It has been a straightforward business model: enabling clients to focus on core competences while improving their competitiveness via lower cost or higher performance. Value drivers such as labour arbitrage or economies of scale have long supported this approach but are now losing their grip in an increasingly digital and complex world. Amidst eroding margins and predatory competition, legacy business models are under pressure – and so are industry leaders.
For leaders to depict the way forward, they need to deal with six strategic priorities:
Firstly, futureproof growth sources are required. Sounds obvious? Maybe, yet few companies have managed to achieve meaningful and sustainable revenue diversification; instead, overoptimistic business plans, unsuccessful acquisitions or sunk investments have been the result.
Secondly, to avoid painful performance shortfalls, legacy business models need to be actively sustained while their future role and shape are being determined. This requires focus – both in terms of continuous drive for improvement and in radical and technology-driven step change.
Thirdly, value propositions are to evolve from mere cost savings to providing clients with genuine and sustainable competitive edge. As such, they need to be an integral part of the corporate vision, railroading the longer-term development of the service portfolio and overall business.
Fourthly, the right partnerships-for-market approach, access to technology or geographic reach, for example, are indispensable. They are key not only to avoiding dilution of management resources or investments but also to enabling a lean and highly customer-centric operating model.
Fifthly, commercial, governance and compliance frameworks are vital in order to manage increasingly complex and ambitious outsourcing contracts – not least as life and profitability insurance.
Lastly, in times of purpose-driven organisations, the Business Services & Outsourcing industry is finally due to produce a tangible contribution to its clients’ sustainability efforts.
In addressing the above priorities, the right leadership will make the difference. A healthy blend between developing in-house leadership talents and external reinforcement is where the race starts but also where existing approaches require upgrading. Not to forget that different leadership styles, mindsets and ways of working are needed – starting right from the top.
Yet leadership competencies such as results orientation, strategic thinking, commercial acumen and people leadership only account for the “present” qualities of leaders. Locating new sources of growth, shaping visions and taking value propositions to greater heights requires leaders to tap into their development potential to re-engineer existing business models and tailor them around future market requirements.
This all starts with the proper identification of potential to orchestrate a bespoke leadership development approach at various levels of the organization – from preparing executives for increasingly challenging leadership missions to motivating middle and upper management levels to adopt new business perspectives. Simultaneously honing the right organizational and cultural environment is essential to support this development and effectively integrate external recruits.
Curiosity about the unknown and the ability to process and analyse a broad spectrum of potential ambiguous information from various sources is key. In times where the “top-down” management style is an endangered species, leaders have an even greater need to win over others with empathy and effective communication and establish support across a broad and diverse audience. Lastly, they need determination to work around unforeseen obstacles that arise on the transformation journey, and to deliver regardless of challenging or ambiguous framework conditions.
It’s time for the Business Services & Outsourcing industry to rediscover and rebuild its leadership base, while remembering that existing skills matter less than the ability to acquire new ones.