Over the last eight years, City & Guilds has been transforming itself from being a one-dimensional business focused on qualifications, to a multi-business unit vocational education organisation and a global leader in skills development. Along the way it has been learning how to deal with being a more ambi-dextrous organisation.
In this article, Chris Jones, CEO of City & Guilds describes the journey so far.
Back in 2003, City & Guilds was highly dependent on UK-funded qualifications revenues, and was organised functionally as a single UK business with some exports. However, its world was changing. As government policy reduced the barriers to entry, competition increased, with corporate-backed new-entrants aggressively selling themselves into the UK market. So the challenge was how to successfully compete to protect and secure City & Guilds’ UK market leadership, whilst at the same time develop future revenue streams.
This aspect of ambi-dexterity emphasises the messy nature of business, and the need for leaders to accept and live with what looks like an imperfect solution for any single business unit…”
Building Different Levels of Innovation in City & Guilds – from 1D to 3D
“Our first step was to introduce stronger financial planning disciplines, increase our focus on customer needs, and future-proof the technology infrastructure – all basic but necessary 1D level of innovation” (see Diagram 1 below).
Diagram 1: Levels of Innovation
Meanwhile, the UK qualifications business reframed itself into being a vocational education business, serving its customers along more of the learner value chain, by extending its product offering into learning and teaching resources, and building the technology for online assessment.
But to look for new growth we also had to do things better, and so we carved out the International business from the UK Commercial Division, in order to release it from the dominant UK core business, and provide International with a separate, focused leadership with its own distinct strategy. This took our International business into acquisitions in South Africa, and a joint venture in India – all contributing to a tripling of its revenue growth.
This alone though was not enough. We also needed to put more focus on the different needs of our key UK customer segments, by separating out the corporate employer market from the further education market. This greater focus on employers was reinforced by our acquisition of Kineo, the accreditation and e-learning business. To complete the picture, we also address the leadership and management market – served by ILM, and now also by the Oxford Group, recently acquired in February of 2015.
when making capital allocation decisions, we have to establish the right balance between protecting the core whilst also investing in the future revenue streams, and strive for efficiency-driven self-funded organic growth, as well as the inorganic growth through acquisitions. Part of this challenge is to identify those common areas that can be developed across the business for the benefit of all.”
So within our chosen markets, the MDs and their management teams are continually innovating in response to their external demands. The solutions to these demands sometimes require greater cross-business collaboration. One example of this is the reform taking place in Apprenticeships. These are being managed as a Group programme, sponsored by the UK MD, working across the businesses to find the right solution that includes support from our joint venture in India, Manipal.
Another example is the delivery of turnkey solutions for national government-backed programmes such as in Saudi Arabia – requiring the UK to support the delivery of a solution for International, but being delivered in a way that doesn’t degrade the UK capacity. So as new customer opportunities emerge, we will continually flex how we work between our business units, Group functions and support services.
Managing the Tensions Arising from Ambi-Dexterity
In developing into a portfolio of business units, supported by a corporate centre and shared services, City & Guilds has been wrestling with three significant tensions that inevitable emerge in ambi-dextrous organisations:
1. Whole versus Parts – how we ensure that the business units, organised around different customers, keep enough of their own assets, whilst also ensuring that synergies are secured through providing Group functional support. When a business unit within a Group does not have all its functions to operate independently, it needs to collaborate and share, which inevitably generates tensions. This aspect of ambi-dexterity emphasises the messy nature of business, and the need for leaders to accept and live with what looks like an imperfect solution for any single business unit. It is not straightforward, and we are still evolving our shared service model.
In making the most of our talent and know-how, the challenge is, whilst being focused on delivering business unit profit targets, to have a collective view on talent and succession planning that addresses our specific business unit as well as our Group-wide needs. This encourages the movement of talent around the business as well as sharing of knowledge around the Group.
2. Profit versus Growth – how we balance the greater profit contributions but slower growth of the UK business, with the higher growth but lower profitability of our employer and international businesses. So when making capital allocation decisions, we have to establish the right balance between protecting the core whilst also investing in the future revenue streams, and strive for efficiency-driven self-funded organic growth, as well as the inorganic growth through acquisitions.
Part of this challenge is to identify those common areas that can be developed across the business for the benefit of all. Developing a learning technology platform for the Group is one such example.
3. Incremental versus transformational growth – with the rate of change taking place in technology, another challenge is ensuring the business units continually innovate within their respective markets whilst also ensuring the Group takes as wide a perspective as possible on seeking out new technological innovations. Having this ‘peripheral vision’, not only will help us find specific solutions for our business units, but could also potentially disrupt our business units. This then needs to be viewed from a Group perspective, to avoid being constrained in spotting new opportunities.
Leading our Ambi-Dextrous Organisation
All of the above challenges, and more, are being faced across the Group by our leaders on a day-to-day basis. Along the journey of the last eight years, we have been maturing in how we lead our ambi-dextrous organisation.
We are probably now at the stage of ‘conscious competence’ of leading a collection of different business models, collaborating where necessary, and being open-minded and able to test and challenge ourselves, with a planning process that makes sure we face up to these tensions. And in bringing together our senior managers together two to three times a year, to think laterally and make collective sense of our markets, our businesses and our opportunities, we are becoming more adept at adopting the Netflix mantra of being ‘tightly aligned, loosely coupled’, to ensure we continue to be a global leader in skills development.