Creating a Unified Operating Model for Business Outcome Partnerships

In my recent article on the evolution of Global Business Services, I emphasized how GBS organizations must urgently transition from FTE-based pricing to outcome-driven contracts to remain competitive and deliver true business value. That transition is now underway, with forward-thinking organizations transcending conventional time-and-materials models to embrace true business outcome partnerships.

This shift represents not merely an evolution in service delivery but a fundamental reimagining of the client-provider relationship.

As we enter an era where AI adoption accelerates and talent transformation initiatives gain momentum, the next frontier for GBS leaders is establishing scalable, replicable operating models that deliver measurable business outcomes while enabling equitable gain-sharing between providers and clients.

The Business Outcomes Imperative

Traditional GBS engagements have often struggled to deliver transformative value—not due to lack of capability or intent, but because the underlying operating models weren't designed for outcome-based delivery. Transitioning from effort-based to outcome-based partnerships requires more than superficial changes to statements of work; it demands a comprehensive operating model with four essential pillars.

The Four Pillars of Outcome-Based GBS Partnerships

• Outcome-Focused Contracting: The foundation of any successful business outcome partnership begins with reimagined contracting approaches that transcend traditional service level agreements. These contracts must:- Establish dedicated schedules for business outcomes separate from base services- Define clear, measurable outcomes with unambiguous success criteria- Articulate Key Result Areas (KRAs) tied directly to business performance- Delineate specific responsibilities for both provider and client- Include mechanisms for adapting to changing business conditions. The most successful outcome contracts I've witnessed include explicit sections on "Client Dependencies"—acknowledging that providers cannot deliver transformative outcomes in isolation. This shared accountability forms the cornerstone of genuine partnerships.
• Value-Aligned Commercial Models: Business outcome partnerships require commercial structures that align provider compensation with client success. These models typically include:- Base compensation covering operational costs- Performance-based variable components tied to outcome achievement- Gain-sharing mechanisms that reward exceptional results- Reinvestment provisions that channel a portion of realized benefits into continuous innovation. However, the "fee at risk" component can become a double-edged sword when not properly structured. I've witnessed clients using missed targets as arbitrary grounds for contract termination or penalties, without acknowledging their own accountability in outcome achievement. This creates a toxic dynamic where providers become reluctant to "put skin in the game" not because they lack confidence, but because they fear unilateral accountability. To mitigate this risk, successful commercial models must be accompanied by:- Detailed outcome RACI matrices specifying exact responsibilities for both parties- Explicit dependency documentation with timeline implications- Formalized escalation processes when dependencies aren't met- Joint review mechanisms before any penalty enforcement. The key differentiator in successful commercial models is balancing risk and reward proportionally. When providers put significant revenue at risk for outcomes, they must have both corresponding upside potential when they exceed targets and protection from factors beyond their control. This balanced approach ensures both parties remain invested in long-term success rather than short-term metrics or contractual maneuvering.
• The Value Office: Orchestrating Outcomes: Perhaps the most overlooked yet critical component of successful outcome partnerships is establishing a dedicated Value Office—a cross-functional team responsible for:- Quantifying baseline performance and establishing measurement methodologies- Tracking and validating realized benefits against targets using agreed metrics, dashboards, and regular cadence reviews- Managing the value realization roadmap with clear milestones and accountability- Facilitating resolution of impediments to outcome achievement- Ensuring transparent reporting to all stakeholders. In practice, the Value Office must balance two seemingly contradictory portfolios: immediate business outcomes and longer-term transformational initiatives. The latter often presents a strategic paradox—activities that may initially reduce revenue but are essential for future growth and relevance. Consider initiatives like capability remapping, location strategy refreshes, or language neutralization technologies. These may eliminate the need for language-specific agents and cause short-term revenue declines. Yet providers who avoid these transformations to protect immediate revenue ultimately surrender their strategic value proposition, becoming mere consumers of client-led initiatives rather than drivers of innovation. The most effective Value Offices I've observed employ a portfolio approach that:- Categorizes initiatives as "run" (immediate outcomes) vs. "transform" (strategic enablers)- Tracks separate metrics for each category with appropriate timeframes- Creates consolidated roadmaps showing how transformational initiatives enable future outcomes- Establishes "transformation credits" that acknowledge short-term revenue impacts as investments. The Value Office serves as the central nervous system of outcome-based engagements, providing objective assessment of progress while identifying optimization opportunities. Unlike traditional governance focused on contract compliance, the Value Office maintains unwavering focus on business impact—both immediate and future-oriented.
• Collaborative Governance Framework: Conventional GBS governance structures—with their emphasis on SLA adherence and issue management—prove inadequate for outcome-based partnerships. Effective outcome governance requires:- Joint executive steering committees with decision-making authority- Integrated transformation councils aligning outcome initiatives with business strategy- Value realization reviews focused on economic impact rather than operational metrics- Innovation forums that identify emerging opportunities- Rapid intervention processes when outcome trajectories deviate from targets. A critical organizational shift in mature outcome-based partnerships is the realignment of traditional service delivery teams. In legacy models, delivery teams operate as independent entities focused primarily on operational metrics, often with a mindset oriented toward margins and incremental growth through additional scope or short-term project work. For true transformation, these delivery teams must be brought under the purview of the Outcomes Officer, creating an end-to-end governance structure where service delivery and outcome achievement are indivisible.

This integration recognizes two essential truths:

1. Service delivery teams cannot be elevated to strategic partners without the transformational vision that comes from the outcomes and transformation office

2. Transformation and value offices cannot execute effectively without the ground-level insights and operational expertise of delivery teams.

The most successful GBS partnerships I've observed feature unified delivery structures where outcomes officers have direct oversight of both transformation initiatives and day-to-day service delivery. This enables coherent prioritization, resource allocation, and strategic road mapping that would be impossible with siloed governance approaches. This governance approach acknowledges that achieving transformative outcomes requires ongoing collaboration rather than contractual enforcement, with organizational structures that reflect this integrated philosophy.

Distinguishing Outcome Partnerships from Gain-Share Models:

While often used interchangeably, business outcome partnerships and gain-share models represent distinct approaches with important differences:

"Business Outcome Partnerships" focus on achieving specific, predefined business results (e.g., reducing DSO, increasing customer retention, accelerating time-to-market) where the provider assumes significant delivery responsibility but the client gains maximum results when delivered successfully. A corresponding risk/reward trending towards the client and the provider having the ability to earn back any investments is facilitated.

"Gain-Share Models" typically involve identifying and implementing specific improvement initiatives where realized benefits are shared according to predetermined formulas, often with lower provider risk but also capped upside potential. The most sophisticated GBS organizations maintain both approaches in their portfolio, deploying each where strategically appropriate. Outcome partnerships excel for strategic, enterprise-level objectives, while gain-share models often prove more suitable for discrete, project-based improvements.

Building a Unified Operating Model

The ultimate challenge for GBS leaders is creating a standardized yet flexible operating model that supports outcome-based delivery across diverse clients and engagement types.

Achieving this balance requires:1. Modular Contracting Frameworks - Developing standardized contract components that can be assembled to fit specific client situations while maintaining consistent principles

2. Scalable Value Measurement Methodologies - Establishing repeatable approaches to baseline creation, benefit calculation, and validation that can be efficiently deployed across engagements

3. Talent Transformation - Developing specialized capabilities in outcome engineering, value realization, and consultative partnership management

4. Technology Enablement - Implementing platforms that provide visibility into outcome achievement, automate measurement, and facilitate collaborative governance

From Aspiration to Implementation

For GBS leaders committed to outcome-based transformation, I recommend these practical next steps:

1. Assess your current operating model against the four pillars, identifying specific gaps

2. Develop prototype contracting and commercial templates for outcome-based engagements

3. Pilot the Value Office concept within a select client relationship

4. Invest in training delivery teams on outcome-based thinking and client engagement

5. Create a playbook for transitioning existing relationships toward outcome-based models.

The outcome based operating model has immense potential to pivot the core delivery focus from business as usual to business growth and value. This stands as an anchor to make GBS future ready, making it an attractive career option.

Is there any other recommendations to embrace outcomes as a core principle within a GBS contract?