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The Governmental Mandate of Shared Value Creation

Sunday, March 6th, 2011

My February 6 blog (Shared Value Creation: The Next Evolution of Corporate Social Responsibility and of Capitalism) explained the many benefits that corporations can achieve through a new, more business-aligned approach to corporate philanthropy. This approach, which is called Shared Value Creation, consists of “policies and practices that enhance the competitiveness of a company while simultaneously advancing the social and economic conditions of the communities in which it operates,” It is a concept, which as Harvard Business School professor Michael Porter explains, is becoming more than a corporate opportunity—it is practically becoming a corporate mandate: a form of “self-interested behavior” that creates economic value for the company, by the very process of creating societal value.

As Porter described in his January 2011 Harvard Business Review article, when applied effectively, shared value creation can burnish a company’s brand, attract new customers and help a company recruit employees and improve employee commitment to the organization. This, however, is only the tip of a value proposition that can go much deeper. It can directly help the company enter new markets, improve economies in existing markets and create totally new business opportunities—generating cost savings, as well as revenue gains.

While the HBR article and my February 6 blog focused on the opportunities for corporations to benefit from Shared Value Creation, a January 2011 Accenture study, New Waves of Growth: Unlocking Opportunity in the Multi-Polar World, effectively suggests ways in which shared value creation can help communities and countries, as well as companies.

Capitalizing on the Four Waves of Growth

According to the Accenture report, governments that hope to create significant growth in GDP and jobs over the next decade must capitalize on what it identifies as four major waves of growth. These waves are based on opportunities being created around:

  • The “silver” economy. The graying of the population, as through initiatives in areas including connected health, health and welfare products and services, lifelong finance and new products that are optimized for older people;
  • The resource economy. The providing of more reliable and cleaner sources of energy and other types of increasingly scarce resources (land, water, food, minerals, etc.), including the need to build and manage intelligent infrastructures and processes (as for energy, buildings, water and land management and so forth);
  • A multi-technology future. The rapid adoption and increasingly integrated roles that new technologies (such as superfast broadband, cloud computing, sensors, analytics, mobility and security) will play across all industries and processes and as integrated with traditionally distinct disciplines to create new fields such as bio-informatics, micropayments and manu-services;
  • The emerging-markets surge. The rise of a multi-polar world in which economic activity and resources are increasingly gravitating toward emerging economies and rapidly growing urban centers and creating new opportunities for all types of low-cost goods and services, citizen services and smart infrastructures.

Countries that effectively capitalize on these waves can, according to an Oxford Economics’ analysis commissioned by Accenture, gain huge benefits. The U.S., for example, could add 0.7 percentage points to its otherwise anticipated 3.1% average annual GDP growth and create 9.7 million additional jobs by 2020—a level of economic output and job growth equivalent to the current size of the entire U.S. auto industry. Other countries could achieve correspondingly similar gains. Germany, for example, could boost average GDP growth by 32% and employment by an additional 3 million, United Kingdom by 24% and 2.6 million and India by about 9% and 37.5 million jobs.

The Government Mandate

Although Accenture paints an encouraging picture for countries and societies that can effectively ride these waves of growth, accomplishing these results will take years of hard work. Strategies must be developed, smart infrastructures built, business environments enhanced and most critically, millions of people must be educated, trained and retrained to create and effectively utilize new capabilities.

This leads to the biggest challenge and the biggest opportunity of all. For better or worse, no single company, government or sector of society has the resources, the skills or the reach required to define comprehensive national strategies for, much less create the foundations for capitalizing on these waves. Positioning a country to capitalize will require entirely new levels of cooperation and coordination among all types of businesses, all layers of government and many different non-profit organizations (especially schools and universities).

This is a challenge in that so few countries have seriously attempted to foster this type of cooperation (and in that many attempts to do so have failed). It is an opportunity in that there has never before been such an urgent need to do so. Emerging countries must do so to address the rapidly growing aspirations (not to speak of the expectations and demands) of their citizens. Developed countries must find ways of compensating for relative declines in economic power and security and especially for preparing their citizens to compete and thrive in an increasingly global workforce.

The good news is that there are a growing number of examples in which corporations, schools, foundations and government entities are cooperating to address common needs. These, as discussed in my last two years of blogs and reports, include Microsoft’s Partners in Learning Program, IBM’s Academic Initiative, Intel’s Teach and Entrepreneurship programs, General Electric’s Ecomagination program (see my forthcoming March blogs and report) and IBM’s Smarter Planet and Cisco’s Smart+Connected Communities initiatives (see my forthcoming April blogs). Not to speak of Accenture’s own Skills to Succeed program.

But as effective as some of these and other industry efforts have been, and as promising as some of their prospects, most address only specific, often local elements of huge, multi-faceted national problems. Large-scale success will require thousands of such initiatives and increasingly formal coordination among them.

There is, however, precious little evidence that most countries are prepared for such efforts. The U.S., in particular, has a fundamental and very vocal disagreement as to whether such efforts will indeed help or harm the country. But disagreement notwithstanding, President Obama is intent on creating foundations for such cooperation. He has, for example, engaged foundations in his effort to enhance community college curricula and graduation rates and has recently enlisted two high-profile business executives to chair groups that are intended to align public and private-sector efforts around initiatives to prepare the nation for the future (and incidentally, to capitalize on Accenture’s waves).

In January 20011, he named General Electric CEO Jeffrey Immelt as chairman of his new Council on Jobs and Competitiveness (whose mission is described by its name) and Steve Case as chairman of Startup America (whose goal is to promote entrepreneurism and high-growth startups). Both are likely to enlist other executives into their efforts and coordinate their efforts with other business constituencies. Immelt is likely to draw members and ideas from groups to which he belongs, such as the Business Roundtable and the Business Council. Startup America, meanwhile, has already won support of and about $400 million in funding from IBM, Intel and Hewlett-Packard. Both groups will at least formalize private sector inputs into critical government decisions. Ideally they will do more, such as usher in an era of cooperation among public, private and non-profit sectors.

After all, as Accenture explains, no one segment of the economy controls all of the levers required to mobilize all the country’s efforts. “Coordination among the three sectors—business, government and non-profit—will no longer be a bonus, but a necessity.”

Posted in 21st Century Careers, Corporate Social Responsibility, Technology's Impact on Job Skills | No Responses »
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Accenture Contributes Its Professional Development Skills to Non-Employees

Sunday, October 3rd, 2010

Accenture has always considered professional development to be one of its core competencies. It recruits tens of thousands of new employees each year, puts them through intense training programs and follows up with ongoing, career-spanning, personalized professional development and mentoring regimes. In 2009 alone, it dedicated nearly $800 million to these efforts.

The company is now extending its commitment to and skills in training and professional development beyond the walls of its own company to thousands of people—250,000 by 2015 to be exact—who do not, and probably never will work for Accenture. Its newly announced Skills to Succeed initiative is intended to help disadvantaged people from all around the world to develop the skills they will require to get good jobs or to start and build their own businesses (and thereby create jobs for themselves and others).

Accenture, both itself and through its foundations, is funding this initiative through a commitment of more than $100 million in cash, in-kind donations and employee time, over a three-year period. It considers this effort to be so important that it has developed a global operating model to align all aspects of the company and foundations’ corporate citizenship efforts around Skills to Succeed. In fact, it has established a goal that 80% of all the company’s corporate citizenship activities will be aligned around this initiative by the end of 2010.

However, while Accenture itself manages and delivers training to its own employees, Skills to Succeed training will be delivered almost exclusively through independent non-profit partners that have proven skills in and share Accenture’s commitment to skills training, and that can “drive change and achieve scale” across multiple countries and continents.

Building the Skills to Succeed Initiative

Accenture launched the first stages of this program in mid-2009, with a $48.3 million contribution—primarily of in-kind skills (such as consulting, hardware, software and office space), secondarily cash and, to a small extent, pro bono contributions of employees’ time (as in teaching, mentoring and so forth). It aligned its efforts around three primary objectives:

  • Employment Building, which is the initiative’s primary focus and is intended to train and prepare disadvantaged people for secure jobs that pay well above local average salaries. It begins by providing training in skills required for these jobs to employment-ready individuals (generally, from high-school juniors and community college students to unemployed workers who are looking to be retrained for new jobs and industries). While much of this training focuses on IT skills (an area in which many NGOs have current programs and skills), Accenture plans to address many types of skills that are “at the intersection of business and technology”. These may include IT operations, programming, engineering drafting and accounting/finance. The program also helps prepare these trainees for actual jobs (such as by placing them in part-time jobs or internships while they are still in school) and actually capture new jobs (as by helping them develop resumes, plan job-search campaigns and secure and prepare for interviews).
  • Business Building, which is intended to help entrepreneurs create new employment opportunities such as by helping them strengthen their leadership skills, develop business plans and strengthen capabilities including financial operations, hiring and customer service; and
  • Market Building, in which Accenture helps governments, NGOs and companies build access to markets where current market infrastructures are not sufficient. Examples include a partnership with the U.S. Agency for International Development to improve rural farmers’ access to information on agricultural and marketing practices.

One of the first and largest efforts was in Brazil, where Accenture partnered with two local agencies (Rede Cidada and the Committee for the Democratization of Information) to establish Conexão (the local membership organization of Youth Business International), which provides free technology training to unemployed people and free consulting to small, promising entrepreneurs. The program was a huge success, training 13,500 young people (3,500 of whom have already been hired) and supporting 124 entrepreneurs.

This success led to more than 80 additional programs so far, with more than 15 NGO partners in both developed and developing countries. Examples include:

  • United States, where Accenture is working with Genesys Works to train inner-city high school students in skills including IT, engineering drafting and accounting and is placing them in part-time jobs during their senior years. Accenture executives also teach business preparedness skills to students in community colleges;
  • United Kingdom, with Youth Business International, to help disadvantaged young people find and get appropriate educations or occupational training and mentor them on skills required to become successful entrepreneurs;
  • India, with the Dr. Reddy’s Foundation, to train disadvantaged young people in business process outsourcing and technology skills;
  • Philippines and Cambodia, partnering with Passerelles Numériques to help underprivileged students build the skills they need to obtain IT jobs; and
  • Several countries in Africa, where it is working with Enablis to build the skills of young entrepreneurs.

Accenture’s Objectives and Methods

The concept for Skills to Succeed was born about 18 months ago during a full-scale assessment of the company’s corporate philanthropy efforts. It was looking for a single unifying effort that addressed a critical, global societal need; that reflected the company’s values, culture and character; and in which Accenture had skills that would enable it to contribute unique skills and expertise, in addition to money.

Its initial efforts in partnering and launching the program, combined with the successes it achieved and the lessons it learned, validated its commitment to the initiative and prompted it to set an ambitious goal—that of training and preparing 250,000 disadvantaged people (anyone from high school juniors to older people who need retraining for or who hope to create their own sustainable, well-paying jobs). Although Accenture is open to all types of NGO partnerships and skills training programs, it assesses each opportunity in terms of its ability to:

  1. Cost-efficiently achieve significant, sustainable, demonstrable and measurable results;
  2. Harness the energies of Accenture and the enthusiasm of its people; and
  3. Be scaled to train large numbers of people and leveraged across multiple states and countries.

But while Accenture is open to examining many different types of programs and partnerships, one thing is not negotiable—its objective. Accenture and its executive committee are fully committed to Skills to Succeed. The company is wrapping virtually all of its corporate philanthropy programs and contributions into this program and is committing all levels of Accenture employees to actively contribute to these efforts. It is also beginning to engage customers and partners in this program, as by working with them to place interns and program graduates.

But for all of Accenture’s commitments and efforts, the company understands that that achieving its 250,000-person objective within five years is a big challenge. It is committed to investing $100 million or more of its resources and the capabilities of its people to the program and is rapidly scaling its efforts. It has, for example, already added 80 new initiatives and is actively evaluating others. The means of accomplishing its goals are flexible. The objective, of preparing a quarter of a million people for rewarding jobs, is not.

Posted in 21st Century Careers, Accenture, Community/Other Colleges, Corporate Social Responsibility, Education System and Institutions, IT Company Strategies, IT Industry and Companies, IT Industry Role in Education, IT Industry's Role, Skills Requirements, STEM Careers | 2 Responses »
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The Growth of Knowledge Process Outsourcing

Monday, February 22nd, 2010

Over the last decade in my quarter-century career as an IT Industry analyst, I focused extensively on the outsourcing of increasingly high-level IT functions to offshore employees. I examined, for example, how offshore tasks have evolved from basic maintenance of old, centralized, Cobol-based applications to the architecting of new-generation, distributed Java and .Net-based apps and a broad range of other high-level IT functions. I examined how application outsourcing evolved into business process outsourcing, in which offshore providers not only managed increasingly sophisticated processes (as from basic call centers though comprehensive financial and supply chain processes), but also developed deep expertise in architecting and transforming entire processes to make them more secure, accurate and efficient.

Although Application Outsourcing (AO) and Business Process Outsourcing (BPO) growth has (along with everything else in the business world) stalled over the last couple years, they promise to resume rapid growth as the recession ends and companies strive to institutionalize the efficiency gains achieved during the recession.

Emergence of KPO

However, the greater growth, and even greater workforce implications will come from a new generation of outsourcing—the outsourcing of a broad range of sophisticated knowledge-based processes in fields ranging from financial analysis and marketing management to legal research and the research and development of the newest generation of sophisticated IT, communication and pharmaceutical products. Even hip replacement and open heart surgery is now being outsourced!

This growth of Knowledge Process Outsourcing (KPO), which was originally launched on the promise of cost cutting, or “labor arbitrage”, is now being driven by something else—the rapid growth in education in emerging countries and the rapid decline in availability of developed country students majoring in STEM (science, technology, engineering and mathematics) disciplines. It is simply becoming easier (not to speak of less expensive) to find, grow and mange such skills in emerging countries. (Note, that while the U.S. continues to lead the world in STEM PhDs, foreign-born students now account for more than half of all graduates. And since the U.S., through a combination of government policies and societal pressures, is making it increasingly difficult for foreign graduates to work in the U.S., more and more of these graduates are returning to their home countries—especially India and China—rather than contributing to the U.S. economy.

We have all seen, or at least heard of the rapid growth in offshore knowledge work:

  • Virtually all of the major financial service companies have opened offshore financial analysis centers;
  • All leading electronics and pharmaceutical companies have build large offshore research and development teams;
  • Offshore hospitals, which perform increasingly sophisticated surgeries for 15-20% of the price of domestic hospitals—with free foreign vacations thrown in—are proliferating and U.S. insurance companies are increasingly referring patients to them.

These, however, are just the most visible tip of a revolution that has begun to touch virtually every aspect of knowledge work. And while the fruits of these offshore knowledge sources were traditionally available only to those very large corporations that had the resources, skills and patience to build and manage their own offshore centers, the emergence of third-party KPO providers is rapidly democratizing the offshore knowledge processing industry, making such services available to mid-size, as well as large firms.

The Emergence of KPO Service Providers

All of the leading Indian IT providers now offer some knowledge processing services. (Tata Consulting Services, for example, offers business intelligence and performance management services, Infosys provides legal research and litigation support services and Wipro is a leader in product engineering services). A growing number of Western outsourcing providers also provide KPO services. IBM BPO/KPO offerings include a broad range of horizontal (including supply chain management) and vertical (as for banking, insurance and healthcare) offerings. So too does Accenture, with cross-industry services including financial and human resource management and industry-specific, such as Clinical Trial Management and Pharmacovigilance.

But while most of the leading outsourcers have begun to enter this field, their progress and active marketing of these offerings has—not surprisingly—slowed during the recession. As of now, the industry remains dominated by business KPO specialists. Although there are a few multi-line KPO providers, such as Outsource2India, KPO Experts and Evalueserve, the vast majority are specialists. More than 300 Indian firms already provide horizontal or industry-specific vertical services in fields including legal research and litigation support (Lexadigm), market research (Progonsys), business analytics (C-BIA) to architectural and drafting (Indovance) services.

Although the vast majority of the larger providers focus on providing business services to large or mid-sized companies, the Internet, combined with the emergence of third-party offshore service intermediaries, are now making KPO services available to very small businesses (as for Web design and accounting) and even individuals (such as for English and math tutors to personal assistants).

But, when you talk about business KPO providers, the discussion should begin with Evalueserve, one the first and largest of India’s multi-line KPO providers. My next blog (February 28 blog) will look specifically into the growth of Evalueserve and the range of services it provides. My March 7 blog will examine the implications for U.S. corporations and knowledge workers and what students and employees can do to “outsource-proof” their careers.

Posted in 21st Century Careers, Business Trends, Creating the 21st Century Workforce, Globalization, Immigration and Offshoring, IT Industry and Companies, IT Industry Trends, IT/Business Consulting/Outsourcing, IT/Software-as-a-Service, Job and Career Opportunities, Technology's Impact on Job Skills, Workforce Trends | 3 Responses »
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The Globalization of Cisco: Emergence of a Corporate Co-Headquarters

Sunday, January 24th, 2010

Globalization, as I have discussed in a number of recent blogs and reports, is rapidly becoming one of the defining attributes of knowledge work. It is also rapidly becoming one of the defining attributes of dynamic, growing companies.

But what is globalization? What are the attributes of a global company and what does the process of going global mean for a company’s employees?

Before describing what globalization is, let’s first examine what it isn’t. It is not labor arbitrage—the shifting of manufacturing facilities and process-based business functions (such as payables processing and accounting) to less expensive locations. Globalization is much more. It is a deep, sustained corporate commitment to decentralizing the company’s operations, diversifying its markets, distributing its business and management processes, and globalizing the corporate culture.

Consider the example of Cisco, a company that is effectively transforming itself from a U.S.-centric multinational corporation (MNC) into globally integrated enterprise (GIE). True, Cisco is not the first company to go global, nor does it have a huge global footprint, especially when compared with IT services giants such as Accenture or especially IBM. But like most of the company’s ambitions, its globalization ambitions are bold and unconventional.

Going Global

For years, Cisco has sold globally and operated overseas facilities. Yet, it based its corporate management team in the U.S., and made virtually all major corporate decisions there. The company’s plan to transform itself into a truly global company, with a global culture, globally-integrated management process and global growth strategy emerged in late 2006, with the board’s authorization of a plan to open a “second corporate headquarters” in Bangalore India.

This new globalization center is not about labor arbitrage. Cisco neither migrated existing operations, business processes nor functions from the U.S. to India. Although reduced costs are certainly a bonus of its globalization efforts, it created the Bangalore center to support net new corporate capabilities and to address three fundamental corporate goals, to:

  1. Accelerate growth in emerging markets (especially Asian) during a period in which emerging countries promise to grow much more rapidly than traditional developed country markets and to incubate some of the company’s most promising new growth businesses;
  2. Drive new levels of innovation by designing products in/for emerging markets and by exposing the company to new business opportunities and business models; and
  3. Capture increasingly scarce talent in a world where employable labor forces in general, and technically educated workers in particular, are growing much more rapidly in emerging countries than in developed countries.

Why Bangalore? First, Cisco, and a number of the companies it acquired, already had operations in the city. Second, and more importantly, India is a huge market and within 5 hours, one can fly from Bangalore to 70% of the world’s population and most of the world’s most dynamic and rapidly growing economies. Moreover, India has a large and rapidly growing base of well educated, English-speaking talent, some of the world’s best technical universities, and a judicial system that respects intellectual property.

The Roles of Globalization Center East

The center, which opened in 2007, is also one of Cisco’s showcase corporate facilities. It is the greenest building in the company and the first to be totally IP-enabled. It delivers a broad range of video service—including video healthcare—directly to employee desktops and serves as one of the company’s premier customer centers and a showcase for all of its new offerings.

More importantly, the facility, which currently houses 5,000 people, provides a full complement of corporate functions and a rapidly growing percentage of the company’s top executives. This includes large numbers of managers and directors, 14 Vice Presidents and Wim Elfrink, Executive Vice President of Cisco Services and the company’s Chief Globalization Officer.

While this executive contingent certainly includes people responsible for the company’s Indian operations, its overall emerging country growth and the company’s overarching globalization strategy, it also includes executives with broader corporate responsibility. Elfrink, for example, is responsible for the company’s entire services business, which accounts for 20% of Cisco’s total revenues. Other Bangalore-based executives manage global initiatives including Smart Connected Communities, Connected Real Estate and Advanced Services.

Bangalore-based executives are intimately involved in all types of corporate decisions. They sit on virtually all of the company’s councils and boards and sometimes drive initiatives that have only ancillary links to India or emerging countries, including the acquisition of at least one U.S.-based company. Bangalore is also taking the global lead in some of the company’s most promising growth opportunities, such as those around smart buildings, smart cities and smart grid.

Cisco’s 4,500 person Bangalore R&D center also plays an increasingly global role. Roughly 40-45% of its activities focus on designing new or adapting current products and services for emerging country markets, 40-45% on developing leading-edge offerings (including a central role in developing the company’s line of Nexus data center switches) for global markets and only about 10% focus on India-specific offerings.

The Future of a Global Cisco

Although the opening its Globalization Center East center was certainly a critical step in transforming Cisco from an MNC into a GIE, it is only a step. The company plans to grow the center from 5,000 to 10,000 people and to dramatically expand its role in developing new markets and products and in training a new generation of truly global managers and executives. John Chambers, for example, has committed to locating at least 20% of Cisco’s to talent in India by the end of 2010 and to ensuring that center will play a co-equal role in shaping the future of the entire company.

But regardless of how big and important the Indian operation is likely to become, it is only a first step to transform Cisco into a truly global company. It is likely to establish additional global centers in the future. China, meanwhile, will also play an increasingly central role. It is likely to become the company’s primary manufacturing hub and home to market initiatives such as Smart Cities.

Although each center will focus on technologies and growth opportunities of particular concern to regional customers and on global functions and processes to which the region’s talent is best suited, each center is also expected to play a central role in the management of the entire company. Each will house large and growing numbers of corporate (in addition to regional) executives and participate in the geographically distributed business model to which Chambers is committed, and to which he is now piloting in India.

Plans are great. But nothing, especially something as radical and unprecedented as Cisco’s globalization strategy, goes quite according to plan. As I will discuss in my next blog, the company has already learned a number of lessons from its initial efforts—lessons that will be critical not only to Cisco’s next globalization steps, but also in those of other companies.

Posted in 21st Century Careers, Business Trends, Cisco, Creating the 21st Century Workforce, Globalization, Immigration and Offshoring, IT Industry and Companies, IT Industry Trends, Workforce Trends | No Responses »
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