Cutting Over and Settling Down

With a good plan, good process documentation, good training and knowledge transfer, and good rehearsal, transferring work processes to the provider organization should be relatively painless. That does not, however, mean problem-free. No matter how much experience outsourcing providers have or how diligently they prepare for transitions, problems will occur. Successful outsourcing providers do two things right here. First, they set up processes to dispatch the problems quickly and effectively.

Many set up a war room for the most intensive first weeks of the transition. This is common practice for postmerger integration, important product launches, big system implementations, plant start-ups, and many other complex activities. The war room should be staffed by knowledgeable managers and lead workers who can allocate resources and get colleagues’ attention so that unexpected problems can be resolved at their root cause. Even after the need for a war room for daily problems abates, executives will want to staff it and use it for the first time through key processes like quarter- and year-end closings and new product launches, as well as for subsequent transitions.

In terms of activity, the transition is a particularly intense time. More operational processes and issues will be noted than can be resolved immediately. Experienced outsourcing providers use triage principles to categorize the problems and implement a ‘‘parking lot’’ for issues that have to wait.

Research shows that new organizational systems and processes will gel over three to four months.^[9] Whether their work is streamlined and effective or full of dysfunctional work-arounds, people will settle into patterns. Transformation asks a great deal more of them. It will require them to provisionally settle, then break the patterns again and again to achieve extensive performance improvements. It is not continuous change. Instead it is a series of change packages or releases. The outsourcing partners must set the metronome that creates momentum from this cycle. If it ticks too slowly, routines become entrenched; if it ticks too fast, workers burn out. So in conventional outsourcing, the partners schedule and manage their transition, then settle into a new phase of slow, continuous improvement. In transformational outsourcing, on the other hand, they must plan beyond the first transition—to the series of change releases that will follow right on its heels.

Thomas Cook’s task plan shows how transformational outsourcing differs from its single-transition cousin (see Exhibit 8.3). That initiative released a series of change packages over 20 months. NS&I’s metronome ticked off facility moves, new product introductions, and system implementations for over three years. As a result, both organizations have mastered not just a new process at the end of one transition but also the capability to make transitions. This particular and precious, hard-won learning is what makes the journey worthwhile.

Exhibit 8.3: Transformation program release plan.

A well-managed change release program can also help a company manage waves of workforce transfers. Executives report that while the first group of employees to transfer often feels anxious about moving to an outsourcing provider, they quickly see the investments their new employer is making in training and tools. Soon-to-be transferred workers hear good reports from those who have gone before, their fears are allayed, and they actually feel eager to make the move. This shifts the emotional energy of the process to support forward momentum.

Lessons and Implications

• Don’t just send messages; make sure they are received. Executives repeat that there’s no such thing as too much communication before and during the transitions associated with transformational outsourcing. In addition to committing to a comprehensive campaign that addresses the needs of all the relevant stakeholders, executives should begin to use communication approaches that help people hear, understand, and internalize the news.

• Manage the risks. Orchestrating work-process transitions and worker transfers is a complex and difficult process. Systematic risk-management approaches won’t take away all the uncertainty, but they can improve the odds of success.

• A few experienced hands can make all the difference. Executives should resist the temptation to be pennywise and pound-foolish with staff allocations during transitions. Add a few extra experienced hands at the doer level to keep critical processes flowing.

• Set realistic expectations that the transition may bring disruption. When processes change, they change for the whole company. Let everyone know that issues may arise and get involvement from individuals inside the company who will have to work differently as a result. If insiders do their part, everything else will work more smoothly.

• Manage the pace and the momentum. Transformational outsourcing entails extensive change over an extended time. If executives explicitly manage page and momentum, their companies will master not one transition, but the ability to execute change.

^[9]M. Tyre and W. Orlikowski, ‘‘Windows of Opportunity: Temporal Patterns of Technological Adaptation in Organizations,’’ Organizational Science 5, No. 1 (February 1994), pp. 98–118.