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Outsourcing for Radical Change(c) A Bold Approach to Enterprise Transformation Authors: Linder J. C. Published year: 2006 Pages: 30-31/135 |
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Face Forward
Transforming your organization means creating a new future for it. That means venturing into new market spaces, taking on new competitors , and operating at an entirely new pace. All of these self-inflicted changes come on top of the shifting business conditions inherent in any normal commercial environment. In conventional outsourcing, executives address the need for change with provisions in the contracts for continuous improvement, for periodic technology refresh, for contractual renegotiation, and if all else fails, for exit. Transformational outsourcing requires an entirely different approach. You and your partner need real strategic flexibility— the ability to change fluidly as threats and opportunities arise.
Leaders don’t just make joint planning part of the expectations; they invite their outsourcing partners to join them in a scenario planning process before the contract is signed. That way, some of the hard thinking about how the partners will thrive in the future can be incorporated into the business model they craft.
Just as important, they make joint strategic planning a regular process—part of everyday management. Whether it’s punctuated with quarterly meetings or annual off-sites will depend on the rate of change in the business. Regardless of its frequency, it should be a way for both partners to confirm or reshape the business model. Some companies even put break points in their transformational outsourcing contracts every three or four years . This kind of ‘‘breather’’ provides a structured time to take a fresh look at the future.
Taking a top-down look at the future is one half of the answer. You will also want to stimulate innovative ideas that come from individuals close to the operations or from other parts of your partner’s organization. Thomas Cook, [*] the leisure travel company, schedules executives from its outsourcing partner to give a quarterly presentation on innovation to its board of directors. It bases a portion of its outsourcing partner’s annual bonus on board members ’ perceptions of the quality of the ideas.
[*] Jane Linder and Joseph Sawyer, ‘‘Getting and Keeping Control in Business Process Outsourcing,’’ Accenture Institute for High Performance research report, October 2003, p. 6.
Recognize That You W ill Underestimate the Task, and Plan Accordingly
Over the course of the past several years , I have talked personally with more than 200 executives experienced in outsourcing. I cannot recall a single one who claimed to have accurately estimated the time and effort the initiative would require. Not one. And some of these relationships fell squarely in the commodity category.
Let’s face it. An ongoing business, with all its processes and people, is a complex organism. And each one is different. Your outsourcing provider may be more skilled at your particular flavor of industrial ‘‘organ transplant ’’ than any other company, but I guarantee that you will both uncover issues you did not expect. The good news is that most unexpected issues just take hard work to resolve. You will want to plan accordingly. What do I mean by that? Create slack .
Microsoft, a company that experts consider one of the most capable in the world at managing large projects, puts one week of unscheduled time in every project plan. Over time, the company has learned that this week will be required. They don’t know exactly how the time will be used at the outset, but they know they will need it.
In transformational outsourcing, you can expect to use more people during your transition than you have counted on. All the bonuses and penalties in the world won’t make the work go faster. Put a 15 percent staffing contingency in your staffing plan. These are individuals at the worker level. Don’t kid yourself that a few smart managers will be an effective substitute.
You can expect to make changes in what you want to do and what you need to do. In addition, your provider will hit unexpected snags. Put a 15 percent financial contingency in your plan to cover these unexpected costs. This should be over and above what your provider said they would charge you. Why not just hold the provider to its contracted price? Because the competitive process that gets you the best price may also incentivize your provider to cut corners. This kind of short-term thinking is your worst enemy if the big payoff is long- term enterprise transformation.
Transforming an enterprise may be one of the most daunting leadership challenges in the game. If you will be stepping onto that particular playing field, however, you will be gratified to know that you can use outsourcing to carry the day. And furthermore, if you personally engage and play with passion as I have outlined above, you are very likely to accomplish the transformation you envision. Since, unlike most management initiatives, you shall get your wish, frame it carefully . The next two chapters talk about the different ways you can use outsourcing to execute transformations and how to aim your approach to meet your strategic targets.
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Outsourcing for Radical Change(c) A Bold Approach to Enterprise Transformation Authors: Linder J. C. Published year: 2006 Pages: 30-31/135 |
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