The rapidly expanding scope of "functional" outsourcing

The concept of outsourcing from a business perspective has been around for decades. However, more often than not the outsourcing targets have been restricted primarily to manufacturing processes or technology infrastructure. Historically, the rationale has been that as long as the discipline ranked as a "core competency" for the company (i.e. product design, resource management, etc.), it would remain in-house.

Today, the business leader's priority has shifted from the concept of identifying core competencies to that of determining what portion of the workload can be completed more efficiently and/or more effectively through external partners. In working through this process, executives have been discovering that the concept of outsourcing can apply to a number of corporate functions that have been historically labeled as "untouchable" by previous generations of management.

Included in this portfolio are a number of traditional consulting target markets, including the likes of HR management, sales leadership and strategic marketing. For years, consultants have been providing services to companies that were in need of short-term assistance in these areas primarily due to a significant transition in the organization's internal personnel (i.e. new hires, internal promotions, etc.).

However, there have been two trends over the past couple of years that have been graying the lines between this ad hoc consulting model and the traditional outsourcing model where services are designed to be provided on a perpetual basis. First, employers have come to the realization that the need for many functional roles (like HR managers, marketing managers, etc.) are often cyclical in nature and therefore may be better filled on an "as-needed" basis. Second, many consultants have begun to offer retainer-based services where for a nominal fee, the company has the ability to engage the same consultant as and when demand within the company dictates. Thus, companies are able to invest in expert guidance when it is required rather than being forced to burden the company with the cost of the resource on a full-time basis.

There are indeed some environments that are better suited than others for this form of functional outsourcing but it would be doing your company a true disservice not to consider the possible application of this model within your business. Old habits die hard but more often than not the opportunity to secure a competitive advantage for your business will present itself when you look beyond the status quo.

Focus Redux!

As online marketing continues to evolve at an exponential pace, many of our customers have become increasingly mesmerized by the sheer number of markets and geographies that have opened up as potential destinations for their products or services. They have every reason to be overwhelmed as the number of opportunities is indeed compelling. That being said, business leaders must still remain cognizant of the fact that regardless of the latest trends or the promise of riches that they extend, focus still wins.

It has always been the case that as companies get a little taste of growth and success, they begin to fantasize about being the next great story on the front of the Business Week, Wired or Entrepreneur magazines. Now with electronic commerce, online advertising and social media marketing as potentially powerful tools at their disposal, executives are jumping at the opportunity to incorporate these tools into their attack and in turn expedite their company's path to glory.

Unfortunately, a funny thing happens along the way; most of these executives (and by extension, their direct reports) become consumed with these tools and ultimately tend to get distracted from maintaining a tight focus on the target markets that brought them success in the first place.

The reality is that customers always have and always will respond more positively to the vendor who specializes in something that is relevant to their unique needs (i.e. industry, geography, etc.). The "trick" with online marketing is to make sure that when and if you do choose to embrace this world, that you do so in a way that remains true to the fundamentals of your business, especially the focus that got you to where you are today.

Start with the end in mind

An old cliche to be sure, but one that has certainly proven to be invaluable within our engagements with clients looking for assistance in defining/refining their corporate strategy. Nine times out of ten our clients are initially looking to document a description of who they are today but are often unwilling to articulate who they want to be tomorrow. As a result, they find it excessively difficult to determine how much capital they will need to inject/raise, how many employees they will require to operate the business, etc.. Without at least a vision for where you want to end up (i.e. how much revenue, what level of market share, etc.), it will be next to impossible to identify your next steps.

Our experience has been that the very first exercise you should run through before making strategic decisions of any kind is that of drafting three year pro forma financial statements that are founded on the best information available to you at any given point in time. On the surface this may sound like a trivial exercise but ultimately your projections will serve to provide the logical backdrop for nearly every strategic decision you will have to make going forward:

• Don't know who to target with your product? Do the math to determine how many sales it will take to achieve your revenue targets and then assess how many target markets will be required to support these sales levels.
• Don't know how many people to hire for the upcoming year? This answer should flow easily from the previous math coupled with your understanding and/or expectations for best practices around employee productivity.
• Don't know when you should sell your company? Your financial projections will give you an accurate assessment of the value of your company over the next three years and from there it is all a matter of your personal objectives.

Just like being in a car, you can drive around endlessly forever but if you at least have a map that points you in the right direction, chances are that you will end up significantly closer to your preferred destination.