Is Expectation drowning Aspiration?
“Herd mentality” is the cognitive bias where we tend to act and think like a group, often overriding our own judgment due to the perceived pressure to conform or fear of being wrong.
“Pressure to conform or fear of being wrong”.
There is some evidence that this cognitive bias is blurring our vision.
Deborah Kops wrote an incisive piece recently asking “If GBS is so strategic, why isn’t anyone in power saying it publicly?”.
It caused a bit of a stir as you might expect.
A combination of reactions reflecting the spectrum of discomfort, acceptance and rejection.
Her review of 100,000+ earnings calls and investor presentations of $5bn+ global companies found just 0.01% (just ten companies) where GBS/Shared Services was called out explicitly by corporate leadership.
One Hundredth of One Percent . . . .
PepsiCo and McDonald’s were notable members of these rare ten outliers.
Carrier’s CEO also recently gave a “shout-out” to GBS reflecting their contribution to improvements in cost structure and processes.
GBS talks internally about value creation a LOT.
But is this aspiration dulled by more prosaic expectations?
Business value that gets C-Suite and Investor attention is focused on customer growth, revenue, COGS, asset utilization, margin, working capital and, yes, EBIT.
But when asked, from the privacy of their own workplace, the majority of GBS leaders respond that internal measures define their value.
According to SSON Research and Analytics annual survey, GBS value is defined in practice by much more “Inside-Out” measures.
- 84% cite “GBS Cost Optimization”
- 74% offer “Internal Customer Satisfaction”
Enterprise operating margin, growth, working capital and revenue are included in the definition of GBS value by just 25-30% of leaders.
What does this tell us?
It is understandable that the large cost base of any unit in an enterprise requires focus, management and leadership.
Cost Optimization should be “table stakes”.
But we risk fading into irrelevance if we cannot sustain the narrative, and the evidence, of genuine enterprise economic impact.
The world is volatile, economies are fragile, and consumer sentiment is delicate.
We need to prioritize the efforts of GBS by P&L and Working Capital Impact and ensure we articulate the narrative in this way.
Think “Outside-In”.
We need to deliver on Aspiration as well as Expectation.
You can read Deborah’s post “If GBS is so strategic?” here . . .
Steve Rudderham of Carrier reported “success on the field of play” here . . .
You can access the SSON Research and Analytics annual survey here . . .
And a recording of the summary webcast featuring Tom Bangemann and Josh Matthews here . . . . .
Is Expectation drowning Aspiration?
Thanks for reading . . . .