Tuesday, 4 September 2018

Outsourcing: Time to get off the production line


Factory production line

Outsourcing is hardly a new concept. It allows us to effectively hive off non-core, yet still important, activities and outcomes to a specialist service provider, freeing up a company’s time, and ideally also budget, to focus on what we specialise in. We gain both time and money: basically oil and gold today.

But, like so many things, you can’t keep doing things the way they have always been done and expect to get better or different results. So, I wonder if it isn’t time to look at rethinking and transforming outsourcing to serve us more effectively, and to really buy us time.

In today’s “cult of busy”, we wear our busyness like a badge of honour. But perhaps we should start doing less and thinking more. Indeed, the “time is money” mantra so many people and businesses cling on to has its origin in the Industrial Revolution. The greater the number of hours the production line ran, the greater the output, the greater the profit.

And, like so many other things we still do today, such as working in a central location from 9 am to 5 pm, for instance, this constrained way of thinking and working is holding us back from evolving into future-ready organisations. It’s also not sustainable to work this way given the rate at which the world is changing. The Industrial Revolution production line is starting to wobble and increasingly needs to be patched and supported, using up even more of our time and resources.

We will never have enough time while we are focussing on old ways of doing things. Instead, we need to radically change the way things have always been done. Enter outsourcing. Back in the day, we started with outsourcing actual labour, such as cleaning services, logistics and delivery, data entry, etc.

Next, we happily outsourced technology and entire processes, such as payroll fulfilment. Individual companies don’t have to invest in the technology and expertise in-house to ensure that this important, yet non-core, activity is completed accurately and on-time every week or month. And cloud computing is essentially outsourced software. The programs are there when we need them, in the volumes we need at that moment, but we don’t have to worry about things like upgrades, or supporting the underlying systems.

Perhaps it’s time to push outsourcing itself to the next level. To date, we’ve typically outsourced processes lock, stock and barrel, without paying attention to the ongoing relevance of the underlying process itself. If we were spending too much time entering data into a system, we would outsource that function to someone who could do it faster and cheaper. We wouldn’t consider reviewing how we achieved the outcome, the important thing is that it was done. But as traditional ways of doing things date, and become less appropriate, returns start diminishing. In other words, you start gaining less time and saving less money.

This, I’d argue, is a legacy of a command-and-control management structure where the focus is on the oversight of getting the job done by following the approved steps, rather than disrupting the way things have been done. What if we were to outsource thinking about how a specific process could be done better, as well as the tools needed to do it. If you have read my column before, it will be no surprise when I use the example of basing budgeting around spreadsheets. Do we continue to do that because that is the way it has always been done, shipping spreadsheets from pillar to post at budget time, or do we stop to consider how this constrains our business from moving forward?

Instead of outsourcing an outdated process, lock, stock and barrel, we could, and perhaps should, outsource the process itself. For instance, in my data entry example above, we could outsource the task to an automation service provider that totally rethinks how our objective is achieved. Suddenly the economies and efficiencies that outsourcing promised us are a reality again. Now consider how you could apply this internally too. Instead of delegating a task to a subordinate, how about “outsourcing” it to them in the empowered fashion – allowing them to figure out how best to achieve the outcome.

So, consider, what other supposedly “core” competencies are you holding on to unnecessarily? How do we level up on getting rid of non-core responsibilities that are keeping us so busy? For instance, are we using the right tools and processes for the job at hand, or are we using tools and processes because that is the way things have always been done?

Question everything. Ask why things are done in a certain way and whether there is a better way to do them. A good place to start is with the processes and activities your people hate. There is no reason for the budgeting process to take months. It should take weeks. But if there is friction in the process it’s going to get bogged down and if your people hate doing something, there is usually a good reason for that.

And finally, default to transparency, the antithesis to command-and-control. Transparency encourages ownership, empowerment, collaboration and buy-in. And these are the things that drive businesses forward, ensuring the sum of the individual parts contributes to a greater whole than can be achieved by a dated, top-down, keep people in the dark, approach.

As published in Accountingweb - August 2018