Make the Hard Call

Transformational outsourcing isn’t the right answer in every situation. Is it right for yours? Does your company need radical change in order to succeed in its industry? More than 50 percent of executives in a 2002 Economist Intelligence Unit survey of 225 executives around the world said their companies will need radical change to remain competitive in their industries. Is speed a critical factor for your company? How long do you have to implement the changes your strategic agenda requires? If you don’t have the time and the resources to build internal capabilities, transformational outsourcing may be the best way to achieve rapid, radical change in critical processes.

If you can answer yes to the seven questions in Exhibit 3.1, you should consider undertaking transformational outsourcing. They add up to a single potent question: are you ready to make a long-term commitment to partner with another company to transform your own?

Exhibit 3.1: CEO self-test.

No CEO would take a decision to transform a company lightly. But embarking on a transformational outsourcing initiative is even more serious. Why? In the hands of capable executives, transformational outsourcing actually works. Unlike most substantial organizational change approaches, using this tool means you will implement the changes you envision and execute the strategy you have laid out. And they will take effect within a few years, not over a decade. Executives who are accustomed to slogging their way through organizational inertia with ineffective approaches will have to hold on to their hats. But they should also be very careful what they wish for.