By Mike Gammage

It seems to me that there’s a fundamental flaw in the conclusions that HfS and PwC draw from their survey The Future of Global Business Services published this week. And that their recommendations would lead organizations down the wrong path.

The report focuses again on governance (which featured heavily in their joint report last year).

This year’s survey shows, they claim, that

“centralized governance organizations create the best outcomes…every organization should organize a governance team and, despite internal resistance from IT and business leaders who do not want to lose control, organizations should seriously consider centralized teams.”

All that I have seen in working with clients over the last ten years suggests that a centralized governance team is a dead end.  If by ‘governance’ we mean clear roles, responsibilities and accountability for driving every aspect of performance improvement, then governance has to be embedded in day-to-day operations.

A small core group supervising governance policies and their overall implementation across the enterprise makes sense. But the meat and drink of governance is the relationships and behaviors of process stakeholders. It’s about regulating actions in the real operational world of end-to-end processes. That’s where it lives and breathes.

Quality management offers a parallel.  Most often it was seen as a silo, separate from operational realities.  It was a box-ticking activity, a cost of doing business. No-one went into Quality Management to further their career. Then organizations like Toyota demonstrated the value of a completely different approach. They embraced quality and tried to embed quality thinking into everything they did.  They realized that quality only comes alive when it connects with everyday operations and gets people doing real work involved.

In Toyota’s case, Quality begat TPS and Lean of course – but that’s another story. The point is that nowadays a centralized Quality Management team is as rare as hen’s teeth. Quality should be everyone’s passion.

The HfS/PwC survey results themselves, and the HfS/PwC conclusions, illustrate that centralized governance teams can’t deliver:

“Governance teams frequently accomplish their primary objectives, but struggle to create similar outcomes in areas outside of their key focus areas.”

In other words, a centralized governance team may be able to railroad through cost savings, but it can’t also deliver innovation or agility or improved customer service. Centralized governance teams are naturally project-focussed and single issue. They can’t deliver sustained operational excellence and continuous improvement because that comes from ongoing collaboration between all the process stakeholders and users.

What every GBS organization needs is a collaborative framework that enables ‘Toyota thinking’:

  • a rich, ongoing and effective collaboration between all of the stakeholders of each end-to-end process (including of course its customers)
  • an engagement with process executors and customer users that will ensure their continual feedback and so drive continuous improvement.

Governance is the framework for this collaboration, the rules of the road that underpin rapid and sound decision-making.

Governance is absolutely a critical success factor, and especially in GBS environments which are often complex and fast-moving, with many actors involved. But its value comes when governance is embedded into the everyday, not ‘managed’ from some corporate ivory tower.

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