Embracing Organisational Tensions: The Balance of Power in Multi-National Companies
Although new to AWS, I am already hearing similar stories from enterprise customers regarding their challenges as they look to proactively grow and even disrupt their own businesses. While our AWS customers are interested in the technology, their stories more commonly address organisational, people, and process challenges. In this post, I will address some of these themes, sharing best practices from customer discussions and my own experience in local and global technology leadership positions at McDonald’s Corporation.
One reoccurring challenge in enterprises, and the focus of this post, is the “balance of power.” Outside of “shadow IT,” an organization’s own technology departments present a closer-to-home challenge, especially in multi-national companies (MNCs). MNCs often have technology teams in each of their major markets and one centrally. A routine debate in these organisations is which technologies should be centralised or decentralised. “Centralists” argue based on (hypothetical) economies of skill and scale and the possibility of “build once, run anywhere.” “Decentralists” counter that the autonomy and flexibility to react rapidly to local customer needs should be a dominant consideration, along with the need to address local legal, fiscal, regulatory, and cultural nuances.
So, who is right? Case studies, academic research, and my own experience show that neither view fully reflects reality.
I have lived on both sides of this equation, and have seen the challenges that often impinge on these polarized views, such as:
|Highly centralised organisations often…||Highly decentralised organisations often…|
Miss opportunities “sensed” locally that can grow into company-wide enablers
Develop for the lowest common denominators, watering down technology-based innovation
Struggle with growing backlogs subsumed by legal and regulatory needs
Fail to tap into distributed expertise
Try to centralise solutions that are very local in nature, leading to complex, hard to support configurations
Lack exit strategies for new applications they develop, impeding the ability to invest in new initiatives
Cannot afford to fund and retain niche skills required for newer technologies
Develop market-specific solutions that cannot be scaled company-wide
Fail to hear lessons learned by other parts of the organisation
It is beyond this post’s scope to help determine the right balance for your business, but there are questions you should consider, including:
- Does your company have common business processes, or is your company willing to drive a high degree of standardisation ahead of a technology solution? Can you garner active global and local organisational support and priority behind this? Can you clearly articulate how standardisation would yield real business value in terms of agility, efficiency, time to market, or new market creation?
- Is the scale of differences across your business units such that they would subsume limited centralised development resources? Do you have genuine differences that might impact the viability of global initiatives, such as government firewalls or data sovereignty laws, poor connectivity, or task automation in markets where labour costs are low?
- How does your company need to differentiate itself in new markets to compete with local competitors?
- Where does the budget and real decision-making accountabilities lie in your organisation?
- Where in your company do innovative ideas normally start?
So what does this have to do with the cloud? The cloud and the democratisation of technology now allow local startups to effectively compete on time-to-market with MNCs, as well as gives them the ability to scale good ideas fast. Startups are often not as constrained by technology legacies or the politics of navigating many diverse internal stakeholders. That said, they also don’t have access to the scale of intellectual capital or customer bases an established MNC has.
While every business will fall somewhere different on the centralised-decentralised continuum, some of the key lessons to consider include:
- Decide which technology should be global, and why. Tap into diverse thinking in your organisation to create real debate on the what, how and why. Develop clear principles on how global opportunities will be identified and prioritised. Will standardisation assure real benefits, and how can these be proven? A key value proposition of the cloud is this ability to prove out hypotheses in a cost effective, rapid manner.
- Bring others along with you.Teams I worked with at McDonald’s had a long tradition of forming and operating “virtual teams” of experts and influencers from major business entities and the corporate function. These are powerful constructs in which to discuss, experiment with, and decide the optimum local-global (“glocal”) balance. These teams cannot just engage in rubberstamping of corporate direction—members must be willing to represent their worldview and be open to others’. Avoid imposing heavy bureaucracies on such teams, allowing them to self-manage within a loosely defined remit. These individuals—unlikely to be the most senior in the technology organisation—will often become your most passionate advocates. They will also volunteer to lead, co-lead, or be the early adopter for initiatives, thus lowering barriers to implementation.
- Encourage small, innovative projects. Virtual teams are a great forum for identifying new ideas based on the premise that good ideas come from everywhere. Simple central sponsorship of these initiatives within an agreed technology framework goes a long way to build trust and credibility, normally more so than changes to formal reporting relationships, but only if ideas are nurtured rather than controlled. Many of the largest initiatives I worked on were originally started by small teams in markets as diverse as Brazil, Singapore, Canada, or the UK to address urgent needs they had.
- Implement real standards quickly and iteratively. In McDonald’s we used the phrase “freedom in a framework” to describe the right mix of global standards and local flexibility. If you agree that centralisation and decentralisation are not binary choices, and that tapping into the global workforce is a necessity, encouraging everytechnology team to innovate and develop within a framework bounded by proven standards to maximise throughput is a competitive advantage. I have found that teams typically embrace good standards as they allow energy to be directed into delivering business value and in a way that can be scaled. Proven initiatives can then be transferred from the local to central team to create a virtual flywheel. Define guardrails for technologies, such as security policies, master data access, and tagging to track cloud expenditure, and make them tangible and accessible through, for instance, AMIs, APIs, and automation. Avoid creating complex abstraction layers in an attempt to achieve some nirvana state, which will only serve to absorb vast amounts of time and money, impeding the ability for teams to capitalise on the very latest technologies. The usual concern that every team might pick their “favourite technology” can be mitigated through the light-touch virtual teams. If a compelling area for standardisation is identified, vet this with the virtual teams to ensure it is looked at from both a central and business unit perspective.
- Build a Centre of Excellence (COE). COEs that have the support of centralised experts but are close geographically to business entities are a powerful way to keep channels of communication open, and to provide expertise and guidance on the implementation of initiatives while tapping into the global workforce. One such example is the Cloud Centre of Excellence.
- Create rotation programmes for employees. Empathy is an often overlooked business enabler. Look for opportunities for your employees to walk in each other’s shoes whether on projects, in a scrum team, or as part of an ex-patriate programme. Associated costs are outweighed by the significant return on investment.
- Recognise successes and efforts. We all pay attention to symbols, stories, and other mechanisms when cultures start to change. Simple activities such as recognising participants in global-local initiatives, providing training, and sponsoring certifications are critically important. Make participation in these teams and activities aspirational for employees as part of their career development.
- Be transparent and be persistent. There will be successes and failures in globalising technology, but ultimately success will be a combination of persistence, desire to learn and evolve, and the visibility of the teams’ efforts. Regular, honest, and broad communication is important. In the early years of these activities in McDonald’s, we would communicate with up to 1,000 stakeholders and advocates weekly. Preserving the team’s integrity and delivering on commitments leads to trust, the very foundation of a glocal approach.
- Be global. Probably the hardest of all this advice is to practice what you preach. Are your key meetings exclusionary, must-be-physically-present events? Is video conferencing an after-thought with dated technology? Do you feel like a second-class corporate citizen if you aren’t in the corporate headquarters? When you think about talent, are you and your HR team thinking about the entire organisation? Actions speak louder than words. Many studies have shown that distance is a much more severe barrier to success in many MNCs than culture or language.
Your application architectures must also account for these principles, a subject to be explored in more detail in a future post. For instance, use patterns and technologies, including microservices and Step Functions, to enable discrete elements to be developed closer to where the need and knowledge resides. The corporate team can develop complex engines, such as for eCommerce, to maximise economies of skill and scale, but enable key areas of customisation, such as the UX and fiscal implementations, to be built and integrated locally. This opens up the ability for business entities to innovate in a way that does not preclude future scalability.
I would love to hear your thoughts on these principles, and what has worked to bring your organisation closer together.