|
The new age of innovation
Business Standard —
April 8, 2008
Excerpts:
If there is a list being compiled on the top management
gurus, the most influential thinkers, or even the most
influential management gurus, you can be sure C K Prahalad
will feature on it. The Paul and Ruth McCracken distinguished
university professor of strategy at University of Michigan’s
Ross School of Business, Prahalad is also a bestselling
author of important books like Competing for the Future
(with Gary Hamel), The Future of Competition and The
Fortune at the Bottom of the Pyramid (with Venkat Ramaswamy).
Each of these books proposed powerful ideas relating
to corporate strategy, business processes and people.
The New Age of Innovation is no different. Prahalad’s
latest book, which will be released later this month,
suggests that the nature of innovation is changing.
As the world flattens, company- and product-centric
ideas must give way to strategies that reinvent business
processes to leverage resources on a global scale. “The
need for enabling unique and contextual experience from
each customer (N=1) will shape the demand for rapid
reconfiguration of resources, ideas, and talent globally
(R=G). ...N=1 and R=G will be the basis for innovation
and value creation. This trend is happening faster than
anyone expected. We believe that by 2015 to 2020, in
a very short period of 7 to 12 years, this transformation
will not be big news. It will increasingly be the norm
in many industries,” predict Prahalad and co-author
M S Krishnan in the book.
An exclusive extract:
This recognition is forcing firms to build project
teams that are multi-geographic and multicultural. The
focus is not just on cost. Cost is a consideration but
equally important is the quality, innovativeness of
the solution, and speed. The patterns of work and the
composition of the teams vary considerably as the nature
of projects and access to talent required varies.
In the following paragraphs, we give examples of firms,
such as IBM (established US-based MNC) and TCS (emerging
India-based MNC), configuring their resources for specific
projects. You will notice that the pattern of resource
configuration depends on the nature of the project and
where the firms can find the appropriate skills.
The patterns continually change. The relationships
across geographies, business units, and vendors are
not predetermined or static. The phenomenon is best
described as a dynamic configuration of talent based
on the specificity of needs.
...
Scuderia Ferrari
The Fiat-owned Scuderia Ferrari is the Formula One racing
car that is nearly custom-developed every year. Ferrari
has selected Tata Consultancy Services (TCS) from India
as a technology partner in the development of the next
version of the racing car. TCS is providing information
technology solutions and engineering services.
It was the company’s excellence in domain expertise
and its capacity to execute projects on time that made
TCS a winner in Ferrari’s search for global partners.
The TCS engagement with Ferrari involves both the broader
2000 luxury car division and the customized Formula
One division, which makes only four custom-built cars
in a year.
Ferrari is leveraging TCS’s resources in multiple
domains, including enterprise IT, vehicle electronics,
and aerodynamics. The team size of over 70 is spread
almost equally between both teams. This collaborative
nature of the project requires on-site presence of the
TCS team in Maranello, Italy, working closely with the
Ferrari design team. Ferrari’s mission is to build
the best cars that win races. Their drivers come from
different countries, and the car may also be made with
global resources.
British Telecom
The composition and physical location of teams in global
project execution also evolves. For example, in contrast
to the Ferrari engagement, consider the TCS engagement
with British Telecom (BT) to upgrade the entire telecom
network of BT to an Internet-Protocol-based data network
called the twenty-first-century network. This engagement
necessitated a full understanding of the legacy BT telecom
network with a mix of old technologies, such as circuit
switches and new equipment.
TCS worked with BT to develop a plan for the migration
of the entire network. The initial design solution team
involved approximately 20 solutions designers each from
BT and TCS. The plan included detailed steps on design,
testing, and deployment of the various nodes in the
network. As the project evolved, the increasing clarity
to the task and the underlying activities allowed TCS
to leverage cost advantages in India.
TCS has shifted a major chunk of services linked to
systems integration, design, and testing to India. It
has set up an exclusive lab for BT in Chennai, India,
with 10 solutions designers and 115 testing and development
experts. This model of offshore resources leverage has
required detailed documentation tasks such as software
development and testing and an explicit understanding
of the network migration processes.
At a superficial level, this configuration of resources
looks likes “business as usual.” What is new
here is that these configurations are constantly changing,
even within a firm and within a project as it evolves:
- Many of these tasks and/or projects are implemented
in multiple locations and around the world.
- Expertise is geographically distributed (the IBM
example) and can be distributed across firms (as in
the TCS-Ferrari and TCS-BT examples).
- The composition of teams is task specific, and the
nature of tasks evolves over times from new and complex
activities to routine. (This was the case in the BT-TCS
example in which the task related to the migration
of the network started with a complex task codeveloped
with BT first and implemented on site in the United
Kingdom till the process was well understood. It then
moved to India.)
- That there are no fixed patterns in the migration
of jobs. It is not the movement of jobs from United
States or other locations to India. The configurations
of teams differ based on the tasks and the availability
of appropriate talent for specific projects.
- The common theme is about talent arbitrage, not
just cost arbitrage.
The change in the patterns of work and composition
of teams in global firms need not be limited to complex
software-intensive development projects. This transformation
of how work is done cuts across business functions and
industries...
...As a result of its early exposure to global resources
in the software domain, technology firms may have an
advantage in leading others in adapting innovative patterns
of work.
... The conclusions from the foregoing trends are clear:
The search for talent has gone well beyond cost arbitrage.
Lowering cost is still a concern, but it is coupled
with the need for better quality, innovation, and speed.
Therefore, firms will engage in pulling together teams
of people based on their skills, attitudes, and experiences
to work on specific projects. What we see here is the
breakdown of the traditional hierarchical systems in
which, business, functional, and geographic groups “owned”
people.
Talent used to be trapped in boxes in the organizational
charts. In contrast, we are moving to a system of project
management in which projects are temporary organizational
systems. The transition is critical to recognize.
The messages is this: “I, as a skilled associate,
do not belong to the India or the US operations even
though I may live in one of those countries and be managed
administratively by the country manager. I belong to
a global practice group, and I can be called upon to
work on specific projects based on my unique skills
and experiences.” Thus each employee starts to
belong to multiple systems:
- A member of a business functional unit (for example,
financial markets business group and/or human resources
function)
- A member of a country team (for example, US, Chinese,
or Indian operations)
- A member of a project team of the moment (for example,
Indian programmers in IMB’s Texas Center Point
Energy utility project)
- A member of a vendor’s firm who works as a
member of the team of the ABC firm (for example, the
TCS team in Ferrari race car electronics project)
The majority of the employees may not have this somewhat
ambiguous and shifting organizational affiliation. However,
for the highly skilled and the most coveted people,
this will increasingly be the reality.
|
|
