THINK TANK TWO: CORPORATE STRATEGY GIL 2012: SILICON VALLEY Business Model Transformation: Empowering Employees to Focus on the Customer FEATURING HCL Technologies Limited KRISHNA SRINIVASAN Global President Frost & Sullivan Krishna_Srinivasan@frost.com www.gtm.frost.com
Agenda TIME CONTENT 9:45 Scenario Planning Fostering Long-Term Strategic Thinking A case-based best practice presentation on how Merck & Co., Inc. used scenario planning to explore long term risks and opportunities. FACILITATOR: Krishna Srinivasan, Global President, Frost & Sullivan 10:45 Business Model Transformation: Empowering Employees to Focus on the Customer A case-based best practice presentation on how HCL Technologies evolved its technology-focused business model to a collaborative, customer-focused model. FACILITATOR: Krishna Srinivasan, Global President, Frost & Sullivan CO-FACILITATOR: Sadagopan Singam, Global Vice President, HCL Technologies 2
The Growth Team Membership (GTM) GTM is a subscription program that supports executives within the functions that report to the CEO CEO s Growth Team GTM provides best practices, events, and services that enable executives to address challenges within their companies GTM: Creating Client Value Corporate Strategy R&D/ Innovation Sales Leadership GTM s case-based best practices help executives: Speed the design and implementation of initiatives by not reinventing the wheel Marketing CEO Corporate Development Save money and reduce risk by avoiding mistakes made by other companies Investors/ Finance Competitive Intelligence Market Research Accelerate problem-solving with a cross industry perspective Improve their functions and companies performance and productivity 3
Profiled Best Practice Company Firm: Industry: Headquarters: Geographic Footprint: Ownership: Revenue (2011): HCL Technologies Limited Information Technology Uttar Pradesh, India Global Public $4.15 billion USD 4
Growth Challenge Problem: HCL s revenue is growing, but it s losing market share to competitors. To regain its competitive edge, HCL needs to reassess its strategies and capitalize on its strengths. 5
HCL uses a three-step business transformation process to prioritize employee empowerment Business Model Transformation Process Objective Activities Develop the Strategy Develop a long-term strategy to focus the business model on HCL s competitive advantages. Create companywide awareness of the need for change Build a long-term strategy to maximize competitive strengths Develop a plan to bridge the gap between the current and desired end state Prepare the Company for Change Objective Prepare the company for change and initiate a culture shift. Tactic: Establish Trust and Transparency Reverse Accountability Empower Employees Transform the Business Model Objective Use three tactics to transform the business model over time. Tactic: Support and Enable Employees Tactic: Foster Collaboration Tactic: Engage Employees 6
Create companywide receptivity for business model change Develop the Strategy Mirror, Mirror Exercise: Comprehending the Current State Where are we? Current performance IT outsourcing market What s happening in our industry? Changing role of the CIO Commoditization of technologies Emergence of system integrators Why do we need to change? Competitive benchmark Market share Customer preferences CEO The CEO spends two weeks conducting Mirror, Mirror exercises at every HCL office. All local employees are required to participate. Local Office Staff 7
Pinpoint competitive advantages to underpin long-term strategy development Develop the Strategy Identifying Customer Value-Drivers Insights 1. Employees are the value drivers for customers 2. HCL s value zone has shifted to employee interactions with customers Planning Inputs Market gaps Changes in customer needs Competitive landscape Current capabilities Customer feedback Determining the Desired End-State CEO 800 global companies are not being served by us or the other top IT outsourcing companies. Marketing Team Desired End-State within Five Years Custom IT Solutions Provider Acquired Target Customers By becoming an integrated IT services provider, we can utilize our value drivers our employees and meet customers need for collaboration. Fundamental Change Required Empower Employees 8
Translate the long-term strategy into a tactical plan that drives employee empowerment Develop the Strategy Inaugural Blue Print Meeting Day One: Secure Buy-In for Corporate Strategy Activities: CEO presents HCL s current state and five-year strategic plan Attendees discuss and adjust the corporate strategy Tactical Plan: Employees First, Customers Second To empower its employees, HCL needs to: Establish Trust and Transparency Days Two and Three: Develop the Tactical Plan to Achieve End State Activities: Discuss and develop the tactical plan for the first two years HCL calls the tactical plan to change its business model and culture, Employees First, Customers Second (EFCS) Support and Enable Employees Foster Collaboration Engage Employees Passions 9
Build employee support for change through transparency and two-way communications Prepare the Company for Change Building Financial Transparency and Trust U&I (You and I) Portal Transparency Portal U&I Portal BENEFITS Creates trust Establishes clarity on financial performance Provides motivation Enhances transparency BENEFITS Identifies roadblocks to change: 1. Ineffective processes 2. Inadequate performance review policy Builds engagement Enables a culture of open exchange 10
Leverage feedback to revise outdated processes and policies to support employees efforts Transform the Business Model Employee Issue Resolution Before The problem management system was characterized by: Centralized power Hierarchal bottlenecks Dissatisfaction with enabling functions Smart Service Desk After The Smart Service Desk: Augments the system Sets expectations Creates ownership Increases satisfaction 360-Degree Survey of Managers Overview The 360-degree survey provides feedback that enables managers to set professional development goals that improve their support of the value zone. Section One: Survey Questions Examples: Does this manager help you enhance the value you are delivering to the customer? When you approach the manager with a problem, does he or she respond by offering solutions or resolving the issues involved? Section Two: Feed Forward Provides tactical feedback on the manger by: Identifying three competencies Rating each competency as a strength or development area Suggesting specific steps for improvement 11
Create account-specific portals that enable employees to collaborate with customers directly Transform the Business Model Customer Value Portal Idea Submission and Collaborative Evaluation Process Customer Value Portal Idea submissions include: Cost optimization Cycle time optimization Process optimization Submit Review Ideas are assessed by a review panel consisting of a senior customer executive and the account director from HCL Customer-Specific Collaboration Each customer account has its own value portal HCL employees working on the account have access to the portal Ideas are only implemented if they are signed off by both the customer organization and HCL More than 850 ideas have been implemented by customers Implement Evaluate The idea is rated on a 5-star system Ideas earning 4 to 5 stars get actively considered for implementation 12
Solicit and apply employee insights to strategic planning Transform the Business Model My Blue Print Portal Directions Meetings CEO My Blue Print Portal Purpose Harness the tacit knowledge of employees Content Recorded presentations of the preliminary division, business unit (BU), and key account strategies Benefits Improves strategies, depth Increases the quality of planning activities Fosters companywide buy-in Following the My Blue Print Portal presentations: Employees provide feedback Managers refine their strategies The executive team finalizes the BU strategies The executive team develops the preliminary corporate strategy Senior management and local staff Purpose Strengthen the annual corporate strategy and generate companywide buy-in Activities The CEO presents HCL s preliminary corporate strategy The employees engage in a feedback and Q&A sessions Outcomes Finalized annual strategy and budget 13
Identify and leverage employees passions to motivate performance Transform the Business Model Employee Passion Indicative Count (EPIC) Survey Purpose and Structure To understand employees drivers and provide employees with specific career development recommendations The annual EPIC survey is: A voluntary employee survey Composed of 90 bipolar statements in three passion themes secular, self, social and 30 passion indicators Respondents rate their agreement with each of the 90 statements EPIC Report EPIC Score Measures an employee s overall passion as: 480 to 360: Very high 240 to 120: Moderate 360 to 240: High 120 to 0: Low Top Five Passion Indicators Welfare Collaboration Management support Attitude Connectedness to colleagues Leveraging fully Leveraging moderately Passion Theme Social Social Social Self Social Leveraging less Benefits Employees Understand their own motivators Set personal development goals Management Designs career development plans Conducts team building activities Provides training 14
Business Results Annual Revenue (2005 2012) Average Revenue per Employee (2005 2012) Revenue ($billions USD) 5 4 3 2 1 0.76 4.2 Average Revenue per Employee ($thousands USD) 60 40 20 39 53 0 2005 2012 Year 0 2005 2012 Year Employee Attrition Rate (Indexed) Customers by Revenue Band Attrition Rate x 50% 0.5 x 2005 2012 Year Number of Customers 400 300 200 100 0 133 397 $1 million and below 50 260 $5 19 million 12 84 $20 49 million 2 10 $50 99 million Customers by Revenue ($USD) 1 2006 2012 5 $100 million and above 15