Leadership – Page 327

When, and when not to outsource (first appeared in InfoWorld)

Argument by assertion seems to be on the increase.

Following my recent series on outsourcing, which argued against the popular non-core-competency theory (exercise core competencies in-house and outsource everything else), I received quite a few letters presenting the counterargument that you should outsource non-core competencies. Why? Because they aren’t your core competencies, that’s why!

It’s hard to come to grips with logic like that, let alone argue against it. But I’ll give it one more try. The more I try to figure out what “core competency” means, the more murky the whole thing becomes. I’m left with four outsourcing drivers – two positive, two negative:

Outsource when the outsourcer can provide the equivalent function for lower cost (or just fire the manager who can’t deliver the function without margins at the same price an outsourcer can deliver it with margins).
Outsource when the function being outsourced requires scarce high-value talent (for example, ad agencies).
Avoid outsourcing when the cost of changing your mind, also known as the switching cost, is high, as it is with IT.
Don’t outsource if your real goal is solving a personnel problem. If you’ve accumulated an inventory of unproductive employees over the years and are really outsourcing the unpleasant task of terminating them, there are far less drastic ways of handling this chore than outsourcing the function.

Nothing is quite this simple, of course, but I can at least understand these four decision factors. Why you’d want to increase the cost or risk of a function because it isn’t a “core competency” — a term whose definition is murky at best — continues to baffle me.

Not only that, but outsourcing doesn’t always solve the problem. Curt Sahakian of the Corporate Partnering Institute (www.corporate-partnering.com), which helps companies create partnership and outsourcing agreements, says many outsourcing deals are structured so badly it’s like drinking seawater when you’re adrift at sea. It isn’t a sustainable solution, and you end up thirstier than when you started.

Sahakian also offers this advice: Since your employers are going to buy their saltwater from someone, why not you? If outsourcing is inevitable, take charge of the situation and suggest a restructuring that turns your existing IT organization into an outsourcing provider, either as an independent or as a joint venture with one of the major outsourcing vendors.

When your choice is whether to be dinner or chef, chef is probably better.

The gut as brain (first appeared in InfoWorld)

If it weren’t for laboratory rats and college freshmen, experimental psychology would cease to exist. They’re the field’s two staples when it comes to laboratory research. The rats are far more adept at learning to run mazes (true fact!) but there are still times that freshmen can be handy.

When I was a freshman, I participated in a bit of research that probed the human ability to recognize patterns. It was a game: Isolated, I was to anticipate the next move of an unseen opponent. The other players and I all looked for (and found) patterns in our opponents’ play to help us win — proof of our naivete, as our common opponent was a random number generator.

Which is just one reason I don’t consider gut feelings to be a reliable source of information.

Quite a few readers expressed concern over my recent column that advised using your brain instead of your gut to make decisions. Most of the disagreement resulted from a misunderstanding: My correspondents thought I’d said the right brain’s non-linear, non-verbal processes have no place in an intelligent person’s cognition.

If that had been my advice, it would have been extraordinarily bad advice. Analytical thinking — the linear processing of facts and logic — will never get you to new insights. That takes creative flashes of inspiration — Archimedes’ “Eureka!” experience that comes seemingly from nowhere, presenting a novel, exciting, unexpected solution to a previously intractable problem.

Archimedes didn’t, however, run naked from his bath through the streets of Athens to a podium to teach his insight. He ran to his laboratory to test and validate his discovery. Non-verbal mental processes may present you with the perfect solution to your problem, but along the way they’ll also deliver any number of bad ideas. Facts and logic are your tools for determining which is which.

Other readers didn’t misunderstand. They’re of the opinion that the right brain is something of a parallel processor, integrating information far faster, but just as reliably as the left brain’s linear approach to thinking.

T’ain’t so. Want proof (or at least strong evidence)?

Here’s a quick experiment: A chess game between equally matched opponents. Give one player five seconds to make each move — plenty of time to use his judgment, not much for logical analysis. Give the other player five minutes per move, so that she has time to think.

If the players are evenly matched, is there any doubt who will win?