership team’s just wanted clear direction. We took this information an incorporated it into our design of day two - we made both groups face their fears. The Design Challenge that kicked off day two had two specific tracks.
The CEO’s where each placed in a team comprised of THE ENGAGEMENT TEAM Shared Services experts and CLIENT people who were not from their organizations. Theses teams were given ownership of the SSE, and had to explain how they made it successful. The idea being that the CEO’s would learn from the THE ENGAGEMENT TEAM experts about shared services, begin to understand the business model of an SSE, and bring the voice of the supplier into the conversation.
The remaining participants were placed in their leadership teams for the four business units. The remaining THE ENGAGEMENT TEAM participants were spread across these teams. For example, the XYZ Leadership team, minus the CEO, was put in a team together and then supplemented with THE ENGAGEMENT TEAM folks and told that they were now responsible for all of the dealings with the SSE for their business. They then had to explain how they had built and managed the successful transition and on-going use of the SSE. The idea here was that the teams had to step up to the leadership challenge themselves, define for themselves what could be shared and what couldn’t, and bring the voice of the customer into the conversation.
This really worked for this group. After this report, everyone was open to the Build A There assignment, and breakthroughs began to happen.