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Do You Have What it Takes to Lead Transformational Change in Outsourcing?

A recent report by Duke University confirmed that the economic crisis has unleashed a huge appetite for change. Delightfully, visionary leaders are stepping to the forefront all over North America. They are implementing transformational global sourcing initiatives at an accelerated pace. They are treating the debilitating economic crisis as a painful “lesson learned.” It seems that every forward-looking company in North America is going through some form of transformation.

A new breed of executive is leading these transformation projects. Do you have what it takes to initiate and lead transformation?

Effective change leaders take calculated risks and challenge the status quo. They earn trust and gain cooperation from everyone including those who do not necessarily agree with the proposed changes. Undoubtedly, outsourcing represents a fundamental change in how business is done. Effective change leaders know that resistance to change is a common reaction. Rather than mowing down resistors, these leaders treat resistance to change as an opportunity to learn about bona fide obstacles they must address. They carefully listen for valid obstacles such as how to deal with non-transferable software licenses or the need to communicate and train the workforce if the outsourcer will be delivering e-enabled processes that have traditionally been manual.

Followership is particularly important when implementing a major outsourcing program. Outsourcing is a material change in how the company operates. The more dramatic the outsourcing strategy is, the greater the impact on the company and its people. Outsourcing means that things will be different. People fear the unknown, and fear is a powerful enemy of change. Great leaders can lead positive change through honest communication and clear objectives and goals. Motivated, willing followers will help implement change, and their willingness is as a result of getting onside early.

Top performing leaders take responsibility for results. I had the pleasure of hearing a keynote address by Angel Mendez, senior vice president, customer value chain management, at Cisco . He knows that Cisco’s CEO doesn’t ask him to explain the intricacies of managing inputs and his services/supply chain. Instead, he holds Angel accountable for results.

As a transformational leader, Angel implemented a customer-driven approach to value chain transformation. In simple terms, while the transformation touches people, process, and technology, Cisco is relying on sourcing, outsourcing, and other value chain functions to create a strategic advantage. This means right-sizing, right-shoring, and outsourcing, relying more heavily on service provider relationships than ever before, end-to-end in their operations. Greater reliance brings more innovative and open relationships with most and termination in some cases where their service provider is unstable.

Outsourcing parts of the organization increases the scope of what is outside of your direct control. Your long-term success is highly dependent on your ability to build strong and collaborative relationships with your service providers. Work closely together to keep an eye on the customer, costs, profits, and the competitive marketplace.

The top three priorities for forming good outsourcing relationships

According to outsourcing attorneys Mayer Brown, the top three priorities in forming good relationships with outsource service providers are:

  1. Maintaining trust and predictability
  2. Maintaining open and effective channels of communication
  3. Treating outsourcing relationships as strategic, not tactical.

As an external advisor and former corporate sourcing executive, I’ve worked closely with line-of-business executives when a service provider relationship is on the rocks. It takes two to make a relationship — good or bad — and it will take both parties to repair troubled ones.

An example of a failed relationship was when a service provider was completely inflexible and unresponsive to all attempts to change services, metrics, and goals that no longer met its customer’s needs. After over a year of trying, the client terminated the relationship.

An example of what happens if you can build a good relationship reveals an opposite outcome. In this case, both parties collaboratively resolved issues, each party bending a little. They resolved the issues and awarded the service provider a multi-year contract extension.

Positive versus destructive leadership

Emotional intelligence, a term Daniel Goleman coined, helps you understand your own traits, strengths and weaknesses and how to control them to ensure you calibrate your actions to have the desired impact.

Emotionally intelligent leaders are easily recognizable in turbulent times. They are the ones who keep a cool head in the face of adversity, are true to their core values no matter what, and help the organization stay focused. Emotionally intelligent leaders are fair and objective.

Conversely, destructive behavior such as demanding unreasonable price concessions, threatening your outsourcers, and relentlessly criticizing them have been standard fare dished out over the past year. Short-term gain? Definitely long-term strain!

Visionary leaders establish a compelling future state for their organization. The vision should be concrete but high level, stretching the organization. The vision should also be sufficiently clear that you can communicate it so a large group of people can understand it. Visionary leaders describe a future that everyone can embrace and translate into SMART goals. SMART goals are specific, measurable, achievable, realistic, and time-bound.

For example, visionary leaders such as Sandeep Bhalla, SVP, Operations at Firstsource Solutions, envisioned an outsourcing relationship to help client Lloyds Bank achieve aggressive revenue and customer satisfaction goals. Sandeep worked with his team to align services and metrics with his client’s goals. The result is a deeper and closer relationship with his customer. And Lloyds Bank is experiencing high customer-satisfaction scores and measurable revenue growth.

Despite the September 2009 unemployment rate of 9.8 percent and over 15 million people unemployed in the United States, according to the Bureau of Labor Statistics, high-performing, proven leaders are in higher demand than ever before. “Top grading,” a euphemistic term for replacing low-performing employees with more capable ones, has rapidly become the norm. Successful leaders dynamically come on board with a proven track record as creative, energetic and collaborative leaders who get results.

Strong, measurable technical skills used to be enough, but times have really changed. Make no mistake, technical skills will always be important, but they are no longer enough. So ask yourself: Do I have what it takes? What skills and abilities set me apart as an exceptional leader? Can I effectively lead my organization through transformational change?

Being a successful leader means being the best you can be every minute of every day. Be that leader.

Lessons from the Outsourcing Journal:

  1. Intrapreneurs, those results-oriented corporate leaders with fresh ideas and entrepreneurial spirit, are thriving despite the economic downturn. Corporate intrepreneurs are the ones getting the high-profile assignments, promotions and financial rewards. It is way more fun to be a tiger than a turtle!
  2. If you want to be on the roster of “must keep,” “must develop” and “must promote” top talent, develop your own relationship management and collaboration skills including the ability to work effectively in matrixed organizations. Advanced technical skills alone don’t cut it anymore.
  3. Regardless of style and attitude, almost everyone comes to work every day wanting to add value and be valued. It is almost impossible to create followership if you don’t take the time to acknowledge contributions, appreciate differences of opinion and say thank you for a job well done.

Linda Tuck Chapman is President, ONTALA Performance Solutions Ltd. She can be reached at [email protected] or 416.452.4635.

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