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.