Chapter 9 talks about ‘Building an Innovation Conducive Culture”. It also discusses ‘Human factored interaction’. Many companies (rightly) focus on marketing but some can forget that the marketing function is based upon and derives from a smoothly functioning firm. JBS, a Pakistani IT giant, was quick to focus on technological innovation that could bridge the gaps in meeting customer demand post-Covid. But it also understood that coordination across units and departments in service of an overarching goal was critical to success. It removed its tall reporting structure and set up cross-functional teams, allowing the flatter structure to enhance each employee’s responsibility. This in part enabled JBS to set up and sustain an open-door policy that allowed any employee to meet the CEO. It also restructured its performance management system. It also enabled startups within the organization. All in all, JBS redesigned its systems and processes to focus on meeting customer needs and thus set up an Innovation Conducive Culture, the theme of Chapter 9
(Dr. Aamir Khan, Case Advisor).
As the world embraces digitalization, companies are utilizing technology more intelligently and strategically. This trend was given a fillip by the onset of the Covid-19 pandemic changed everything. The customers that valued prompt and real-time actions were now facing lag in the provision of goods and services. Major organizations felt the brunt of the Covid-19 pandemic as their revenues plummeted and their value was compromised.
Among the chaos, some companies understood the call of the hour and took decisive action. Companies that were quick to transform their operations and adapt to the new normal were able to navigate their way out of this crisis whilst providing value to their customers. One such company was JBS. They realized the hurdles in meeting customer demand that existed due to the Covid-19 pandemic. The company decided to invest in technological innovation that could bridge this unexpected gap in the market, and to modify the channels through which value is transferred and recognized by each customer. However, to achieve these goals, it had to overhaul its systems and processes. The story of how JBS did is narrated below.
The Goals
In 2017, the Pakistani IT giant found itself at the forefront of this worldwide dilemma as one of the country’s largest IT solution providers. With innovation and a genuine commitment to understanding their customers and stakeholders being among their underlying principles, JBS had much to sustain and even more to accomplish. In regards to the latter, they aimed to generate 22 million (USD) revenue, have at least one notable acquisition, and be a group of at least 3 companies by 2020.
The firm understood that achieving such ambitious targets while maintaining an impressive track record for customer satisfaction is easier said than done when there are structural inefficiencies that undermine a company’s productivity.
The Challenges
The company understood that the biggest challenge faced was finding a way to eliminate inefficiencies within the organization system. The vertical management hierarchy posed an internal communication and collaboration challenge. Their use of legacy business systems and outdated business practices also resulted in work redundancies and performance gaps. These inefficiencies hindered the company’s growth and posed a major business challenge. For instance, on average, only 22% of their projects and orders were completed on time. As a company whose purpose was "to make an impact in the lives of people, customers, communities we serve and in areas we operate”, such a status quo was no longer acceptable.
Veqar, the Chief Executive at JBS, decided that the company had to rethink its strategy to take advantage of the growing IT needs of the market and gain a sizeable market share.
Demand meets Innovation
The IT services sector was among the fastest-growing sectors in the country, contributing about 1% to the GDP of Pakistan at about 3.5 billion USD. It doubled in the past four years and was expected to grow a further 100% in the next two to four years to 7 billion USD. As per the Pakistan Vision 2025 and the Digital policy of Pakistan 2018, the ICT industry size was estimated to reach 20 billion USD by 2025.
In other words, companies were rapidly becoming aware of the importance of digitization and its role in increasing their growth and improving their practices. The onset of the Covid-19 pandemic catapulted the dependency of businesses on IT services. There was a growing demand for IT solutions and it was now JBS's objective to help facilitate these companies within Pakistan.
Laying down the framework
After assessing the market dynamics, changing business needs, and how to better meet the needs of their clients, JBS devised a new strategic framework that was built on organizational growth, excellence, and innovation vision. Growth was depicted through financial indicators and numbers. However, to realize growth, a transformation of organizational culture was imperative, since excellence had to be built into everyday processes.
Further, excellence had to be operationalized, which at JBS was conceptualized as ‘a bit earlier’. This implied that everything that was done, had to be done faster, better and smarter. This efficiency focus changed the speed and quality, resulting in improved productivity. The third pillar was innovation in processes, products and services. In an ever-changing technology market, adapting and leading the change, to remain future relevant was vital. Hence the company focused on consistently offering innovative products and services, subsequently, creating an organization for the future.
With their new outlook and fresh strategic framework now set in stone, the wheels were in motion. Such a change, were it to be successful, had to be implemented with conviction and precision. Keeping it in mind, JBS adopted the following strategies to implement their new framework.
Organizational Restructuring
JBS understood that coordination across units and departments in service of an overarching goal is not only critical to success, in both the long- and short-term, but it’s also one of the most difficult things to achieve. Strategies often fail as a result of a failure to communicate their purpose and goals to all employees within the organization. Therefore, the company emphasized the inclusion of its employees in the implementation process.
The company feared that without proper communication of a strategy – its goals and processes – workers could unknowingly contribute to its misalignment. The company decided to invest in their employees to enable them to understand the company objectives and execute their respective roles within the organization with utmost efficiency, thereby creating buy-in and engagement.
To make the JBS organizational hierarchy more cohesive, the tall reporting structure within the organizational hierarchy was removed and a cross-functional team set-up was introduced in its place. The company believed that the flat structure of the new set-up elevated each employee's responsibility within the organization and eliminated all the excess management layers that existed within the previous tall reporting structure. These changes improved overall coordination and communication within the organization. The fewer levels within the organization hierarchy improved the decision-making process among staff.
Elimination of middle management levels boosted the organization’s budget. The company was able to cut costs and improve efficiency through this initiative. Furthermore, an open-door policy was initiated by the CEO, so any team member could meet and discuss matters with the CEO freely. A similar communication environment was adopted by other team managers. The goal of the organizational restructuring was to align JBS's new culture, structure, and talent with the new strategy.
Addressing work practices
In 2019, when the Covid pandemic hit the world, JBS introduced a 'Work from Anywhere' policy which encouraged JBS to achieve excellence in the work flow. They allowed their employees to work remotely for most of the week. This initiative improved productivity by moving to a ‘deliverables-based’ work system that effectively removed formalities such as attendance, 'body-in-seat' mentality, clock-in, and clock-out system.
Furthermore, communication tools were provided to the employees to stay connected to one another and clients; offering integrated message, video, and phone technology that improved interaction, collaboration, and client experience. Performance scorecards were designed to assign outcome-based objectives to all the team members. The whole performance management system was structured to include individual goals around the three pillars of growth, excellence, and innovation for all employees. This initiative was led by the top leadership that ensured that their initiative was communicated effectively and built into the management system to reap impressive outcomes.
Side by side, JBS also set up a highly effective CRM system that tracked and managed processes at all times, ensuring that productivity remained intact. To further enhance timely product delivery and quality of their services, the CRM mechanism created a system-generated alert that automatically sent out alerts to the higher management whenever there were over 100 open calls from customers and a failure to close those calls by customers.
These internal restructurings laid the groundwork for JBS in achieving its ultimate goal of providing superior value to its customers. Now, with their employees equipped with all the necessary tools, it was time for the company to showcase its offerings to customers and stakeholders. This manifested itself in the form of their third parameter: growth.
Growth Mindset
The growth of entrepreneurship and innovation in Pakistan did not go unnoticed by JBS. It had become a top priority for JBS to take advantage of this progression in the stir of its new strategic framework. To that end, they invested in two charters of acquisition and new product development. The company decided to contribute to the startup culture in the country. Through their platform, they procured individuals with distinctive entrepreneurial characteristics. Soon, the company was inviting and joining hands with various external small startups.
JBS which was a division helped new entrepreneurs while becoming 5 companies including (JBS, HK, Blutech, ENA & JBS Inc.) in such a short span of the time succeed by giving them a robust platform, unparalleled financial support, and a corporate environment that provided proper governance structure that novices often lack. These resources coupled with the strength of their ideas enabled these aspiring entrepreneurs to freely breathe life into their vision and become successful in their respective fields. It was through this acquisition model that they generated a very strong data analytics company, Blutech Consulting. This was initially a one-person start-up in Big Data Analytics, with little to no financial support. JBS helped the start-up in running its business operations, covering the financial costs, and enabling this start-up to grow within the Data Analytics field. Within 3 years, the company managed to initiate various projects in 5 different countries with over 130 people and delivering a 1.8 million (USD) top line.
JBS took a similar approach with ENA, a company that provided IoT and sustainable power to the country. Today, both Blutech Consulting and ENA operate under Jaffer Business Systems. Bluetech Consulting continues to thrive while ENA hopes to achieve similar results. Hysab Kytab being a finance & budgeting app has contributed greatly towards helping people and continues to do so. These developments also helped grow the JBS workforce tremendously, creating over 500 jobs since 2017. In this manner, JBS proceeds in making and supporting startup culture through their acquisition strategy which eventually assists in making an effective startup and offers a successful boost to the entrepreneurs.
Keeping with their goal of fostering entrepreneurship and innovation, JBS also launched GradNest, a graduate program in the IT sector to develop young and upcoming leaders that will drive the industry forward. Additionally, JBS had also worked hard to offer Cloud Computing Solutions that provide a more efficient, flexible, and cost-effective IT model to their customers, without sacrificing control. These included infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). This placed JBS at the cutting edge of cloud services in Pakistan whilst achieving a higher level of customer satisfaction.
With this growth objective in mind, JBS had managed to win 100+ new customer organizations in the span of the last 12 months only, a feat that seemed unlikely at best just a few years ago. It became clear to the company that their new approach didn’t just help sustain them, but catapulted them to even greater heights.
Benefits of Strategic Framework
Jaffer Business Systems’ decision to overhaul and commit to a new strategic framework and managerial structure proved to be a brilliant step for the company. This wasn’t just a fresh coat of paint; it was a masterstroke that the organization had been looking for in 2017 to turn the tide in their favor. As a result of their investment in strategic approaches, JBS had not only grown tremendously but also witnessed significant improvements in terms of the three parameters they laid out.
The company observed improved quality of service and significant additions to its portfolio due to its emphasis on the future of technology, hybrid solutions, big data, and contextualized marketing. Their growth strategy had also yielded great results, the rate of projects completed on time rising from 22% to an impressive 70% which was “a bit earlier”, and this metric was also used to measure ‘Excellence’.
The effectiveness of this framework became most apparent during the Covid-19 pandemic when many businesses were forced to downsize, but the opposite was true for JBS. They not only hired more people during this time, but the total business value grew and they gained more customer organizations. Currently, JBS has a very strong financial and market standing with a highly competent team of 850+ employees, contributing to the country's economic and technological advancement by having won 300+ customer organizations and estimated to generate around 25 million (USD) total revenue in the fiscal year of 2021.
Needless to say, Jaffer Business Systems successfully met their goals for 2020 and look to the future with even greater ambition. JBS, reinvigorated thanks to this restructuring, intends to continue to excel in terms of growth, innovation, and customer satisfaction. Armed with a tried and trusted framework that has yielded impressive results, they aim to acquire a minimum of 5 companies and be a group of at least 10 companies in total by 2030. They also expect to generate 86.3 million (USD) in revenue, enter markets globally in 5 international locations due to a greater focus on exports. The company continues to uphold its reputation as one of Pakistan’s most innovative and esteemed IT software providers and systems integrators.
Questions to stimulate conversation on the case
- How does JBS differ from other IT companies in Pakistan?
- What are the short- and long-term goals of JBS? Are these achievable?
- Why did JBS decide to redefine their strategy?
- What macroenvironmental factors present opportunities for JBS?
- What are some of the other strategies JBS may have used?
Links and media
Website: https://www.jbs.live/