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Purchase Outsourcing That Advances Your Most Important Tasks

Feb 25, 2008
Many people will tell you that you should never consider outsourcing for those areas that are most important to your success. These authorities argue that you'll give away parts of your competitive strength and will become vulnerable as a result.

While vulnerability may sometimes be created and exploited, having outsourced important tasks can also lead to greater success. For instance, when Hewlett Packard introduced the first mass-market laser printer for personal computers, that printer used Canon print technology and was directed by Hewlett Packard software. For more than two decades that technical marriage was the greatest source of Hewlett Packard's profits.

Here's another issue to consider: Have you ever found yourself with a list of more important things to do than you could possibly attempt, let alone master? That's not an unusual circumstance for organizational leaders and those with important responsibilities at any level. Work on one important task, however, and that may leave other important responsibilities uncovered.

When that's the case, stop to consider whether outsourcing could make a difference. Let's begin with an obvious opportunity.

You're really busy now but will have more time in a few months. In that situation, consider whether some work can be done now by skilled people outside of your organization so that progress can be made while you're busy.

Here's an example: Many tasks cannot be defined until someone does basic data gathering and analysis. If you spare a few hours now, you can probably participate in designing that preparatory work so that it can be undertaken immediately.

Done carefully, such a project may develop better information than you would have otherwise gained . . . especially if you engage people with specialized skills for the type of data gathering and analysis you need.

A more typical problem is that you are pursuing an important series of innovations. You aren't quite sure how to approach the opportunities. In fact, your organization may lack some of the perspectives you need.

Rather than outsource the whole task, outsource the elements that require the diversified perspectives that you lack. You can engage professionals or service firms that have relevant knowledge in those areas who can complement your internal efforts. In other cases, do what Hewlett Packard did and work with a potential supplier or partner to fill in part of the gaps.

If the opportunity is a substantial one, you should consider inviting experts to compete to find solutions as Goldcorp and Procter & Gamble have done. Beyond that approach, is there an opportunity to permanently engage stakeholders to develop the opportunity such as occurs with open source software?

In considering places where you might find outsourcing advantageous, look at what no one has ever done in your organization before and think about how outsourcing could make the process go better. Here's an example: Increasingly, new business models engage in providing services that are provided as a consequence of someone using an organization's product.

For instance, the new vehicle's owner may consider purchasing an extended warranty. A powerful twist on that approach can be to offer other products because someone buys the service.

Because of the extended warranty purchase, the owner seems to be indicating that the vehicle will be operated longer than average before resale. Such an owner is a good candidate for purchasing vehicle refurbishment items that show the most wear such as carpets and interior door handles.

Perhaps you should be designing your vehicles to make it easier and more attractive to make such refurbishments. As a vehicle manufacturer, you have a lot more knowledge about how to produce millions of cars than you do about how to make an older car look nicer, one unit at a time. Those with refurbishment design skills might help you generate a highly profitable product business that you can market to all of your extended warranty purchasers.

Learning is another opportunity. Organizations whose business models are relatively unique sometimes find that it's hard to develop helpful learning experiences for employees, distributors, users, and other stakeholders. Standard materials don't apply, and the internal organization doesn't have the skill set to create certain kinds of learning experiences such as simulations.

Under such circumstances outsourcing simulation development could be a good move. Many people learn best from simulations. After finding out what can and cannot be learned from simulations, you'll know a lot more about what other kinds of learning experiences you need to develop. If the simulation covers everything, you've just eliminated big chunks of the potential task.

Acquisitions present a special opportunity. Most acquisitions fail to work out well because the purchasers make all kinds of incorrect deductions about how the two organizations might be meshed together. As a result, a company may make a wrong purchase.

That mistake is often compounded by coordinating the two enterprises in the wrong way. Those mistakes are somewhat unavoidable when research into acquisitions only begins after a bidding war starts. No matter how hard you work, there's only so much you can learn in a few weeks.

Skillful business purchasers are increasingly likely to identify the organizations that they may want to buy someday and to outsource the task of checking each one out well in advance of any potential bidding. Without the last-minute rush, this work can be done better and less expensively.

If you have learned about a potential acquisition in advance, you'll know whether to join in the bidding when such organizations become available. The money you spend can save you the cost of enormous mistakes and missed opportunities. And the best part is that you don't have to divert much time and attention by your existing staff to make these advance preparations.

Add more top talent and your organization is bound to be more successful. Specialized search firms can help you define new positions and negotiate attractive offers that will help bring the talent into the fold.

Naturally, you still need to do your own due diligence on the prospective employees. But having great candidates to choose from makes you aware of how you can build your organization to pursue more of the most important tasks.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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