What’s Wrong With GBS And How to Fix It
I read a fascinating article on this topic recently
Ian Thompson writes from the perspective of Private Equity firms who invest in undervalued companies with the aim to drive rapid EBIT growth prior to generating investor returns through an IPO or sale.
In the global economy, the macroeconomic outlook remains cautious, while financial engineering is largely exhausted as a value creation lever.
So we are back to improving operational process performance if we want to drive imrpovement to P&L and Working Capital.
The essence of Ian’s article reflects the broader emerging reality, beyond just PE owned companies.
The game has changed.
- 71% of PE firms now prioritize operational improvements to drive P&L impact over financial engineering.
- 65% of them have achieved less than half the value creation targeted in their operational improvement plans.
This is an Execution Challenge!
XQ (“Execution Quotient”) rears its ugly head again!
It is reflected widely across industries, globally.
Global Business Services (GBS), as an exemplar, has a good track record in driving cost efficiencies across complex, multi-country operations through centralisation and labour arbitrage, but it is largely “one and done”.
Delivering continual, annual economic productivity improvements in GBS is notoriously hard.
But thats just the start! Driving cost efficiencies in the operation you lead is table stakes, the real “North Star” is to create sustainable, repeatable enterprise value.
Business Value in terms of Enterprise P&L and Working Capital.
We need to execute with discipline (with thanks to Ian).
- Starting with the real end-to-end business processes, not the org chart. Forget about ownership and control (they are an illusion! 😉), focus on influence to drive outcome.
- Ask whether the work should exist before asking how to automate it, apply AI to it or resource it.
- Fix the big processes, the business cycles, “Customer to Cash”, “Source to Pay” et al, from the front, not the back. Move upstream and “Shift Left”!
- Focus on the gaps between the functional silos, where value creation opportunities live, peacefully and unchallenged!
- Remember that “Certainty is a Disease only cured by Curiosity”! We don’t KNOW as much as believe we do – find those gaps in understanding . . .
- Build for the business outcomes (P&L, working capital) the enterprise needs, not the structure you inherited.
- Use the tools that exist now and use them thoughtfully and where the business impact is maximised (positively!).
- Be clear that the scope of transformation (influence) is broader than the scope of service operation (control).
- Lead and operate with demonstrable “XQ”, Curiosity & Determination.
You can read “What PE Firms Get Wrong About GBS And How to Fix It” by Ian Thompson, here . .
You can read the S&P Global Market Intelligence’s 2026 Private Equity Survey here . . .
What’s Wrong With GBS And How to Fix It
Thanks for reading . . .
