Q: I know that outsourcing has its benefits, but it also increases cost and comes with the risk of losing control of some of your operations. Is there an ideal formula for it?
Almost all corporate activities can be viewed as some sort of outsourcing. For example, when you needed business cards you asked a printing press to print the layout designed by your agency. You didn’t grow trees and produce paper yourself. When you wanted to turn your vision into a running business you hired staff to help you reach your destination. You didn’t perform all the roles like a one-man show. Outsourcing doesn’t always mean extra cost if it was part of your pricing policy. If you’re saving time or manpower by outsourcing, then that’s a lower cost. If you’re gaining a better quality by outsourcing, then that can lead to increased sales and/or higher customer retention, which means additional revenue.
Outsourcing doesn’t mean forgetting about quality control though. Look at what happened with the horsemeat debacle. The purchase managers trusted their suppliers and their own criteria and they forget or ignored the fact that putting unrealistic pressure on suppliers to constantly lower their prices can lead to such disasters. The ultimate aim is that nobody notices what you have outsourced. Take Bang & Olufsen TVs as an example. The fact that the actual screens on some of their models are outsourced didn’t affect delivering a great user experience. Outsourcing is nothing but a collaboration between two different groups for mutual benefits. Answering what, why, how and when to outsource is your guide to your own ideal formula…and that’s just my two cents.
Q: My employees keep running to me every time they face a problem. How can I teach them to think for themselves?
Centralized management exists when there’s one decision maker and many doers. The key to decentralize the workflow with your team is to empower others to take calculated risks and make their own decisions. This means you will have to let go of some authority. By the way, if your first thought right now is, “What?! That’s really scary”, then it could be likely that you have the wrong team and that’s why you can’t trust them or that you have a centralized manager hiding in your mental closet. People won’t bother coming up with solutions or options if they know that you’ll choose only your own. So, be honest with yourself and see if you’re shutting their ideas down most of the time. If you’re not, it’s also possible for people to give up when they’re demotivated by the centralized process and lack of empowerment.
Let’s assume for now, that they’re empowered and you didn’t encourage or set a centralized management style. In this case there are a few other options for why employees return frequently to their bosses: It could be a personality issue where they lack the ability to take risks or live with consequences; it could be that some of these challenges are new to them and they never came across them before; or it could be both previous options mixed with laziness. A job that needs someone who can take risks can’t fit an employee with a weak personality. There has to be a match between the personality and behavior of the position and that of the employee. Meanwhile, you can just ask them not to approach you with a problem without options of their own regardless of how bad they are…and that’s just my two cents.
Q: Our CEO doesn’t share details related to new deals when meeting prospects or even how they were turned into clients. Is that a fair practice or is he paranoid?
Some companies worry about sharing their techniques with the line managers in case they use them against the company when they join the competition or branch out on their own. Sometimes, the “technique” for closing those deals is just a straightforward bribery. Keeping such a thing a secret shared only between the CEO, the Chairperson and the CFO will be their first instinct considering that it’s an incriminating act and nothing to be proud of. However, if there’s no traffic under the table, fear of losing control or leaking secrets to competitors can drive companies to the darkest corporate abyss. Is it wrong of them to think like that? Not really. Is it going to make managing operations more difficult? Absolutely.
Apple, for example, shares any upcoming news or dates about marketing campaigns or new product releases with its employees only a few days before going live. Is it a crazy and stressful environment? You bet, but that’s how they see their business, a war. It’s a bit easier in the service industry because sharing techniques and coaching younger managers is expected. It also can’t cause detrimental damage to the business when employees leave, in most cases, mainly because each company has its own style of operation and brand positioning. Also, services are highly dependent on the characters of the people delivering – two pastry chefs following the same recipe won’t give you an identical cake. Bring it up casually to know where the company stands on such matters…and that’s just my two cents.
For Loaay Ahmed’s advice on business or work matters, send a short email to loaay@knightscapital.com. Please note that only the questions chosen for publishing will be answered.
Loaay Ahmed is a management consultant and strategic expert. To learn more about Loaay and his consulting service, strategic business therapy, visit www.knightscapital.com.
