Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation

After every combat exercise, the U.S. Army uses its well-publicized After Action Review process to establish a causal connection between what people did and the results they achieved. It starts with some very pointed questions like: What did we intend to achieve and what did we actually achieve? It then invites participants to review what they did that led to the outcomes and what they could do to improve those outcomes.

Executives can borrow this approach to improve their ability to get value from transformational outsourcing initiatives. They should:

• Set the agenda for leveraging capabilities at the outset of the initiative and revisit it regularly. The business model design and scenario planning processes described in Chapter 5 will enable executives to take up these questions in detail. Executives will want to repeat the process when competitive and marketplace changes shift the landscape. These reality checks will keep the company’s strategy on course and bring key stakeholders into the process at the same time.

• Adopt metrics and incentives that keep both partners focused on increasing the return on the relationship over time. Whether these spark waves of innovation or just encourage a company to use its new capabilities, these diagnostic and motivational tools should align the priorities for both partners.

• Establish the organizational machinery to act on opportunities. Executives will want to integrate responsibilities for innovation and value improvement into the established roles and governance structure for the relationship. That way, it will become part of the everyday management of the partnership.

• Open the doors to cross-fertilization. Give employees on both sides the means to navigate through each other’s organizations. When they know they can easily figure out whom to talk to about a new idea, they will. Enabling serendipitous innovation throughout the partnership is just as important as driving directed innovation.