ADVISORS, LLC WILLOWTREE VOLUME 1, ISSUE 1 THREE SIXTY TRENDS FEBRUARY, 2012 ACCIDENTAL MULTI-SOURCING BY KATHRYN DOUGLASSINSIDE THIS ISSUE: I don’t view “multi-sourcing” as a new era methodologies and technologies, duplica- could take many more months. If the or new trend in sourcing. The concept tion of effort and costs, lack of account- legal arrangements are pursued in isola- has been around for many years, albeit ability and customer dissatisfaction. Done tion, without any consistency in require-ACCIDENTAL 1 under other names --- such as “best of correctly, it can be a very flexible way to ments, a clear, overarching strategy andMULTI-SOURCING breed” and “selective” sourcing. I see this get the best solutions for a complex complementary responsibilities -- the model as a natural evolution for certain environment. In either case, the hard resulting disconnects, white spaces andSERVICE DELIV- 1 organizations, whose high process disci- work is up front. Defining the portfolio of duplications will consume resources andERY MODELS pline, governance and sourcing / services, and determining their suitability create headaches for a very long time. organizational sophistication allow it to for internal, external or joint sourcing, andWTA EARNS MO- 2 work with multiple providers and act as determining how to group services andBIS CONTRACT the “prime” in the overall delivery model. deal with the “grey” areas and touchSCHEDULE There are organizations that have used points is critical preparation to engaging this strategy to great success for many with service providers.OUTSOURCING 2 years, but there are also those that have Secondly, most organizations who under-SERVICES AP- tried it and failed. Why does it work for take a services sourcing agreement for some and not others? the first time seriously underestimateOUTSOURCING OR 3 There are two important considerations how challenging it can be to manage theSTAFF AUG? WTA is Headquartered in Denver surrounding multi-sourcing: clear vision/ agreement. A multi-sourcing deliveryLEAN THINKING 3 strategy and management discipline. model requires far more attention, inter- face and coordination than a single There has been a trend lately to recom- Multi-sourcing is the tactical realization of source service delivery model. Enormous mend multi-sourcing as the “right” way toTOP 10 COMMU- 4 a sourcing strategy for service delivery. challenging exist in managing three or source -- without consideration of theNICATION FAUX It is a path that should be undertaken four different services providers, and the client circumstances. I believe strongly purposefully, with careful planning and touch points, processes and communica- that multi-sourcing is not for everyone.CUSTOMER HIGH- 4 coordination. Sometimes, organizationsLIGHT—WESTERN tions between each of them and the client Clients should be aware of the considera- find themselves in a “multi-sourcing” organization. I would not recommend this tions inherent in this model and carefullyDISPOSAL environment after making serial, and approach for a company that is resource investigate whether or not it will work for sometimes independent, decisions or process challenged, or one whose time their organization. If the organization isWTA WELCOMES 4 around sourcing – I call this “accidental horizon is short term. Getting multiple up to the management and processNEW TEAM MEM- multi-sourcing”.BERS service agreements in place will be only challenges, and the strategy enhances This multi-sourcing-by default model is the first challenge. Getting the operating and optimizes its delivery of services –WTA ENGAGES 5 riddled with pitfalls, including the possibil- agreements and common processes set multi-sourcing can be very effective.NEW MARKETING up among the various service providers ity of disjointed processes, inconsistentFIRMCOMMUNICATION 5THOUGHTS FOR SERVICE DELIVERY MODELSCONSULTANTS Thanks to Lou Dobbs and many of our company employees may have lost their sourced internally, often called “in- politicians, most Americans think that jobs, there may be no net US job loss. sourcing”, or they can be sourced exter- outsourcing is synonymous with offshor- Often, employees who are affected by nally, typically known as “outsourcing”. ing – in other words, moving US jobs to a outsourcing keep their old jobs but are Most companies have service delivery foreign company. The impression is that simply “rebadged” – they go to work for a models, which may include a combination any company who outsources is forcing third-party company but deliver the same of these sourcing approaches. Some US jobs overseas. Not always. type services they formerly performed as complex delivery models involve multiple employees. processes or sub-processes/services, Many people would be surprised to learn which may be sourced to multiple third that many of the Outsourced services are If this all sounds confusing, let’s take a parties , what we call “multi-sourcing” orOur symbol is the WillowTree, known for its being provided by US companies, with US look at the terminology to see what it all in some cases, “best of breed sourcing”. resilience, strength and flexibility. Citizen employees. Even some foreign really means. “Sourcing” is simply the act companies provide outsourcing with US of obtaining designated services from a Citizen employees. Often, even though particular source. Services can be
THREE SIXTY TRENDS Page 2 THREE SIXTY TRENDS Page 2WTA EARNS MOBIS CONT RACT SCHEDULEWTA EARNS MOBIS CONTRACT SCHEDULE Provider of Lean Consulting Services while improving customer and The following are real results from to the Federal Government employee satisfaction,” said Kath- organizations that resulted in costs ryn Douglass, WillowTree Advisor savings and improved services to cus- In November, WillowTree Advisors managing partner. “This opportu- tomers: (WTA), began offering business nity is an excellent way for the Lean is the reason that an Iowa transformation and Lean consulting Federal Government to optimize business can now obtain a clean “Lean Government is services to the Federal Government its operations and focus on the water permit in four and a half with recent approval from the General customers and stakeholders it is about increasing our months instead of 28. Services Administration (GSA) under serving.” capacity to do good.” the MOBIS Schedule, SIN 874.1, Lean Government initiatives cen- Lean is the reason that, in S. contract number GS-10F-0002Y. ter on the agencies’ work and Carolina, the lead time for proc- Today’s economic and political pres- operations, helping them think essing storm water applications sures have pushed governments to differently about the way they dropped from 47 days to 10. do more with less. Lean Government work, while increasing capacity and adding value for those they Lean is the reason that, at BAE methodology enables agencies and serve. Lean initiatives focus on Systems, the time to upgrade the public entities to do more with the eliminating administrative and enterprise resource planning resources they have and provide transactional waste and lead the (ERP) system was reduced from better services to their stakeholders organization to design and imple- 24 months to six. and constituents. ment its processes by directly We’re betting that Lean initiatives will “The application of Lean techniques to focusing on achieving desired be a key focus this year in federal, state business processes can save time, outcomes. and local governments. reduce waste and eliminate costs – OUTSOURCING SERVICES APPROACH Whether an organization is just getting started helps companies establish successful out- tomer focus on the root cause of issues that can with a significant outsourcing transaction; or sourced service provider relationships by using up-end even the most well-negotiated services negotiations are completed and the team is process improvement and organizational trans- agreement. We help our clients establish a getting ready for transition; or the team is ex- formation methodologies to streamline the healthy working relationship, with sound commu- periencing dissatisfaction with an existing nications and operational proc- relationship --- it pays to take an holistic esses that help avoid cost overruns, approach and consider the way in which value leakage, performance prob- the organization will use the services, and lems and the expense of contract address these issues directly. breakage or renegotiations. During the initial stages of an outsourcing The 360 Approach can be applied initiative, significant focus is placed on with new services contracts in pricing and contractual negotiations. transition, existing services con- Less focus is usually placed on the com- tracts needing revitalization or munications, operational change manage- remediation, renewals with current ment and process adjustments that need service provider, or services trans- to be made in order to successfully ac- fer between providers. commodate the new service delivery The 360 Approach for all outsourc- model. As a result, customers often find ing scenarios focuses on an end-to- themselves one or two years into a major Tate and Lyle, Americas Headquarters in Decatur, Illinois, where a end analysis in five key dimensions: services agreement, with customer satis- team of WTA advisors has been working with the Global SAP Imple- faction issues, performance and cost · Process Maturity problems, and significant concerns over · Organizational Maturity whether the arrangement is successful. · Contract Relevance processes and organizations that feed, manage · Service Cost 360 Sourcing Services™ a service offering for and interact with the outsourced services. By · Service Quality This holistic approach ensures that all key areas contract remediation and services transition, utilizing this new approach, we help the cus- of sourcing are addressed.
VOLUME 1, ISSUE 1 Page 3OUTSOURCING OR STAFF AUG? BY KATHRYN DOUGLASS Outsourcing vs. Staff Augmentation Outsourcing Scenario 1: Company A, a Let’s see how staff augmentation is New York based company, chooses different. While outsourcing involves contracting to contract with Service Provider X with a third party for entire processes to deliver support for its Customer Staff augmentation: With staff or services, there is another, some- Call Center, which is in New York. augmentation, a third-party pro- what-related approach, often confused Service Provider X has a call center vides temporary employees to a with outsourcing. This model is called already established in Arizona, and firm for a particular project or “staff augmentation”. There is a subtle it shifts the work from the com- service, and those employees join difference between outsourcing and staff augmentation. There are some pany’s location in New York to with the firm’s team to help deliver “The application of Arizona. Most of the employees are services for a period of time. The tests to help determine whether the terminated. Lean techniques .. test for staff augmentation is the relationship is true “outsourcing”: can save time, Outsourcing Scenario 2: Company A inverse of the outsourcing test. The chooses to outsource with Service project or service is managed by reduce waste and Outsourcing: If a firm gives a third Provider X. Service Provider X firm, and the price varies based on party the full scope of the responsi- chooses to purchase Company A’s what services that are requested. eliminate costs…” bility for service delivery, it is proba- facility and hire all of its employees Billing by the hour is typically indica- bly outsourcing. Outsourcing typi- to deliver on the contract. tive of staff augmentation arrange- cally implies that there are fixed Outsourcing Scenario 3: Company A ments. If there are no set deliver- deliverables or services, managed chooses to outsource its call cen- ables and there are no service by the third party, with some con- ter services to a Service Provider, levels, this is probably a staff aug- tractual performance standards. who is responsible for all calls mentation relationship. Because there is an agreed-to placed to the call center. The Ser- charge for those deliverables or vice Provider offers end-to-end Why does this matter? It matters services, fixed-price arrangements services, including the systems and significantly in several key areas: are typically indicative of outsourc- software to track and resolve contract negotiations, pricing, service ing. Let’s look at some scenarios: issues and problems. Pricing is levels and contract governance. typically on a by-the-user basis.LEAN MINDSET BY SCOTT ZIMMERMAN "Lean" seems to be everywhere. What our work environment, we think not of is difficult to create the mindset of started as Western manufacturers change, but improvement. We also peacetime operations. Everyday activi- emulating Toyotas unique production think of improvement as global - if my ties, the management of the mundane, methods has now been implemented job gets easier, but my internal cus- takes discipline and will, but not individ- in every industry from healthcare to tomers or suppliers job gets harder, it ual "above and beyond the call of duty" the public sector. There is Lean Ac- may or may not be the right move, courage. Fire prevention is the answer, counting, Lean Sigma, Lean Service – depending on the overall cycle time, not putting out fires. How many times I’ve even seen ‘Value-Based Lean Six transparency, quality, etc. have we been told that an ounce of Sigma (VBLSS) teams – now there’s a The Lean Enterprise Institute dis- precaution is worth a pound of cure, mouthful! The tools springing from this cusses Lean Management in this way, but we reward the firefighter, not the "methodology" are point-effective. By also. Using Demings terminology, the fire preventer. Daily operations call for that I mean that the tools are effective lean mindset understands change in making the job easier, not overcoming at solving a single problem, but unless the context of Plan, Do, Check, Act. I adversity to get the job done. the underlying philosophy is embraced, describe it in as the Closed-Loop the result will be limited to that issue, Methodology. Closing the loop is the The Lean Mindset, then, is thinking that point. foundation for every important mana- constantly in terms of global improve- gerial system. Its the way systems ment, creating self-managing, closed- Whats missing is a Lean Mindset. We engineers view the world, and how loop systems, and developing an or- run around the operation as ham- junior officers are trained to think in ganization that values predictable Scott Zimmerman is actively blogging on Lean topics on the mers, seeing nails everywhere. In- the military. operations that obviate the need for WTA Website. stead, we need to give voice to our heroic comebacks. inner engineer, and our inner leader- ship guru. Engineers stake their ca- The best leaders in the military are not reers on analyzing problems and what Jim Collins would call "Level 4 designing solutions, and the leadership Leaders". Contrary to popular lore, gurus facilitate change in an organiza- they are not heroes. In fact, one of the tion. If we, as operators, supervisors, tenets of Lean is to create a team, not managers, and executives have a heroes. Having literally led a team of common approach to our work and courageous firefighters, I know that it
THREE SIXTY TRENDS Page 4TOP 10 COMMUNICATION FAUX PAS IN CHANGE MGMT When Communicating on any type of critical project, including business transformation, and outsourcing, how can you go wrong? Let me count the ways... 1. Not developing a communications strategy and plan 2. Communicating only with “select” individuals “When you are leveling 3. Letting “bad news” sit 4. Not anticipating and thinking through answers to critical questions with employees about 5. Approaching communications as an afterthought what is coming down 6. Sending “mixed” messages 7. Conducting only “one-way” communications the pike, skip the 8. Being afraid to communicate platitudes.” 9. Communicating inconsistently 10. Not tying the communications to real business outcomes No matter what kind of change an organization is undertaking, communication can make it a success or doom it to failure. Don’t let these problems happen in your project!WTA WELCOMES NEW TEAM MEMBERS AND PARTNERS Our extended team has grown Toni Martin—Administrative Ed Powers—Strategic Planning over the last year and we are Assistant Expert pleased to welcome several new associates, consultants, teaming Colleen Kindler—Lean Expert Triche Guenin– Lean Six Sigma partners and support staff mem- Catherine LeRoi—Lean Expert Expert bers. Spitfire Group, Inc. Matt Bross—Financial Expert Laura Powers—Technical Interfacing Technologies, Inc. Colleen Kindler, Ed Powers and Triche Scott Zimmerman—Lean Guenin take a break from working on the Writer Expert The Great Online, Inc. Denver Water Lean Enterprise Project.CUSTOMER HIGHLIGHT: WESTERN DISPOSAL Company Overview: Approach: WTA then proceeded to document and map all processes within this critical area of service for Western Disposal is a family-owned busi- WTA performed a one week assessment, which Western Disposal. As part of this process, WTA ness, headquartered in Boulder Colorado, identified business issues and laid out the key consultants identified key improvements to the that started over 35 years ago with system, to the business processes one truck and a vision of what custom- and to the training for customer ers would value in a trash collection service representatives. company: dependable, on-time service from friendly, well-trained employees. Results: Western Disposal has 120 employ- WTA identified and installed a web ees, over 70 vehicles on the road based collaboration tool, which now each day and 35,000 residential and houses the documentation for all commercial customers. Western business processes, all training Disposal attribute its success to the tools and job aids. commitment to provide the best ser- The tool selected was Interfacing vice to all our customers every day. Technologies, Enterprise Process Business Problem: Center ( EPC) BPM solution. Western Disposal was working with Western Disposal, Headquartered in Boulder Colorado, was the site “We chose the EPC because, not an aging, in-house developed CRM of an extensive assessment and process mapping for customer only does it meet the client require- system that was the heart of its busi- service and sales departments. ments, but we felt that it represents ness. They wanted to know if the high us well and will serve as a reminder turnover and difficult training for its cus- business processes within the customer ser- of the engagement”. Kathryn Douglass tomer service reps was a result of the sys- vice and sales organization. tem and if that system needed to be re- placed.
VOLUME 1, ISSUE 1 Page 5WTA ENGAGES THE GREAT ONLINE WTA has been very busy with net marketing, blog development at www.willowtreeadvisors.com marketing over the last year or and electronic customer out- (Designed by Colorado Web Solu- so,, and earlier this year, our reach. The team of Joe Caston, tions) , our Facebook Page Marketing Assistant, Brett Piche, Julianne Salisbury, Suzanne Tran- www.facebook.com/ left to complete his MBA and tow are providing great support willowtreeadvisors and our Linked start his own business. So we’ve for our website, Linked In and In page at www.linkedin.com/ taken our own advice and out- Facebook presences. company/2279508?trk=tyah . sourced! We have engaged a You can also follow us on Twitter: If you haven’t already done so, local Denver marketing firm, The WTA80209. please check out our new website Great Online, to assist with inter-COMMUNICATION THOUGHTS FOR CONSULTANTS It doesnt matter how brilliant, you cant get excited about what see what I can do." Are you con- competent or even right you are. youre talking about, dont expect vinced that the person will resolve If you cant master people skills, anybody else to. You must show your problem? Roger Dawson youll get left in the dust. Commu- people that you believe what says: "There is a place in heaven nication lapses will affect your youre saying. Enthusiasm should for every person who says, `Ill people skills. not be faked. Think about it in take care of it. " A customer terms IASM: I Am Sold Myself. doesnt care whether or not the How we communicate with oth- Low energy, monotone voice and problem was your fault; she cares ers has a tremendous impact on a corpse-like appearance will not only that youll resolve it. Speak our business success or failure. convey that message. Project confidently, take responsibility and Here are some of the more com- energy through an animated voice follow through. mon communication mistakes and purposeful gestures. If you people make: 5. "Yes, but ..." -- not listening. The dont believe in yourself and show it, no one else will. most important communication “Whenever you 1. Me, me, me -- focusing on our skill -- listening -- is also the hard- own agenda. It doesnt matter 3. Arrogance -- an "Im right" respond … with “yes, est to master. But there is noth- what you want. What matters is but…” it’s a sure attitude. It doesnt matter if youre ing that makes people feel more what the other person wants. Zig right and you know it. Being validated than being listened to. sign you haven’t Ziglar said that you can get any- closed-minded to others ideas or Effective listening requires show- listened.” thing in life you want if you help confronting or challenging differ- ing people that youre listening, other people get what they want. ent opinions creates an opponent through eye communication and When you frame your communi- out of your colleague, not an ally. vocal responders ("mm-hmm") cation from their point of view, You can challenge or accuse or and letting them know you heard you will be more successful. insist all you want, but "a man them through appropriate re- A business advisor I know once convinced against his will is of his sponses. asked an insurance agent what own opinion still." You win people over more effectively with an open Whenever you respond to some- she thought about every time she -minded attitude, a willingness to one with "Yes, but...," its a sure talked to a client or prospect. She say: "Well, you might be right. I sign you havent listened. Before replied: "Making the sale, making hadnt thought about that. Lets you state your response, make an more money. Ive got to do this for discuss that possibility." Youll be effort to paraphrase what the my children, their well-being, their amazed how often people will talk other has said ("So what I hear future." My friend suggested that themselves out of their point of you saying is ...") or to identify the instead of thinking about her view and see their way clear to feelings behind what the other children, she think about the yours if you dont treat them as if said ("You must be so proud"). clients children -- their well-being, theyre wrong. When people feel listened to, their future. With that new ap- theyre more likely to listen to you proach, her business turned 4. Weasel words -- lack of convic- in return. That creates a connec- around almost overnight. tion or responsibility. Lets say you tion that creates understanding, 2. Ho-hum -- no enthusiasm for express a complaint to a vendor, improves relationships and capi- your idea, product, service, self. If and the response you get is: "Ill
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