Leadership Determines Value of BPO’s

Today’s CEO’s have come under intense scrutiny with the bad behavior of a few leading to Sarbanes Oxley legislation, new board accountabilities and harsher stock penalties to poor performance numbers. Investors/employees wonder if the bad boys the tip of the iceberg, the worst of a mediocre bunch, or indicators of fiscal and ethical renewal in the marketplace? Increasingly, corporate leaders are responding by focusing performance efforts on core competencies and a new receptiveness to Business Process Outsourcing (BPO).

“Leadership is performance. You have to be conscious of your behavior, because everybody else is.” Carly Fiorina

The many books and pundits on Leadership can be distilled down to three critical elements: Character, i.e. behaviors reflecting passionate good works serving internal and external needs; Communications, i.e. seeker of understanding/trust and enthusiastic relationship builder; Competence, i.e. demonstrates broad knowledge, insights and skills across functions of finance, operations and sales. These set the tone for internal corporate cultures to perform optimally. Business leadership is about creating a cause to grow for employee passions to achieve.

Past efforts to address performance have focused on developing internal teams. Many writers have written what leadership is and how to make teams work but the reality of performance says teams can only make a difference in making positive changes in the critical numbers of cost, growth or earnings when leadership sets a culture of collective cause rather than past internal survival of the fittest that creates dysfunctional teams. Beleaguered leaders have turned to BPO’s in recognition of partnering with those entities that perform non core functions better than they can on their own. Creating value in non core functions through cooperation outperforms internal team efforts. Real growth will come from innovation that BPO’s are focused on and accountable to create. Business development is a process, not a project, that is lead by the CEO, leaving the details in non core functions to BPO’s that are accountable to measurable results.

Creating internal teams to address issues of technology, sourcing, transportation, etc have consistently failed at cost containment and growth/client support due to dysfunctional teams competing with internal interests such as egos, turf battles, lack of expectations, lack of leadership, politics, stuck in old processes/resistance to change, lack of empowerment, lack of accountability, lack of resources, lack of or competing visions, et al, etc. Key elements of successful teams are: Selfless individuals (impossible when politically nominated/placed by vested interest departments); Enlarging mindset (like an army without a general, a football team without a quarterback, building a house without a general contractor); Empowerment ( if management not willing to truly run with teams outcome or accept responsibility of no outcome, teams unable to win). CEO driven cultures that thrive on embracing change for client deliverables, consistently lead in real market growth and profits. Growth cultures drive business development, not career or personal interests of the old economy command and control approach.

Boards and C-Level leaders are increasingly recognizing the value of partnering with companies who can bring cost savings leverage, leading edge technology and support to non core functions that allow a keener focus on what they strategically do best, with greater spend savings, leveraging latest technology from partners w/seamless visibility, measurable deliverable values and dedicated support teams for real time solution development. It’s all about creating innovation, increasing speed/nimbleness and business development resulting in a powerful halo effect from success that echoes within the organization and as a market leader. Command and control hierarchies are designed to face the CEO, with unfortunately their ass to customer! Corporate leadership must deliver innovation by creating core competencies that face their customers like their non core partners already have. They also put team leaders in place with senior sponsorship and the most to lose to insure success and avoid compromise!

“Fortune and love favor the bold” – Ovid

Transportation management is an excellent illustration of such opportunities. A fractionalized provider market, without single source asset integrity, one dimensional technologies and customer service support that lacks empowerment or cross modal interface can only be leveraged by transportation management BPO’s. The transportation industry has evolved from asset based, to brokerage, to third parties, to today’s value driven, spend leveraged, with real time technologies in dashboard driven accessibility and dedicated support teams that understand their uniqueness and customer driven objectives. Companies that turn to leading BPO’s in this field save at least 10% on their transportation spend with additional savings in inventory management, customer service, receivables and overhead costs. Unfortunately CEO’s that rely on internal departments to manage this non core function miss real savings, missing customer values with distracted resources when run by internally/externally vested interested parties. Transport function managers are usually focused on sub optimizing goals, compromised further by providers delivering the most lunches, event tickets, and advertising specialties.

Gone are the days of relying on internal teams to define much less solving problems in non core areas. Inefficient command and control management hierarchies using market bids for sourcing at best gain only the best of a mediocre bunch. Today’s business leaders understand the need and value of partnering with BPO’s whether transportation management, human resource or technology providers who can deliver real time, leading edge solutions that share in accountability for measurable deliverable performance results. Boards, shareholders and employees are demanding of their leadership more than a mastery of buzzwords, industry jargon and cronyism.

There is growing intolerance of breaches of ethics, poor moral behavior, performance shortfalls or quality missteps. The market ultimately decides with their purchasing and too many companies have lost their footing with insecure managers, tawdry behaviors, questionable accounting practices, enhanced executive bonuses and rigged contracts for political and/or financial gain and the like.

Unfortunately the case has been made that traditional teams are unable to objectively address the BPO selection process given vested interests noted above. Leadership must take responsibility to direct outcome expectations and select an accountable person to research and recommend options without favor to vested interests. Teams understandably are often built with self serving members seeking personal if not departmental gains rather than solutions for the greater good of the company and their clients. Rather than a department representative, a senior level person with understanding of finance, supply chain and customer needs is required to effectively select the right fit BPO organization.

Values of an also ran: Minimize risk, Respect the chain of command, Support the boss, Make budget. – Tom Peters

Success stories abound for those companies with the leadership, vision and confidence to outsource non core functions that have accountabilities for measurable value/results. History is littered with business failures of those with a lack of insightful leadership. Be bold! Lead by the example of your actions and performance driven by core values and partnerships that focus on customer growth.