In outsourcing and in the business world the mind-set regarding ideas and innovation is often too full of ‘buts’ and ‘either/ors.’ Vested Outsourcing’s collaborative approach to driving supplier innovation and flexibility depends on inclusiveness and eliminating the either/or.
Filippo Passerini, P&G‘s CIO and president of Global Business Services, is a big proponent of avoiding the either/or mentality.
Under Passerini’s direction P&G has saved more than $600 million since consolidating all back-office functions several years ago, such as finance and accounting, HR, facilities management and IT into one unit—Global Business Services—and then by outsourcing many of the nonstrategic activities involved in providing the services.
Reading recent interviews and articles about him in CIO, Forbes and McKinsey Quarterly I get the distinct impression that he knows quite a lot about transitioning both people and organizational functions in an outsourcing effort.
“Creativity is good,” he says in his interview with CIO magazine, “but innovation is better. And for innovation to work, you really need to understand the business.” That latter point is straight from the Vested model.
“The model we have created for shared services is considered one of the most progressive in the industry,” he adds. “It is not an easy one to approach, but it is very powerful in the way it blends offshore and outsourced services with centralized and consolidated operations and de-duplication of services.”
He says he has observed an attitude that has prevailed for too long among some IT shops: at any one time it is possible only to deliver lower-cost services, or higher-quality services, but not both.
That is “too binary,” Passerini asserts. “It is the unacceptable science of the either/or,” he says. “Business is not like that! We need to deliver high-quality, low-cost services.”
No amount of technology can replace the “power of motivated and energized people,” and that is where innovation comes to life.
“It’s all about innovation—at the operating level in the way GBS is structured and in the design of our work processes, as well as upstream, in the IT-driven solutions that we can offer to support P&G’s brands.”
The two-step process of first establishing GBS and then entering the outsourcing phase was wise: “We had maximized our internal ability to cut costs and improve service quality. By consolidating and standardizing our services, we had paved the way for a smooth transition where we could leverage the greater scale and unique expertise of outsourcing partners and also negotiate attractive and mutually beneficial agreements with them.”
What has made all the difference at P&G and what also makes all the difference in a Vested relationship are firm commitments to collaboration and strategic connections in outsourcing partnerships.
Passerini says P&G wants to reduce costs in its commodity infrastructure operations, on the one hand, but also wants to continue to invest in innovation on the other. “Therefore, we have separated our investments in innovation from the objective of reducing costs in operations, to eliminate the risk that a one-sided focus on costs could undermine the building of business capabilities.”
In the Vested approach that’s done by fashioning a governance a structure with insight, not oversight, one that optimizes pricing model incentives to achieve Desired Outcomes with agility and flexibility.
And that means using the power of and. The power of and takes self-interest out of the equation and eliminates the either/or world of selfish divisiveness.