Imagining a better future for shared services (and organisations generally)
A triumph of unintended consequences
By Tim Casserley and Akos Csernus
In October 1980, Tim Berners-Lee, a young software programmer on a six month contract at CERN (the European Organisation for Nuclear Research), developed a database to keep track of research projects, people and associated software. It used hypertext, invented by Ted Nelson and Douglas Engelbart in the US in the 1960’s, to create links between different documents. Berners-Lee called his system ‘Enquire’, short for ‘Enquire Within Upon Everything’, a guide to the everyday domestic concerns of Victorian Britain. He left at the end of his contract and the new system fell into disuse shortly afterwards. No one, perhaps not even Berners-Lee himself, knew it was the predecessor to the World Wide Web.
During the 80s, the previously chaotic information systems at CERN began to coalesce around common standards in computer systems, programming, network and computer hardware. Progress was inconsistent. According to Ben Segal, former TCP/IP coordinator at CERN and one of Berners-Lee’s mentors, the internet and its standards were widely resisted in Europe, “At that time, there was considerable controversy around standards. I spent my time, in those years, bringing into CERN what we now know as the Internet protocols – TCP/IP and family – and back in 1984, these were not wanted at CERN. They were American, they weren’t wanted in Europe”[i]. Despite being under-staffed and unwanted, “a shoestring operation, run out of SW Group with a few friendly contacts here and there’[ii], Segal’s team convinced the different stakeholders of the credibility of internet protocols. It took five years, involving face to face meetings one stakeholder at a time.
The introduction of internet protocols across CERN enabled Berners-Lee, who returned to CERN in the mid 80’s, to develop a proposal for a system to help scientists share information across different networks, computers, and countries. His idea – which he presented to his boss in March ’89 and called Mesh – was to structure hypertext in such a way that the links between human readable documents could travel across the internet and be viewed by users. ‘Vague but exciting…’ commented Mike Sendall, Berners-Lee’s boss, responding to the somewhat abstruse way the proposal was constructed. Clearly, he realised Berners-Lee was on to something as he sanctioned the off the record purchase of a NeXT computer to enable Berners-Lee to develop his ideas in his spare time. When Berners-Lee and Robert Caillaiu had difficultly collaborating because of the different divisions in which they were located (Caillaiu was working independently on a hypertext project at CERN), Sendall found a way for their partnership to flourish[iii].
Berners-Lee programmed the prototype in three months, installed it on his and Caillaiu’s machines and set up the world’s first Web server. They renamed the project the World Wide Web and published the CERN telephone directory on the website as a way of immediately gaining the project early acceptance. It was well received, but broader adoption was not forthcoming. “Tim tried to sell it, as an aid to collaboration…but they didn’t really adopt it quickly…it was adopted in a few physics labs…there were a few people like Tim who could immediately get it and work on it but they were marginal people, they weren’t in the mainline...”[iv] According to Segal, the senior managers at CERN were terrified about losing their EU funding by being caught tinkering with computer systems rather than focusing on the core work of particle physics. Berners-Lee and Caillaiu soldiered on. In ’93 they persuaded CERN to release the source code for free and make the Web open to all. As a result, it grew exponentially. Suffocated by the bureaucracy at CERN, and attracted by an offer he could not refuse, Berners-Lee left to join MIT in ’94. Segal concludes, “This whole thing was an accident. It was a spare-time project by a guy with a vision and amazing implementation potential. The Web was accidentally created at CERN from its weakest part, using underground resources… but that helped in retrospect...the Web…came from nowhere, it couldn’t have been foreseen.”
The creation of the World Wide Web shows how most significant change is unplanned and accidental. It is the result of the interweaving of decisions and actions taken by multiple players from which patterns emerge that no one person can lay claim to have caused.[v] Berners-Lee’s achievement was made possible by the figuration of different events, leading to an outcome that was unpredictable.
In our previous articles we put forward the idea that the future of shared services may lie in the unintended consequences of creating them. We argued that such a future depended on the executive team’s capacity to reframe its thinking about organisations and the purpose of shared services. In this article we explore those unintended consequences and the ways in which leaders might amplify them. We go on to imagine a radically different future for shared services – one which leads to the emergence of more ‘civilised’ way of organising. In using the word ‘civilised’ we are referring to the ground-breaking work of sociologist Norbert Elias[vi]. Elias used the term in a neutral sense – not to mean superior or better – but to refer to the parallel processes of centralised state control and increasing interdependence of populations that generally lead people to demonstrate more civilised behaviour towards each another.
We hold this possibility lightly – as one of many potential futures that may arise dependent on how circumstances play out and organisational leaders respond. Other, less promising, futures are equally possible.
Some unintended consequences
Consolidation of people and power
Previously, we spoke about consolidation in terms of people – the co-location of cross functional teams, resulting in greater diversity and inclusion, more exchange of ideas, and innovation. The shadow side to this is consolidation in terms of power. Creating shared services requires that power is centralised into a command and control structure that determines the division and specialisation of labour as well as employee behaviour. Without this, employees could not be compelled to work in cross functional teams, for example, or comply with process standards, or interact with customers in tightly defined ways. The expectations about exactly how shared services employees carry out their roles are more intrusive and demanding than those in their parent organisations.
This kind of culture is, of course, deeply disempowering. In our first article we wrote about the old, industrial, command and control thinking that led to its creation. At the same time, it is also incredibly influential on patterns of employee behaviour. While people respond in different ways to centralised authority with the power to ex-communicate wrong doers, most demonstrate conformity and self-regulation. These are qualities often associated with ‘more civilised’ societies and communities. In other words, the unplanned result of consolidating people and power is that people tend to behave in more civilised ways towards one another.
Emphasis on meeting customer needs
The success of shared services in bringing about more focus on customer needs as opposed to the arcane requirements of its own internal processes, has been patchy to say the least. There has been some improvement in increasing service provider accountability by clarifying the link between back office activities and customer requirements, but it’s marginal at best.
We believe the co-location of multi-functional teams has had significantly more impact on shared services addressing customer needs. As the number of people involved in the fulfilment of customer requirements has increased, so, inevitably, has the feeling of mutual inter-dependence between those involved. Elias’ theory, which is borne out by our own experience, is that this can lead to people exercising greater empathy and self-restraint. If I know my success depends on the success of multiple others, I am more likely to modify my behaviour to take into account other peoples’ sensitivities and needs. If we are all in the same situation of depending on each other’s actions for our mutual success, there is likely to be increasing social pressure to exercise self-restraint. Against this background, feelings of common humanity may develop. People’s behaviour towards one another may become more civilised. This will be reinforced if, as mentioned above, there is a centralised authority with expectations about people behaving in this way. We say ‘may’ because the values – both espoused and actual – of the centralised authority will have a significant influence on the extent to which people demonstrate self-restraint and common humanity towards one another. Recent events in both the UK (with Brexit) and the USA (with mass shootings) are testimony to this.
Arm’s length relationship
Typically, shared services organisations are set up as separate legal entities with their own Profit and Loss. This is intended to reinforce their role as a supplier to the mother organisation. It also conveniently off-loads perceived ‘non-core’, back office activities into white collar factories, thereby avoiding the effort and time involved in managing ‘non-core’ workers. The unintentional consequence is to create conditions permissive of various forms of organisational deviancy. Less constrained than their parent organisation by legacy culture and office politics, some SSO’s have been able to innovate. In some instances, this has extended to the culture and leadership style of the organisation.
Investment in technology enablement
Technology investment is intended to reduce cost, increase activity rates and enable SSO’s to provide a service across multiple countries and business units. It is one of the main reasons why – salary being the other – most SSO’s tend to employ those in their early careers who are digitally literate. At the same time, it has created sizable groups of millennial employees who use technology in new and different ways. Indeed, SSO employees tend to be more digitally savvy than the customers they are serving in the parent companies. As a result, SSO’s have the capability to become innovation hubs for new technology solutions.
Taken together, the unintended consequences of creating shared services has led to the emergence of a very specific type of organisation, in which:
Employee interaction, behaviour and individual identity are influenced by the pervasive force of centralised power
People experience feelings of mutual interdependence
Interactions are characterised by self-restraint and people demonstrate ‘civilised’ behaviour towards one another
There is more wiggle room for innovation due to less constraints from parent company legacy culture and politics
Digital innovation and discovery are made possible by the number of digitally literate, younger employees
Reaching a tipping point – the role of the leader
Leaders can amplify these characteristics in two fundamental ways. First, by thinking and seeing organisations differently. Secondly, by seeking to influence and amplify the dominant patterns of conversation in the organisation.
Thinking differently requires letting go of the idea that organisations are rational, machine like creations. Instead, it means focusing on the processes of human interaction and communication going on inside the organisation – the interplay of competing agendas and intentions from which alternative possibilities emerge. It means paying attention more to the relationships and conversations required for the organisation to function effectively. When leaders notice and participate in the dominant conversational patterns in organisations, they open a door into the possibility of influencing these patterns. And since organisations are made up of these dominant conversational patterns, the organisation changes as the patterns change, “This notion challenges the traditional way of thinking about communication as the transfer of information from one brain to another (rather like digital data is copied from one computer to another), and instead sees communication as a dynamic and non-linear process whereby meaning arises in the process of interaction, being negotiated and constructed in a way that enables the possibility of novelty, or ‘learning’ to emerge. Therefore, what people talk and do not talk about in organisations and who is included in and excluded from these conversations and hence the ‘patterning’ of conversation is of paramount importance to organisational change.”[vii]
How do leaders influence the dominant conversational patterns? One way is to find opportunities to focus the conversation on the degree to which the real needs of the customer are being met and the value that is being created as a result. Of course, it’s a conversation that’s impossible to have without being deeply informed about the real needs of the customer and the extent to which current end-to-end value chains are addressing them. The role of the leader, we suggest, is to encourage their teams to find ways of interacting with their customers on a face to face basis and build relationships. Inevitably, this will lead to the uncovering of unmet needs or wrinkles in the value chain. Fulfilling or resolving these needs or wrinkles will create more value for customers. To enable this to happen, leaders need to create space and time by re-investing productivity gains into staffing capacity and talent development. Once the level of creative dialogue with customers has grown, leaders can switch their attention to showing a keen interest in the results of early innovation experiments and supporting those that develop novel ways of creating customer value.
One other critical way in which leaders can influence the conversational pattern is to have a frank conversation with their bosses about the purpose of the SSO. This means practicing a mixture of advocacy and inquiry. Advocating for SSOs to become true business partners by involving them in planning and implementing corporate strategy. Inquiring into what is stopping the organisation from reinvesting productivity gains, as opposed to pursuing ever lower headcount and transaction costs. It’s not likely to be an easy conversation, nor a one time event. Leaders will need to persist and be sensitive to the realities of organisational realpolitik.
Imagining a radically different future for shared services
Of course, all of this may lead nowhere. The future is inherently unpredictable. At the same time, our experience points to the power of human imagination in influencing the course of future events in strange and mysterious ways. If we don’t imagine something new, something different, how will it ever come to be? In the words of Einstein, “Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”[viii] Supposing the characteristics that were unintendedly created continued to evolve? Supposing they reached some kind of tipping point as a result of being amplified by enlightened leaders? Supposing these same leaders sought to influence the dominant conversational patterns in their organisations? What might be the best possible, human centric outcome? Could Shared Services evolve to become the foundation for a completely new paradigm of organisation? Not in the quasi-religious, Frederic Laloux sense of creating soulful organisations operating from a higher form of consciousness in which there is “a journey of personal and collective unfolding toward our true nature”.[ix] We leave that to those of a more evangelical and charismatic persuasion. We are talking here in Elias’ sense of more civilised ways of organising. What would it take to make this imaginary future real?
Making the imaginary real
We foresee the need for change in four key areas.
Defining and organising the organisation
We imagine a future where employment becomes eco-system based. Core members of the organisation use their external networks to understand market trends, learn about new practices and technologies across industries and partner with academia on research and capability development. Organisational boundaries are porous. There is an external network of professionals with a strong affinity for the organisation’s purpose and culture that are nurtured and developed by the organisation. These people join project teams at the invitation of the organisation or on their own initiative by pro-actively proposing engagements. Beyond this circle of allied partners, the organisation encourages crowd sourcing to solve complex challenges.
An Agile at scale model is the main organising principle. Self managing, cross disciplinary teams design and service client experience journeys and create new customer solutions. Finance, compliance, supply chain and customer service elements of the customer journey are combined. Procurement, compliance, finance and the support elements of the vendor/ partner experience are integrated. Scrum teams experiment, innovate, and share learning. They have access to relevant information on business strategy and full visibility of the customer experience journey and value chain. They engage and consult to end customers and use new and emerging technologies.
Organisation purpose and the place of the customer
Customers come to be defined as both consumers and employees. The organisation attributes equal importance to addressing the needs of both. It moves away from Agile’s tyrannous obsession with fulfilling the needs of customers while ignoring the needs of employees because it recognises this is the road to emotional exhaustion and job burnout.
The purpose of the organisation is more about value creation than cost reduction. Corporate bosses treat the organisation as an incubator of new ways of working. They adopt a venture capitalist approach of investing in a portfolio of initiatives with the expectation that some, but not all, will be game changers. Capital and resources are allocated, including technology and internal and external expertise.
The organisation is seen as the place to learn about and experience new ways of organising and leading. Employees are involved in strategic planning, at a functional and enterprise wide level, as well as designing the customer experience journey and developing services and products. Careers are planned to rotate from the parent organisation into the SSO and vice versa. The SSO provides opportunities to learn about navigating challenging, fast moving service environments and to experiment with a new way of organising. Strong relationship networks that span the SSO and parent organisation stimulate innovation and new working practices. The SSO experience is seen as an essential ingredient in the developmental journey for future leaders of the enterprise, especially in the area of change leadership.
The nature of leadership
Management spans of control and levels of reporting become minimal. Roles rotate within and across teams based on project requirements. Decision making is focused on those that are best equipped and placed in terms of proximity and information, rather than static hierarchy. Organisational leaders act as coaches of self-organising, Agile teams, rather than managers of business outcomes. Senior leaders continue to carry out their titular obligations as regards legal, regulatory and external reporting requirements, but embrace the paradox of being in charge while simultaneously not being in control. Self-organising Agile teams take responsibility and ownership for specific outcomes. There is shared responsibility for the creation of business strategy and decision making on key strategic choices. Various forms of deliberative democracy are widely used in this regard, including Future Search and Employee Forums.
Approach to innovation and change
The organisation develops into an innovation hub for digital solutions that create consumer and employee value as well as novel ways of working with, and learning to use, digital technology.
DevOps is used extensively to embed innovation in day-to-day operations. This provides the opportunity for testing and feedback loops. Operations teams are staffed to allow self-managed development work to take place beyond the day job. Automation frees up capacity and allows resources to be reinvested in service development and learning initiatives.
Employees find new ways of interacting with digital technology that make it possible to articulate complex ideas by using richer, more nuanced vocabulary. Digital interactions move beyond their current dumbed down, ‘like/don’t like’ binary nature. As a consequence, discussions and decision making become less polarised.
The organisation’s approach to managing change, particularly in the area of digital transformation, takes on a more human stance. It ditches conventional, linear, sequential, process-based project management in favour of practices that embrace the complexities of the human world. Those in charge of transformation programmes are expected to be reflective practitioners concerned with the value of change to employees as much as customers.
An unknowable future, imagined
The future we have imagined is imaginary and may not materialise at all. Equally, it may take a very different path, one that is even less human centric than the current manifestation of shared services. Elias wrote ‘The Civilising Process’ on the eve of the Second World War. Many years later he wrote ‘The Germans’, an attempt to explain how some of the most horrific acts of the twentieth century were conducted in the very name of ‘civilisation’. In our own century, Berners-Lee’s original intentions became distorted by the relentless pursuit of the Web’s financialisation by the likes of Facebook, Amazon and Google. For Berners-Lee, the Cambridge Analytica scandal of 2016 marks a new low in the evolution of the Web, the point at which it descended into barbarity. In a recent interview he spoke of his fears that we have “…ended up producing…a large-scale emergent phenomenon which is anti-human.”[x]
In this article we described how some accidental consequences of creating shared services laid the foundations for, paradoxically, more ‘civilised’ ways of organising. We went on to talk about what it might take for this to reach a tipping point in organisational evolution, and the role leaders might play to make this happen. We painted a hypothetical future of the best possible, human centric future for shared services – projecting it onto the cinema screen of our imaginations in the hope that it might inspire others to imagine other, not necessarily similar, but equally generative futures.
What would yours be?
[i] Segal, B (2014), ‘Weaving the Web’, speech at ‘Innovation’ ISO/CERN Conference Proceedings, November 13-14 2014, page 21
[v] These ideas are derived from sociologist, Norbert Elias’ ‘The Civilising Process’ as well as the Complexity Sciences.
[vi] Elias, N (1939, reprinted 2000), ‘The Civilising Process, Wiley-Blackwell
[vii] Critchley, W and Stuelten, H (undated) ‘Starting when we turn up - Consulting from a Complex Responsive Process Perspective’
[viii] Viereck, GS (1929) ‘What Life means to Einstein’, The Saturday Evening Post, October 26 1929
[ix] Laloux, F (2014) ‘Reinventing Organisations: A guide to creating organisations inspired by the next stage of human consciousness’, Nelson Parker
[x] Brooker, K (2018), ‘I was devastated: Tim Berners-Lee, the man who created the world wide web, has some regrets’, Vanity Fair, August 2018