September 14, 2004

Excerpts: Everything You Need to Know About Strategy - Part X

By: 800-CEO-READ @ 1:20 PM – Filed under: Management & Workplace Culture

8. Do you elaborate on and enhance Jerry Gs dictum by adding, We subscribe to Best Sourcingand only want to associate with the best of the best.
I was described in public as a radical by a senior Japanese official, during a Summer 2004 conference in Nagano. (Actually, which I guess even amplifies the label, he was a Japanese-American, who spent much of his career in Silicon Valley.) I retorted sharply that I was no such animal! Alas, hed been taking detailed notes during my presentation. But didnt you say you could readily imagine a $50 billion corporation, perhaps in pharmaceuticals, which had only two full-time employeesyou and one other. And outsourced everything else? Then he added (see Number 3 above) that one of the two would, of course, be a woman.
I agreed hed taken accurate notesbut still denied the radical label. I waffled a little, and allowed as how I didnt expect to see anything so extreme in the near futurebut the concept made perfect sense to me.
And it does.
(Particularly the bit about the woman.)
Im cribbing here from British management guru Charles Handy, who said years ago, Organizations will still be critically important in the world, but as organizers, not employers. The conference I was attending was a Client get-together, sponsored by Indias Infosysthe most exciting, farsighted company Ive come across in years and years. Thus I could imagine Infosys doing our IS/IT. The best-most interesting of the biotechs would do our R&D. UPS would handle any and all supply chain issues. Best of breed specialists would also perform clinical trials. Omnicom would execute the entire marketing chore on a turnkey basisand perhaps wed contract with one of old pharma to do the selling (though I believe that specialist, Internet-based sales firms may usurp Big Pharmas sales role, too). And on. And on. (And on.) Finally, my female partner and I would contract with a project management consultancy to orchestrate the overall network.
Economist writers John Micklethwait and Adrian Wooldridge also beat me to this piece of radical turf in their book The Company. They imagined tomorrows Ford Motor Company as simply a vehicle brand owner which would design, engineer, and market cars, but not actually make them. My punch line in the Infosys presentation had been: Not out sourcing. Not off shoring. Not near shoring. Not in sourcing. But ... Best Sourcing. That is, while I acknowledge the increasingly nasty politics of off shoring, I believe it miscasts the long-term economic excellence debate. Companies that attempt to be best at everything are doomed. I further believe that every unit in the traditional firm (logistics, IS/IT, HR, finance, R&D, marketing, sales, etc.) must offer proof positive that it is, to mimic Mr. Garcia, the only ones who do what we door at least equivalent to the best of the best.
Meanwhile, my partner at Lean Staffed Pharmaceuticals Inc. and I will be photographed in the subcontracted Annual Report seated behind a desk over which one can see a gilt-framed picture of Forrest Gump, with his immortal quote in bold lettering at the bottom: DONT OWN NOTHIN IF YOU CAN HELP IT. IF YOU CAN, RENT YOUR SHOES.