September 27, 2019
As we presented in a recent blog, shared services centers (SSCs) – or what we refer to as Global In-House Centers (GICs) – must create their own innovation team to support their parent enterprises’ innovation agenda. But how should you structure your team to yield the desired outcomes?
Innovation maturity and mandate
You should start by determining your SSC’s innovation maturity and mandate. The maturity is determined by the strength of your existing internal capabilities, including talent, technology, and culture; the involvement and support you require from leadership; the primary focus area of the innovation, e.g., generate revenue, reduce costs, or mitigate risks; and the impact generated by your innovation initiatives e.g., dollar value of costs saved or revenues generated.
The innovation mandate is outlined by the level of ownership and visibility for innovation initiatives; the extent of cross-collaboration between business units / functional teams; and overall alignment of your SSC with the parent enterprise’s structure and business model.
Once you’re armed with that information, you can select one of the three SSC, or GIC, innovation team structures most prevalent today, based on the guidelines we present below.
Types of SSC innovation team structures
SSCs with low-to-medium maturity and innovation mandate
If this describes your SSC, you’ll do best with a centralized structure in which your parent enterprise drives the innovation and you have limited involvement. This structure allows the parent company to have greater control and ownership, and prevents the GIC’s low maturity from being an obstacle. Many organizations prefer this structure, as it enables faster implementation of enterprise-wide and business model-related innovations, promotes standardization, and improves governance of innovation initiatives. However, many SSCs are reluctant to operate in this structure, as it presents limited opportunities for them to breed an in-house culture of innovation and deliver higher-level transformational value.
SSCs with moderate-to-high maturity and innovation mandate in a specific domain
The best fit for these SSCs is a business unit-or functional team-led innovation structure. This allows the parent enterprise to adopt a decentralized innovation approach, enable direct communication and visibility between the SSC and business unit or functional stakeholders, leverage innovation teams placed within the GIC’s business units or functional teams, and provide better alignment on domain-specific end-business objectives. Key success factors include regular mentoring by the parent’s teams to build strong future-ready GIC leadership, and direct communication channels between SSC and business unit stakeholders.
SSCs with high overall maturity and innovation mandate
For GICs that fall into this category, a dedicated innovation team in which responsibility for innovation is fully in its hands works best. This structure allows the GIC to take more ownership of proposing and prototyping new, innovative solutions, and equips it with capabilities to better respond to enterprise-wide requirements.
Achieving the right balance of ownership, accountability, and investment is the key to successfully implementing this structure and making it a win-win for both SSCs and parent enterprises. It enables the SSC to reach its true potential and gain recognition as a thought leadership partner and empowers the parent to implement innovation initiatives with relative ease and replicate best practices across business units and functions.
Because every company’s innovation structure is inherently different, GIC leaders need to thoroughly investigate each of the models and decide on the most appropriate one based on their GICs’ overall maturity and mandate.
If you’d like detailed insights and real-life case studies on how SSCs are driving their enterprises’ innovation agenda, please read our report Leading Innovation and Creating Value: The 2019 Imperative for GICs.
In upcoming blogs, we’ll be discussing ways you can promote innovation and increase its impact in your shared services. Stay tuned!
