Have you ever considered the possibility that what you do on a daily basis and what you strive to achieve throughout the course of time in your business, profession, career(s), or even a lifetime for that matter, could be contributing to some higher purpose?
Now, this of course will mean different things to different people, but it is no surprise that having this sense of purpose or mission, can drive both individuals, through to the largest businesses, to do great things.
So, that is why we believe at The Startup Business that our last practice of The Seven Practices Of Highly Effective OutsourcingTM is the most important of all the previous six – Expand Your Global Mindset.
Never in all the history of time, have we been so connected with each other as we are today.
A mining disaster in regional China can be news around the World in minutes. A fireworks celebration on New Year’s Eve on Sydney Harbour, can be broadcast live to billions of people. A teenager, still in school, can share to the world in the most intimate of detail, their personal story to a global audience while sitting in their bedroom – and they have probably monetised their shows and are now making more money than their parents may have done in a lifetime!
The old rules of business are being broken.
The Sharing Economy, The Me Generation, Internet Of Everything, Wearables & Virtual Reality, Artificial Intelligence, Robotics, Automation, Big Data, Everything As A Service, The You Economy is today’s language.
Companies like AIRBNB & UBER are fast becoming old school… the next wave of players are entering the market, contributing to greater disruption than those of their predecessors
However, there is a dark side to all this disruption.
People are losing their jobs to outsourcing and automation. Infrastructure development is destroying arable and natural landscapes and polluting our water and sky. The gap between the very wealthy and the poor is extreme. In fact, according to a 2017 report by Oxfam, this gap is so large that just eight individuals own the same wealth as 3.6 billion of the world’s poorest people.
Clearly, there is much to be done – and we can take positive steps in a way that not only it is good for our business, but also for our communities, societies, and our planet.
You see, today success is achieved through partnering and collaboration – not going at it alone.
Our global ecosystem is borderless, tightly integrated, highly interactive, and technologically revolutionised. Synergies, innovation, and excellence are a team sport. Finding new ways of working with each other, challenging the status quo, moving beyond the mediocre and being socially responsible, must be today’s imperative.
At The Startup Business we believe you can do this in three ways. Firstly, it is about having a Philosophy of how you see this world – a global mindset, then developing a set of Principles, followed by implementing specific Practices into your business and then initiatives that contribute to your ecosystem.
Philosophy & Beliefs
Having a philosophy in business is important because it guides you in how you go about achieving your ultimate vision and mission. A philosophy has a lot to do with how you see the world and why you do what you do and that of course leads to how you go about the decisions you make.
We are also, by our nature, attracted to individuals and organisations that stand for something. When this happens, it is often because we feel a sense of connection. A sense of common humanity reaching out. A feeling that we are all in this together to achieve a common goal or cause.
This philosophy must also extend to your outsourcing partnerships. They are part of your ecosystem. So, for you to achieve your vision and mission, they also need to buy into your philosophy – otherwise we are just working together for the sake of a transaction, and not connected at a higher level.
Principles & Ethics
Principles and ethics are the rules on how you conduct yourself and what your actions are judged by.
At The Startup Business, as a service organisation, we are defined almost entirely by what we do and say each day. For us to be successful, it is therefore critical that we model exemplary behaviour. Our ethical principles are the values that set the ground rules for all that we do at The Startup Business, The Startup Business School and associated companies including Phykon.
As we seek to achieve responsible commercial success, we will be challenged to balance these principles against each other, always mindful of our promise to our stakeholders that we will achieve responsible commercial success.
Sometimes ethical demands and economic realities conflict. In such cases, exhibiting high ethical standards should always win. We cannot justify or rationalise illegal or unethical behaviour because it undermines trust.
The Ethical Principles and the Guidelines For Ethical Decision Making have been adopted by us to support these objectives. They may also provide an example on how you may like to address them in your own business – even if you are just starting out…
The Ethical Principles
Honesty: We will not say things that are false. We will never deliberately mislead. We will be as candid as possible, openly and freely sharing information, as appropriate to the relationship.
Promise-Keeping: We will go to great lengths to keep our commitments. We will not make promises that can’t be kept and we will not make promises on behalf of the The Startup Business, The Startup Business School or associated companies unless we have the authority to do so.
Fairness: We will create and follow a process and achieve outcomes that a reasonable person would call just, even-handed and non-arbitrary.
Respect For Others: We will be open and direct in our communication, and receptive to influence. We will honour and value the abilities and contributions of others, embracing the responsibility and accountability for our actions in this regard.
Compassion: We will maintain an awareness of the needs of others and act to meet those needs whenever possible. We will also minimise harm whenever possible. We will act in ways that are consistent with our commitment to social responsibility.
Integrity: We will live up to our ethical principles, even when confronted by personal, professional, and social risks, as well as economic pressures.
Guidelines For Ethical Decision Making
At The Startup Business, to guide us in making ethical decisions, we apply the following questions.
While they do seem obvious, we suggest you trying some scenarios of your own, starting with the first question on top of the list and working down in that order. The way in which these questions are designed is to shed a light into that often-grey area of business decision making…
Is it legal?
Is it a violation of the company’s Code of Business Conduct?
How will it make you feel about yourself?
How will others who are affected react?
How would you feel if the world knew about it?
Does the behaviour make sense?
Is the outcome appropriately fair to everyone involved?
Will your leader and your leader’s leader approve?
For example, you may be deciding around offshore outsourcing, in which your current local support team will no longer have jobs in your business. While this decision to outsource is aligned to your overall strategy, how you go about implementing this strategy will have different outcomes depending on the approach you take. In the case of your local staff, how you communicate to them, and when you do this, and which ways you will support them through this significant event will be influenced positively if you use the Guidelines For Ethical Decision Making, or potentially negatively when you do not use the guidelines.
Practices & Sustainability & Social Responsibility
Our final way of developing a global mindset, is about who you are as a member of the community.
Are you and your business a role model and example, and are contributing your influence and resources to a greater cause which is encapsulated in your everyday actions? For example, this might be in terms of your environmental footprint. This might be in ways of embracing diversity in the workplace. Maybe for you, it is about sharing your rich insights more broadly by speaking out in publications, social media and events? Perhaps one of the things you are doing is volunteering for local causes – either participating, supporting, promoting, or funding.
There are many things you can do – and they do not need to cost money for you to do them either. Of course, some activities may provide you with greater exposure and even potentially lead to business opportunities – but of course that is not why you do them.
You embrace practices of sustainability and social responsibly because you believe it is the right thing to do. You and your business have a higher purpose that is greater than just the day to day transactions that may be providing an economic benefit.
You are about making a difference.
You & your strategic outsourcing partner need to be aligned …
That way the power of one plus one will always be greater than two
So, having an outsourcing partner that believes in the same things as you is also important.
What happens when you have outsourced? Well in many businesses, not much else.
You have now successfully transitioned outsourcing into your business and operationally it is ticking along – what about the value proposition though? Are you exceeding your expectations?
Several years back, I was asked to conduct an independent outsourcing review with a global corporation that had outsourced several thousand-equivalent personal, across business and technology functions. Part of this review involved conducting interviews with stakeholders across multiple organisations, and from junior to senior positions, and included two questions:
How’s your outsourcing performance going, on a scale of one to ten?
How would you rank your current outsourcing performance based on these ten industry standard criteria, on a scale of one to ten?
Experience over time in outsourcing does not ecessarily lead to value
Instead, a focus from day one in driving improved performance continuously will lead to value
I then gave my own “independednt” assessment based on further questions, reviewing artefacts and observing management interactions across multiple levels.
So, what did I find out?
Well, surprisingly, when stakeholders were asked the question, “how’s it going” (business perspective), they typically scored this higher than they scored against the industry standards which were higher than the independent assessment.
It was as though there was an ingrained belief by all parties that, the longer they had been outsourcing, the more experience they had, and therefore were better at it.
So here is the rub…
You may think you are performing very well right now but how do you compare against industry standards and benchmarks? How would an independent third party assess your outsourcing today?
This dilemma to achieve value from outsourcing led me to the creation of the sixth practice of The Seven Practices Of Highly Effective Outsourcing™ as Exceed The Standard Others Look To.
We all want to be “best in class”, or the leader of our industry. But why is it that so very few pursue this noble cause with a passion?
So, the purpose of this sixth practice is to provide the concepts and frameworks for you to pursue value in outsourcing in your own business and thereby choose magnificence over mediocrity.
In terms of outsourcing maturity, I am a great advocate of capability maturity frameworks of which the Carnegie Mellon eSourcing Model is a favourite.
One of the capabilities this model defines is Value Management and this contains seven sub capabilities or activities.
It is important to highlight that these seven Value Management activities are not separate autonomous functions with distinct and unique processes, rather they serve as a way to bundle the concepts of Value Management into one framework or over-arching capability when managing outsourcing relationships. Furthermore, it is also possible to position the seven activities as either operationally focused, strategically focused, or at some point between.
Therefore, for you to address this challenge of driving increasing value into your business when you outsource, there are three things you must do and it first starts by improving the business…
Improve The Business
The first thing you must do is implement a continuous improvement process into your day to day operations. This could be as simple as a suggestion box where ideas are put forward, or more engineered, where there are clear processes, documentation, and technology tools for enablement and governance.
Both can work very well, as the key to success will always be focus. Doing that in your own business might be around making it fun for everyone to participate, or perhaps there are incentives. However, when you are outsourcing, to drive continuous improvement, it gets a little more complex because of these possible drivers…
Your outsourcer may only implement improvements that help them and not you.
Your outsourcer may not feel motivated to implement improvements or even call things out that will lead to improvements.
Your outsourcer may have a view that if they help to improve things, then potentially they lose out because it could reduce their revenue.
Your outsourcer may see opportunities for improvement, but because implementing them requires both you and them collaborating, it all seems too hard.
Now there are some quick things you can do to help alleviate some of these restraints.
Firstly, if you are paying your outsourcer based upon time only and the longer it takes them to do things generally means they get paid more, you insert clauses into agreements that might request an annual productivity saving. Of course, to do this, you need to have all your processes clearly defined and key performance indicators mutually agreed. Oh yes, you also need a commercial agreement as well!
Secondly, you may just have an agenda item on your regular weekly meeting to discuss improvement ideas – this in itself can lead to driving value because as the old saying goes: “inspect what you expect”! Yes, that’s right, you need to ensure you have regular meetings as well!
Continuous improvement is …
Instead, a focus from day one in driving improved performance continuously that will lead to value
You see, if you implement outsourcing the right way, with the appropriate disciplines in place, such as meetings, clear outcomes and agreements, you will drive performance. So, it is no surprise that most businesses do not get value; because they have failed at just those two fundamental imperatives alone!
Ideate For Opportunities
The term Ideate or Ideation is used relatively broadly, however I like to position it with our clients as the middle path that sits between daily tactical continuous improvement ideas and long term strategic innovation. It is a combination of top down and bottom up as well as internal and external input and contribution.
In strategic outsourcing partnerships, I also like to see it where the outsourcing partner is taking a more pro-active role in their client’s business and they are leveraging back into their own organisation for deeper and richer capability, as well as a broader industry network, which could be global, to draw on.
There are six steps to the ideation process in which we would expect the strategic outsourcing partner to take a leading role…
Step 1: Framing
This is about the strategic outsourcing partner obtaining a more holistic understanding of their client’s business objectives and context, and to ensure that both the client’s business and their end customer “value” are clearly framed. The outcome from this is a shared viewed on the ideation engagement scope and the objectives to achieve.
Step 2: Discovery
Through discovery the strategic outsourcing partner will look “internally” by undertaking targeted interviews within their client’s business, to better understand the specific nature of their strategic objectives, imperatives, challenges, and opportunities. As an outcome, there is a strong understanding of current business as usual initiatives, issues and strategy, which will form the basis for focusing external research and synthesis of ideas that are generated to build into prototyped concepts.
Step 3: Concept Creation
At this step, the strategic outsourcing partner shifts their focus to look outside of their client’s business and begins researching opportunities identified during discovery. Looking out, the strategic outsourcing partner may leverage its global network to engage their other customers and non-customers, subject matter experts and others within and outside their client’s own industry.
The strategic outsourcing partner will next synthesise the insights from looking “in” and “out” to build prototyped concepts, ready for testing and implementation.
The strategic outsourcing partner will build prototyped concepts that can be tested, refined and implemented by their client. This prototyping may include sketches, screen mock-ups, story boards, journey diagrams, case studies, and other artefacts to communicate the prototyped concepts in a meaningful and powerful way.
Step 4: Test & Refine
In step four, the strategic outsourcing partner will conduct a dry-run of its findings with a few key people form their client’s business, to test and further refine its presentation and approach prior to step five; the ideation session. The purpose here is to ensure a refined approach which is nuanced to reflect their client’s context and not just generic.
Step 5: Ideation Session
In the ideation session, the strategic outsourcing partner would be expected to present the approach and findings of its engagement with their client and include the prototyped concepts that may identify new capabilities that the client can leverage, or solve old problems with new and disruptive thinking.
The outcome of these sessions is further refinement, prioritisation, and endorsement of prototyped concepts, and agreement on a roadmap for implementation.
Innovate For The Future
It’s hard to know where to start with this topic of innovation. Clearly there are vast amounts of literature, frameworks, models, and concepts that are all successful and readily available, as there are definitions of what innovation is. However, as we are looking at it in an outsourcing context, its best to define innovation to be as…
“Innovation in strategic outsourcing is a strategic approach of solving problems and presenting new opportunities that would never have been conceived if the two parties involved (the client and the outsourcing partner) had tried to do so on their own, in isolation. In essence, it is this collaboration where there is alignment and synergies but also differing experiences and perspectives that make innovation in strategic outsourcing an awesome force to be played with.”
So how do we make this real? What do we need to do to start innovating in our business when we have a strategic outsourcing partnership?
To answer these questions, we need to just quickly go back to our first approach to driving more value from outsourcing, and that was in relation to continuous improvement. In this scenario, it is basically individuals or teams coming up with ideas from anywhere, which are then put through some form of assessment process.
In ideation, it was where our strategic outsourcing partner is taking the initiative to drive to a specific outcome.
For innovation in outsourcing, it is very much a collaborative process, even to the extent that if funding is required, then both parties may contribute equally and, of course, they are likely to benefit equally as well.
Inputs into innovation can come from anywhere – that is why establishing continuous improvement and ideation capabilities are essential, because they are the feeders into innovation.
In a recent study by Boston Consulting Group (The Most Innovative Companies 2016), they found that having a strategic partnership in the pursuit of innovation is a major benefit.
Essential also, is the client organisation to be willing to have those sorts of conversations with their strategic outsourcing partner. They will not happen overnight because a lot of this is around building trust and building collaborative relationships, however by getting the fundamentals in place, there is no reason why businesses who do outsource today can’t aspire to create innovation partnerships as well.
Observing master craftsmen and artisans applying their unique talents to their chosen craft is always inspiring. Whether that be the blacksmith turning a red block of hot iron into a masterpiece, or young women performing a centuries old dance to perfection, ultimately what we are seeing is mastery taking place.
Now, of course we can un-pack these examples, but when we do, we miss the beauty of the overall picture. Because it is always the combination of the parts, making up the whole, that brings the greatest joy that we are appreciating and applauding.
However, all these master craftsmen and artisans needed to focus on each individual element – they had to have all the pieces in place and, over time, perfect each one them.
This is really a guiding principle in anything we do in life. For outsourcing, we can certainly apply this same principle.
In fact, we must make this an imperative. We need to make sure we have all the pieces in place and apply the required focus at the right time, if we want to be successful.
Sadly though, this is seldom done by businesses.
Some businesses may implement one or two components and make some progress in obtaining value from their outsourcing, and other businesses may implement everything, but for one reason or another, fail to be consistent – they fail on their execution.
Over the years at The Startup Business we have observed this. We have seen the good, the bad, and the just plain ugly when it comes to outsourcing and that is why we believe that “Execute With Discipline & Passion”, our fifth practice of The Seven Practices Of Highly Effective Outsourcing™, is so key to being successful in outsourcing today.
Once you’ve transitioned your business to your outsourcing partner …
There are five things that need to be in place between you and your partner at all times
When you have them, you will be successful in achieving value from outsourcing, because the very nature of these five things are continually driving your focus around obtaining real value. When you do not have them, or may be have just one or two of them, your outsourcing will likely to be mediocre, or will, at worse, fail.
So it is only by implementing all five, that you will have the opportunity of obtaining best in class outcomes.
Imagine today, that your outsourcing is positioned in your business the right way and you are scaling up to the next level because of it. Imagine also that this “right way” is where your outsourcing relationships are that of a partner, where value and insights are regularly shared. Imagine today, that in your outsourcing partner, you have everyone, from the most junior, through to the most senior members, excited about your business; they want you to succeed – they have your back.
Could that make a difference to your business’ success? Would your growth be accelerated? Do you think it would be possible you could now stand out from the crowd and even be seen as the leader in your industry?
These five things will make a difference to whether you are successful in outsourcing or not.
And we call these, The Five Disciplines Of Strategic Partnerships™…
Service Operations Excellence
This is like an engine that is always finely tuned to deliver the most optimal performance.
Expert Consultation & Advice
Is like having your own in-house Q&A Desk that helps you with small tactical issues and big strategic challenges.
Robust Risk Management
Is like having a control centre where there are preventive and detective processes to ensure nothing is overlooked.
Value, Leading Practices & Insights
This is where you have a flow of information on tap that you can utilise that would otherwise not be obtainable.
Efficient & Effective Administration
Finally, this is like having a having a plug & play business office that is transparent and helps you with your planning.
The Five Disciplines Of Strategic Partnerships™ are essential to have in place if you want to do outsourcing the right way. When you get them right, you have the essential capability to set up, scale, and sustain your business. When you get them wrong, or worse, don’t implement them at all, your business outsourcing will…
- Be unlikely to perform effectively
- Probably just have a transactional, non-value adding relationship
- Most likely increase your exposure to risk and threats
- Not evolve due to a static outsourcing relationship
- Have a significant management overhead to maintain such an outsourcing relationship
So to help you implement The Five Disciplines the fifth practice of The Seven Practices Of Highly Effective Outsourcing™ the right way into your business get your eBook and do the online self-assessment.
One of the things that is most often misunderstood about outsourcing today, is the transformational potential it has on your ability to scale your business.
Sure, outsourcing just a few transactions may not appear to be much, however one needs to realise that to succeed in outsourcing today, in this age of disruption, you need to take a strategic approach. So, this by its very nature, means outsourcing becomes an enabler of business transformation because it forces you to think differently than you may have done in the past.
Completely new teams of people, potentially located in different geographies, where you need to define processes, and then start measuring performance, are all aspects of this transformation potential.
Furthermore, this journey that you have started will also mean that new skills and capabilities like governance, risk and commercial management will be required, developed and mastered.
As your business grows, other considerations will be apparent …
These include business acumen, ethics and social responsibility, and the like
So that is why we refer to the fourth practice of The Seven Practices Of Highly Effective OutsourcingTM as Embark On The Journey.
In this practice, we will discuss the four major elements that you need to consider when you embark on your journey and transition your business, well at least parts of it, to your newly selected strategic outsourcing partner.
At The Startup Business we call these elements The Four P’s – being “process”, “platforms”, “people”, and “performance”. View The Four P’s as the “swim lanes” of your project transition plan (amongst other ones, of course).
For example, in large business outsourcing transitions, there will be specific individuals assigned to each of The Four P’s. In smaller businesses, even a single-individual business, The Four P’s are still relevant, even if you as the “business” are doing everything! You just need to be sure nothing gets missed.
Let’s now go through each of The Four P’s in more detail so that you can implement them in your business outsourcing transitions…
Processes & Functions
When you made your decision to outsource, you based it on a set of criteria and then identified an area of your business that, in your analysis, deemed suitable to outsource. This may have been a specific process or activity; maybe, account reconciliation, for example. Or perhaps it was to outsource a whole function of your business – a team or department, which is made up of multiple processes or activities.
Regardless of which approach you took, the need to map out the detail from the lowest “task” level through to the highest “mega process” is essential because, in outsourcing, you need to be clear on the hand-offs as well as the roles and responsibilities between your business and your outsourcing partner’s business, and down to the individual or role level of each one.
In traditional outsourcing, typically we are just looking at low level tasks and activities. However, in strategic outsourcing we need to have a more holistic view to understand all the moving parts and inter-connected relationships – even when the initial outsourcing engagement may be relatively small. This is also especially important in terms of the potential of future automation and robotic investments in your business, which have the potential to eliminate the low-level tasks and activities altogether.
This mapping exercise is also where you need to be working very closely with your outsourcing partner. This is because it is in your best interest that they are engaged and working side by side with you, as you map out this detail in what we call your “business process architecture”.
Platforms & Tools
The next element you need to review for your outsourcing transition are the technology platforms your outsourcing partner may require access to, and the technology tools that will facilitate collaboration and drive efficiencies between you and your outsourcing partner’s business.
In terms of your current platforms, you need to consider whether it is possible to give outside parties access.
Does your outsourcing partner’s team require remote access to your systems via connections such as VPN?
How secure is your outsourcing partner’s facilities? …
Physical and virtual security controls must be mandatory with no exceptions
If they do get access, then does this mean they have access to everything, or can you partition what they have access to? If your current platforms are cloud-based, then it may be that it is easy for you to give them their own unique log in – but still you need to be sure as to what level of access you are going to grant them.
Emails and telephones do not cut it as collaboration tools. You need to have high-definition video that allows seamless connectivity between you and your outsourcing partner (at The Startup Business, we use Zoom which, in our opinion, is a high quality, scalable and cost-effective solution).
You also need to have facilities for file sharing, whether this be on your own secure network, or cloud-based, using applications like Google Docs, Microsoft OneDrive, or Dropbox.
For the tracking of work tasks, again you may have your own in-house workflow tools or enterprise solutions such as Jira, or if you are a smaller business, Trello and Basecamp may be useful for you. Other technologies such as Microsoft’s 360 platform and even their standalone OneNote, will also be useful.
When it comes to using technology collaboration tools across multiple parties, always keep in mind the criticality of security, the need for version control procedures, and the insurance of having data backed up.
People & Teams
When we talk about people and teams, what comes to your mind?
Do you think about relationships, do you think about high performance, or is it something different altogether?
You see, one of the main contributing factors for which most outsourcing fails to deliver on the promise, is because the focus is too much on process and not sufficiently on people. In other words, we have mapped all our business processes to the most detailed level, but we have failed to fully grasp the people aspects: change management, knowledge management, training, skills, and overall learning, on both the customer side of outsourcing and the actual outsourcing partner’s side.
On top of this are factors such as the client business learning about outsourcing and, that in itself, is a journey, but also the outsourcing partner learning about your business – you; the client! Because the greater the understanding or context from both teams, the more it will ensure a more favourable outcome when it comes to overall outsourcing service delivery performance. However, that will not address everything. To further complicate this, if you are outsourcing to teams located in different countries, then you have the cultural challenges as well.
So taking on board all these factors and implementing ways to overcome these challenges, will lead to an enhanced working relationship between your business and your outsourcing partner’s business.
One of the things we do at The Startup Business is to help our clients appreciate these cultural challenges in a practical way and use a framework based on the work of Geert Hofstede’s “Dimensions Of Cultural Differences”.
To summarise, Hofstede defined six cultural dimensions that vary depending upon the generic culture you are looking at. Now, in outsourcing where you are doing this locally, this is not very relevant. However, if you are outsourcing to India and you are an Australian, United Kingdom or USA based business for example, then this framework will show you the cultural differences for each of these six dimensions. The value of this to you is to have greater insight into your partner’s preferred cultural way of expression and, at minimum, be mindful towards it, as you work together as “one team”.
If you are not familiar with the work of Hofstede, then you can find more at this website:
Performance & Standards
You have now mapped your business processes, you have defined the platforms and taken into consideration all the people aspects; it is now time to define your performance measures and standards.
This, surprisingly, is often overlooked, but essential, if you want to achieve value from your outsourcing. After all, wasn’t at least one aspect of your decision to outsource, to achieve value? But if you are not measuring where it matters, how do you know if you are getting what you want?
Also, just as important, does your outsourcing partner know or understand your standards?
This is where service levels come in to play. What are your minimal requirements? What does your outsourcing partner need to do, to exceed your expectations and, will you provide them performance-based bonuses or similar incentives if they do?
Now, typically what happens is where businesses have not outsourced before, there is little in the way of data to quantify current performance levels. Sure, there are exceptions to this, but as a rule it is only when processes become defined and documented does the true visibility of performance occur.
So, what this means is it just might be that you define some performance targets initially as a guide, but also allow for a period of time, for the data to be validated. Depending upon the actual process, this may only require a few days’ worth of information, whereas other businesses may require months. However, the outcome will be the same in that you have mutually agreed with your outsourcing partner of a baseline to work to.
This baseline will incorporate a series of metrics and key performance indicators and, depending on your desire of sophistication, incorporate them into regular reporting dashboards and balanced score cards; concepts that may take an hourly, daily, weekly, quarterly, or even yearly view.
We also would highly recommend that you put in place formal review meetings, or governance as we call it, with your outsourcing partner. In these meetings, you are initially reviewing the status of the outsourcing transition, but subsequently they evolve where you are collectively reviewing past performance, initiating required corrective action, and planning for future needs.
Have you ever thought about what drives team performance?
The Blue Angels is the United States Navy’s flight demonstration squadron that was formed in 1946 and shows the best of the best when it comes to high performance. Obviously, their technical skills are indisputable, as is the aircraft they fly. However, in countless interviews, articles and books written about The Blue Angels, they re-affirm the criticality of their interpersonal relationship with each other as the ultimate success factor. How they work together as a team under pressure day in, day out, demonstrating the ultimate in high performance teams, is testament to this – now for over 70 years!
So, what about you and your business?
No doubt when you are recruiting, you are seeking the most capable applicants. Current experience levels, attitude, and interpersonal skills to fit in with your culture and, of course future potential, are all factors. In many ways, you are putting together a team which you are expecting to be high performing.
Now, what about with outsourcing? Do you think you need to take a similar approach?
At The Startup Business we believe you do need to do this. In fact, we believe it so much, we have placed the importance of this in our third practice of The Seven Practices Of Highly Effective OutsourcingTM as Create An Esprit De Corps.
Search For Candidates
Congratulations – you are now at the search stage of finding an outsourcing partner. Now what?
Well, before you just reach out to anybody, let’s just think about this for a moment.
If our objective is to establish a strategic outsourcing partnership, then wouldn’t you agree that it makes sense to ensure there is a match or alignment between your business and your outsourcing partners?
This is a very important factor, and that is why it is necessary to look at all the outsourcing partners in terms of their size or “tier”, because it is essential you align your business appropriately.
For example, if your business is in fact a major global corporation, it would just make sense to collaborate with a tier 1 outsourcing firm because they have the scale and resources to adequately serve your needs.
However, if you are a startup, you may aspire to, say, partnering with IBM, Accenture or even Amazon and Google but if they do not see the same potential in your business as you do, then you just will not get the attention or focus that you require in a partnering relationship.
Conversely, if you reach out to an independent contractor, you get the transactional skill (in traditional outsourcing) but not leveraging a broader thought leadership and capability to help you grow and scale.
The outsourcing firm on the other hand is seeking that next “big” account and, rightly or wrongly, that is generally where their attention will be, and if you are too small, you will be ignored.
So, while there are generalities, in many ways this sums up the dilemma in outsourcing.
So, what you need to do is to map your business to a specific outsourcing partner tiering level. While this is not a perfect science, it will start to have you focusing on the typical attributes of an outsourcing partner that is best suited to your needs. The exception to this is when you consider your business is in the process of growing rapidly, or you have a need for some specialised capability, in which cases you should be looking at the next tiering level above from what may be represented in this illustration.
When you have defined the tiering of your prospective outsourcing partner, you can then do a search (or have an advisor do a search on your behalf) to prepare a list of possible candidates to be your partner!
Screen & Short List
The second step is the screen & short list stage. Again, the level of detail you go into here is dependent on the scale of the opportunity in question. However, regardless of size, the principles remain the same.
This step can also be considered where the exchange of significant information takes place between your business and your list of potential outsourcing partners.
How you interpret the response will also vary in that you may have already identified some minimal requirements such as for the quantitative data – some thresholds to allow easy scoring.
Alternatively, you may have several of your colleagues independently review specific aspects and for them to provide their own scoring feedback.
The important thing to keep in mind is that this process is about determining whether or not they can do the job based on your criteria’. The objective of this step is to disqualify and make your list of prospective suppliers small – say down to two or three “candidates”.
The process is basically no different to recruiting an individual for your business!
Select Strategic Partner
While it is possible that during the screen and short list stage, you have already identified a preferred candidate, our third step is to formally select our strategic outsourcing partner. This is an important step and should not be rushed through, even for the smallest of engagements.
You want to be sure that not only can they do the job, but that there are synergies and an alignment between your business and theirs. In this step, you now want to drill down into your early questions, or you may want to review samples of their work, or even have conversations with their references – their own clients.
At this stage you may have also received some indicative pricing, however it is likely that your prospective outsourcing partners (if you are down to just two or three in the short list) may require more information from you. What this could mean is that they now need to do a due diligence on your business!
At The Startup Business, we help our clients to process this information using scoring tools that incorporate the ten criteria and the five perspectives. While a decision could then be taken on the total score derived, we still work with our clients across all the bands to ensure that when the final verdict of selecting the outsourcing partner is made, it is robust and meets the needs of all stakeholders for today and for tomorrow.
Whatever way you choose, make a decision based upon broad criteria and multiple perspectives and always think long term and what this possible decision might mean for your overall business strategy. That way, you can be assured of getting it right… well perhaps most of the time!
Secure The Relationship
Your final step to Create An Esprit De Corps, is to secure the relationship. This means contracting and signing a document of some sorts, but it is also much more than a piece of paper.
Securing the relationship is about setting expectations. Not only do you have expectations from your outsourcing partner, but they also will have expectations from you. So, having these early conversations about how you will work together, how you will communicate, manage risks, manage change, and manage disagreements is essential.
Equally, discussions around how you can leverage each other, build a relationship together and create more value than you could on your own, must take place.
It is these conversations that are the essence of securing the relationship.
While this does contain the legal jargon you would expect from a contract, our partnership agreement goes beyond that and looks to the future – this is something you may consider for your outsourcing relationships as well.
Now, it has to be realised at this stage you will not have covered everything. There will be risks you have not thought of, costs you had not considered, even processes you did not fully represent. These are yet to be, with your outsourcing partner further into the relationship.
Some of these things may cause tension as well. However, if you have followed and implemented Practice I, II and now III, the right intent should already be established, with good will demonstrated by you, your business and your outsourcing partner’s business, most of these issues will easily be overcome.