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Volume 3.1 Table Of Contents
- Uncover organizational assumptions before outsourcing
- Trend Watch: “Transformational Outsourcing” is on the rise
- Digging Deeper: Leading and managing the outsourced organization
- Ask the Business Performance Expert:
- Speaking of Success:
Uncover organizational assumptions before outsourcing
As we kick off 2006, companies of all sizes are struggling with ways to stay competitive and profitable in the face of globalization. One strategy that has been gaining ground across the board is “Transformational Outsourcing”(See Trend Watch below), where non-core processes are outsourced and largely managed offshore. While this approach has potential, partnering with an outsource provider has its own set of challenges (see Digging Deeper below). Uncovering the often overlooked and underestimated organizational assumptions about outsourcing is the first step in determining if this strategy is a fit for your company.
The earlier in strategic thinking and planning that you identify organizational assumptions, the more ability you have to address the real challenges facing your company:
- Assumptions regarding your organization’s uniqueness: Just as no two people are the same, it is also true that no two organizations are the same. Even if your closest competitors are experiencing success with transformational outsourcing, it’s important to assess the similarities and differences between your organizations’ workforce, customers, suppliers, alliance partners, and other stakeholders. At a minimum, this will provide you with more realistic expectations if you do decide to outsource. At a maximum, you may conclude that other strategies would produce comparable or better performance results.
- Assumptions regarding your organization’s capability: Outsourcing often involves a large number of simultaneous changes in people, processes and systems. For example, as an entire function gets moved to an outsource partner, current employees will have to take on new roles as liaisons and perform their jobs in different ways. Not only will they need to learn how to lead and manage a virtual team, but they may need to learn another language as well. Your organization may or may not have the competencies and resources readily available for this to happen. Uncovering these issues will impact your decision on which functions and processes are most suitable to be outsourced.
- Assumptions regarding your organization’s willingness to outsource: Even when an organization has the capability to execute an outsourcing strategy, persistent problems build when company leaders expect that the organization will instantly embrace the changes, and overlook or underestimate the natural level of resistance that comes with such this type of transition. Knowing which internal and external stakeholders are critical for success and their likely level of buy-in can help you determine how much you would need to adjust timelines, and if outsourcing could produce the level of performance required within the timeframe you need.
Bottom line: Even the best strategies run into unexpected and persistent problems ("Strategic Gridlock") if they are a mismatch with an organization as it exists inr reality. Incorporating the above considerations into strategic thinking and planning for transitional outsourcing can help you determine whether this approach will work for your unique organization.
Trend Watch: “Transformational Outsourcing” is on the rise
According to the cover story of the January 30 issue of BusinessWeek magazine, “the new buzzword is ‘transformational outsourcing’.” While outsourcing bits and pieces of functions as a way to cut costs has been in existence for years, there is a new emphasis on outsourcing entire business functions and processes as a growth strategy. Almost any function or process can be outsourced; however just because it is possible doesn’t mean that every function belongs being outsourced.
For instance, one of the most difficult processes to outsource is inbound customer service - especially when customers have problems. This is a time when companies must shine in order to regain their customer’s confidence and trust. Only the most knowledgeable and empowered people should be on the phone so that they can quickly and effectively resolve problems. However, all too often, I encounter representatives who eventually confide that they are part of an outsource provider and have no ability to make decisions or take action. If you were a customer with other choices available, how long would it be before your loyalty wore away?
Knowing which functions and processes to outsource is as much an art as it is a science. Gaining input from various stakeholder groups about their needs and concerns before making commitments provides you with information to balance what should work in theory with what will work for your company as it exists in reality.
Digging Deeper: Leading and managing the outsourced organization
A major challenge of outsourcing is leading and managing a virtual workforce that isn’t bound by your company’s rewards, policies or procedures. While personal influencing skills are critical, it is also essential to consider the cultural factors (values, beliefs and practices) that will advance or block your ability to lead and manage an outsourced team.
Locating the cultural elements that will help or hinder your outsourcing strategy requires going beyond the formal (written) culture in both organizations to determine what values, beliefs and behaviors are rewarded in reality. For example, regardless of policy, if one company rewards openness and teamwork and the other company rewards individual decision making, it will be much harder to develop a seamless organization.
Once you’ve conducted this type of cultural due diligence, you can prioritize which issues to address that will make the biggest difference in getting more of the performance you want in the shortest amount of time.
Looking for fresh perspectives
at your next leadership meeting or retreat?
Pam Harper provides high- energy keynotes that
provide participants with new insights and practical
ideas for accelerating progress toward key business
objectives. For more information call toll free
(877) 612-1228 or contact
us.
Ask the Business Performance Expert:
Q: What is
the biggest myth about outsourcing?
A: I’ve encountered many
leaders who believe that outsourcing is a cut-and-dried
issue and that it’s up to the outsource
provider to make the relationship work. But successful
outsourcing requires much more than simply handing
over a business function or process to an outside
party. Both parties must be prepared to invest
time and energy on a continuing basis on planning,
skills training, and communication. Ultimately,
everyone must make the transition from an “us-them”
mindset to a “we’re in-this-together”
mentality.
Quote: “Reality is merely an illusion, albeit a very persistent one.”
---- Albert Einstein (1879-1955), physicist and philosopher