Digital Reinvention

Have you OUTGROWN your operating model?

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Have you had the feeling that why do I take a couple of months to launch a new scheme, when my competitor reacts much faster? We are always too busy and key initiatives take very long to complete? We always have need for further hiring whereas, intuitively I feel that I already have a large team?

In case any of the above are true, time may have come for your organization to re-look at its operating and governance model.

Some of the common reasons for the above symptoms are:
– Layers of Supervisory and Administrative oversight across functions and regions making decision making very bureaucratic
– Localized or regional decision making supports multiple ways of doing things which cannot be managed through standard workflows
– Key functions like business development have been duplicated across business units which makes it locally optimal but globally sub-optimal

These tend to amplify with scale and sooner than later, will become huge bottlenecks in growth. 4 key directions of the new operating model include the following:
1. Consolidate and Optimize administrative and support activities across plants / Business Units through implementing Shared Service Centers (SSC). Candidates for this include F&A, Procurement, HR, IT, Security, etc. This drives significant cost and efficiencies. Even in India, it is reasonable to expect >20% savings
2. Activities that are key like Business Development, Manufacturing Quality, logistics etc across locations may be possible to consolidate as Centers of Excellence (CoE). This drives hiring and retaining talent in locations that are critical. These high caliber resources are not commonly available across the country
3. Automate operations where possible using robotics and cognitive computing capabilities
4. The above three converts the organization as a Platform which enables rule based agility on the front end.

No wonder there are many Indian companies that are maturing on the above journey. A schematic of a possible operating model is highlighted here. Needless to add, this is not a cookie-cutter solution and needs to be tailored to the process and cultural maturity of your organization.

Benefits of Operating Model Transformation

– Costs being de-coupled with topline growth
– Service Oriented Culture, which drives Turn Around Time (TAT) and Service Level Agreements (SLAs) across functions
– Step-Jump in Efficiency. >20% improvement in efficiency is reasonable to expect
– Ability to define exceptions and manage them at scale

These are exciting times as Corporate India comes of age….!

Associate Director, Digital Strategy, IBM GBS

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