This post builds on an article in the TM Forum Inform: Why do CSPs need to in-source skills?, which quotes Vodafone's journey to strategically in-source the engineering of its Operational Services and Business Services (OSS and BSS in Telco language).
I can relate to this article after working in digital professional services for a long time and making a career change seven years ago to support clients in regaining control of their digital future. In fact, I worked on the first major revamp of Vodafone's digital estate about 20 years ago, then as a service supplier. I have since worked in various industries, notably financial services, where I have also seen this transition developing. With tech becoming ubiquitous in every part of products and services, joining tech into the business value chains is becoming a strategic necessity.
However, this transition is far from straightforward. Before rushing into solutions, it's crucial to 'Henko' your perspectives. 'Henko' signifies seeing things in a different light. We help you reframe your business to find breakthrough solutions in organising for performance. When the macro-recalibration feels coherent, the journey of change becomes much easier.
The digital change challenges in traditional businesses
Digital maturity has been vastly different across industries:
For BigTech, it has been somewhat easier. Tech is the business; the business of the product/service is the tech. BigTech organisations and tech startups tend to build an in-house engineering base because they see digital engineering as strategic. They invest in the talents, and the talents want to work there (even if it has been shaken lately). The challenge is one of alignment, but we'll look at this another time.
The situation is contrasted in more traditional industries where we often see a Business side with "stakeholders" organised around the core business' products/services and an IT side delivering to the stakeholders' demand. This makes for two-tier organisations with a vast layer of coordination in between. Such organisations are inevitably slower and highly wasteful in their digitalisation because tech is unnecessarily disconnected, and often disjointed, from the value creation.
Such organisations stem from a leadership legacy of thinking in terms of White Collars (doing the thinking) and Blue Collars (doing the delivery)
With the acceleration of digital and tech, the latter organisations have found themselves caught a step behind with their technology capabilities, and have had to go to consultants to play catch-up in the digital race. However, as tech has become ubiquitous and continually evolving, said companies have effectively embedded consultants in their payroll for many years, which is a very costly way to run a business.
Some have looked to mitigate the costs by outsourcing to cheaper shores, and outsourcers have ridden a couple of golden decades. How do you bring business and tech closer in your value chains when you only have few hours of overlap in time-zones? What has worked for accountants has not worked well for software delivery or digital innovation. More worryingly, the emerging economies command rapid salary inflation, negating the initial savings and never addressing the waste and inefficiencies of a distant collaboration. The CFO should start worrying because it is all coming to roost!
Going from a "delivery leadership" to a "digital leadership"
As organisations are growing in maturity, and finally seeing digital as an integral part of their value chains, insourcing is the natural evolution. However, insourcing is not just about shifting the engineering pools from consultancies to in-house or from offshore to onshore. It is primarily about establishing a new alignment of your system with business and tech working together, meaning aligning to horizontal flows of value instead of the traditional competency silos.
Digital is about creating cross-functional collaboration across business and tech towards outcomes. There are no White Collars and Blue Collars anymore. Everybody should support excellence of the business and everybody should think about improving and innovating the business
Very importantly, such an alignment means a lot of reconsiderations:
For work and value to flow, delivery planning and organisation can no longer be the centralised epicentre of coordinating the alignment. Planning needs to be shifted closer to the periphery to enable agility. See below for holding organisations' coherence.
Establishing the alignment of teams to value is a lot more difficult than it sounds. Shifting from value mostly expressed in budgets and projects into persisted constructs of the organisation (value streams) is often unclear. All the more that organisations rarely have a clear idea of their value chains and how they connect into value streams, especially for the teams residing deeper in the topologies of the business.
How to create autonomy in the parts, distributing agency and initiative, starting by solving the problems that the teams see. Most leaders will lament that people are not taking initiatives, but the teams are often overloaded with a backlog decided for them and not given headroom to fix perennial issues. This state of play is also responsible for a decade or two worth of tech debt. Big reset needed here!
Strategy is a factor of alignment for organisations to pull in the same direction. Strategy should progressively supersede the planning in offering the glue for systemic alignment. More people working from outcomes. So, it is not a strategy imposed top down, but a strategy that engages the systemic collaboration. It needs to combine bottom-up emergence and systemic coherence. That makes for a strategy operating model that needs to be continuous instead of annual. A very big change in most organisations.
Lastly, the above requires clarity of team alignment and needs for collaboration, clarity of team roles in the system and clarity of people roles in teams and across teams. In turn, it changes the leadership from a traditional focus on tasks and delivery to a focus on creating the context for success and continually evolving and stimulating the system. This is another substantial change, especially for organisations that have mostly run on procuring outsourced services and project management.
That is the complexity of insourcing. Organisations that just contend with shifting the geography of their headcount are in for quite a disappointment. Insourcing offer both the necessity and the opportunity to rethink the business alignment. Time to make the real digital change: Merging tech and business in the same value chains.
Being intentional in joining the business and tech value chains
Digital Change is a simple equation:
Digital = (Business + Technology)^Working Together
Clients need to rethink the approach to their change and challenge themselves to how they are going to organise their progress. The change will not come through freewill alone, it is essential to create strong intentionality about it. In a classic change management way, that has often meant appointing a change director (or even a "Chief Transformation Officer!") and deploying change agents across the business who try and convince people to work differently.
Traditional change management approaches become quickly dissonant: As the leadership of the business is generally responsible for the work initiation and its governance, it anchors the organisation in its existing ways of working and consultants end up working against the leadership in place.
The leadership in place are the custodians of the system and should therefore equally be the actors of its evolution
Recalibrating the leadership change
With such a recalibration, it is a question of helping the leadership to transition their business and themselves in the process. For that, organisations need a very different kind of support, more professional coaching than consulting. We are not so much changing processes, but changing the humans behind the practices. Change deals with beliefs (individuals and collective), habits, uses, experience, fears sometimes, etc.
Change is at least as much emotional and implicit than rational and explicit. And because with digital and tech much more is connected, individual change has to go in unison with the systemic change.
Consequently, the real help is not so much about who talks the talk, but who can co-create the engagement and bring the exercises to help the leadership and systemic change at all levels, from the teams to the board.
Recalibrating the supporting professional services
Needless to say that new approaches to change will not be supported by the usual service ecosystem that have prevailed to the current status quo. Organisations need to refresh the professional services to receive a more modern support. For that, they need to become comfortable engaging and experimenting with more emergent services rather than the traditional establishment.
If you criteria is to select the organisations to come and run the "transformation" for you, you have not quite understood the subtlety of modern change.
It is not about having a ready-meal of change, but learning to become your own chef of your new solutions in your evolving context
It is not about outsourcing the change to an expert and carrying your leadership the same way. It is a leadership change, you are in the middle of it. Just like Olympic athletes seek the most challenging coaches to win medals, you need to challenge your thinking and understanding to move at pace in knowledge work (digital/services/tech/etc).
From its inception, Henko has been designed to accommodate those emerging change approaches. Henko marries the change expertise with the professional coaching engagement (aligned with the International Coaching Federation -ICF- standards). We will develop in ulterior blogs the details about our coaching engagement model and the System for Continuous Change. We encourage you to learn more from our Website at www.henko.co.uk
Your next steps:
If your business is in the process of insourcing or realigning, you may want to talk to us to see how we could support you, please book an initial consultation »
Learn more about new approaches to change from our upcoming series of meetups »,
Please watch this space for upcoming public trainings and leadership reflection circles.
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