I wrote a note for the Deep End column @ Sandhill.com on the emerging shifts in global talent distribution and orchestration. I submit that in the flat world, due to the ever changing dynamics of the business world, emerging countries are beginning to be recognized as primary centers for carrying out research and related activities. While views like cost of labor and research aimed at tapping the bottom of the pyramid appeals as the plausible reasons for such investment, in reality, labor costs, the quality of local infrastructure, favorable tax regimes and government incentives all play a role, but skills are the biggest magnet for R&D investment. The labor and cost arbitrage wave is slowly morphing into a talent arbitrage force. The “Well-Designed Global R&D Network” begins to deliver goods when organizations configure their innovation networks for cost and manage them for value. The world is beginning to see a shift from a Vertically Integrated Model to a Globally Distributed Process Network.
Wide spectrum and massive scale are key things for a service oriented business with wide reach and supporting multiple verticals. The reality is that global networks may make these happen faster, better and cheaper. Starting from the fundamentals, it can be seen that a truly lean global innovation network that operates with optimal efficiency across borders and cultures in a seamless way , in real life is an uncommon thing but where one exists, it can be seen as quite beautiful. Setting up these is not rocket science. At its core, it is easy. Most companies have the core factors that can be leveraged already in place Viz : cost-effective node location, well-designed product development platforms, an innovation-friendly global culture, and a well-aligned set of incentives & the urge and passion to make this succeed through best-in-class leadership etc - These are all available to leading companies. In reality, it may be termed an innovation by itself, if companies could pull up such a well running global network – given the challenges, commitment and energy needed to make this happen. We are also beginning to see that across industries and regions, there is a subtle but a potentially massive shift is happening: Leading edge forward looking firms are slowly moving away from pursuing vertically integrated innovation approaches and are moving towards setting up what looks like a globally distributed innovation networks. Such networks are characterized as global partner ecosystems that in alignment with the core business entity engage in activities such as co-developing and co-marketing new products, services, and enable opening up new business models. Needless to say such radical changes executed will bring in significant benefits. Read the full note here.
Francisco D’Souza,the new CEO of Cognizant argues in the op-ed of the same edition that in the future, DNA will increasingly be de-linked from geography and suggests that by extension the future of services is global. In fact, the globalization of services delivery will form the basis for competitive advantage in most industries – and software is no exception. He opines that software vendors that understand the globalization of services and internalize the new set of best practices associated with it will be best positioned for leadership in the coming decades. His recommendation : Services firms must start thinking in terms of “fine slices” and see what makes most sense talent-wise, and then orchestrate it in a way that is seamless and makes sense for its clients. An excellent article - highly recommended for reading and adoption of the ideas stated therein.
Clearly interesting times ahead and the global talent arbitrage and the emergent opportunities would transform the nature of services business in many profound ways and service organizations need to sieze such opportunities to gain and maintain enduring competitive advantage..
Labels: Future Of Services, Global Networks, Innovation, Vertical Integration