Chris Oleksy10.21.06
To Make or Not To Make…Life, Trouble or Death:
A Tale of a Company’s Culture
Chris Oleksy
Act 1—Make or Buy?
In comparison to Shakespeare’s infamous line from Hamlet, “To Be or Not To Be,” many people in the medical device industry often view outsourcing similarly and, therefore, “To Make or Not to Make” strikes a chord. To-make-or-not-to-make simply comes down to the also-infamous value proposition “make vs. buy.” In other words, should my organization make (do things internally), or should it buy (source externally) what it needs? And, will the company’s culture support the decision? This is applicable for everything from services to the tangible manufacturing of goods.
Shakespeare wrote Hamlet between 1600 and 1602, and it’s likely that the value proposition debate about outsourcing has been around just as long. Ironically, if you examine the debate closely, you will see that the outsource proposition often has a life-and-death comparison to Hamlet’s adventures. Many people view outsourcing as a matter of life and death to their organizations. And, in most cases, it can indeed be just that. It should be noted, however, that death doesn’t occur as a result of outsourcing incorrectly; it occurs when things that should have been outsourced are not outsourced—which resulted in the organization focusing on things it should not have spent its energy/resources on and, ultimately, failed its business model.
Act 2—Life
Successful outsourcing can provide “life” to an organization, allowing it to achieve its mission and conquer its industry unlike anything that could be done by itself. The examples are too numerous to mention.
Some published case studies have examined organizations that were transformed by the power of successful outsourcing. The wind in the sails that outsourcing creates for an organization is, hands down, unlike anything I have seen done by a company on its own.
When done right, outsourcing creates an environment in which you have multiple partners and enterprises helping you achieve your organization’s goals. This “two heads are always better than one” mentality is very powerful. Even a superstar like Michael Jordan couldn’t win championships without other heads/hands on the floor to help. The point is not to outsource everything, but to determine when/where your organization should outsource to harness outsourcing’s business changing power while allowing your organization to focus on what it does best.
Act 3—Trouble or Death
Unsuccessful outsourcing can lead to trouble if not managed correctly, and other published case studies have illustrated this as well. Outsourcing the wrong things, not partnering correctly and not having the right business processes in place to successfully outsource can lead to severe problems—but usually not death. So take note that outsourcing is not a silver bullet…but it can be a golden nugget.
Act 4—Disaster Avoided by the Human Spirit
When studying cases, you will notice an interesting differentiation between successful cases and unsuccessful ones. In a less-than-optimal outsource experience, disaster usually is avoided. It doesn’t mean the potential for problems is less prevalent, but it does mean that the “all hands on deck” attitude will prevail. Therefore, the probability of success with outsourcing is much greater than failure. The reason is that the resilience of organizations in turning around problems and ensuring success is incredible. The human spirit to succeed against all odds is simply amazing. People want to be winners—not losers—and will do whatever it takes to be successful.
Act 5—Cultural Fuel
Many organizations understand that outsourcing is an important element to success. They understand from both the strategic and tactical levels that it makes perfect sense. They recognize that they can’t do everything without becoming so watered down that the distinction of where the company’s true competency rests is lost.
What many companies fail to recognize is that their culture must be conducive to outsourcing. A company’s management team wanting to outsource in a culture that is anti-outsourcing is like putting diesel fuel in an unleaded engine. This will result in a smoking engine and, ultimately, an engine in need of repair. This is why it is so difficult in some organizations to outsource—and so easy in others.
If the culture to outsource is present, successful events will prevail and unsuccessful events will be mitigated, because the resilience to see outsourcing succeed will dominate the attitudes and actions of all involved.
If the culture to outsource and leverage the power of “two heads are always better than one” does not exist, the organization should retrofit its engine or expect difficulty in outsourcing.
When the engine simply “knocks” (rather than keels over and dies), you have a culture that does not support outsourcing—but, rather, individuals within it who do. These individuals do everything they can to see the engine run smoothly, but the engine will knock due to the resistance in the culture. There must be a match between the cultural needs of its organization, its employees and its partners.
Having been involved in hundreds of millions of dollars’ worth of outsourced activities for almost 25 years, I have found that the most successful events involved senior management that exuded the confidence and willingness to outsource and leverage the power of partners for a win-win experience for both parties. The culture and its people focused on what they did best and let others in the supply chain do what they did best. This confidence was built into the culture and rewarded/recognized among its employees—and its partners. When any difficulty or trouble arose, the speed to recovery was dramatic as well, because all parties worked toward a common goal.
Please understand, for businesses in which outsourcing is a key component, a minefield of issues can develop. Utopia is tough to achieve. However, where the culture of the organization is one supporting the outsource win-win theology—and its employees and partners are recognized and rewarded for it—the engine will hum and win any race it attempts.
The Finale
Experience has proven a key point: Outsourcing is a strategic engine, but culture is the “fuel” for this strategic engine. What will control the pace of success or failure recovery/avoidance is the culture of the organization.
As you think about outsourcing within your organization, regardless of whether you are an OEM or a supplier downstream, think about the culture within your organization. Does it have an outsource culture, or does it favor internal control?
If you are an OEM, what about your suppliers’/partners’ downstream? Do they have a culture conducive of partnering with you and outsourcing downstream from themselves? This is critical to see if they are walking the walk. If not, look for a supplier/partner that does. It is critical that cultures align across the supply chain.
If you are a supplier downstream from an OEM, does your OEM customer have a culture of outsourcing? If not, a win-win scenario may not be possible and you may just end up with diesel fuel in your unleaded tank.