Dave's Desired Outcomes

A young marketing manager, newly arrived in Seattle and fresh from seven years of “basic training” at Frito-Lay, got a referral to Dave, the CEO of a fast-growing coffee company.  When our marketing manager got Dave on the phone, they chatted amiably for a couple of minutes, then Dave got down to business.

“How do you think you might be able to help me?”

The question stopped our young marketing manager in his tracks.  “I can help you with marketing strategy.  New product development.  And sales promotions.”

“I’ve got those areas pretty well covered,” Dave said.  And thus ended any potential business relationship.

Where did our young marketing manager go wrong?  He offered activities, not results.  Working on strategy, product development or promotions, those are activities.  Dave wanted results.

That young marketing manager was me.  I think about that experience whenever I get into a discussion about the first Rule of Vested Outsourcing:  "The business model must be outcome-based, not transaction- or activity-based."

If I had a “do-over” with Dave – don’t we all wish we could have a few “do-overs”? – I’d like to say something like this:

“Dave, I can drive your top line with innovative promotions, packaging and channel development strategies.  I can also drive your bottom line by applying the analytical rigor and business case development skills I learned at Frito-Lay.”

I’m pretty confident that focusing on what were probably his most important desired outcomes – growing revenue and profit margins – would have taken the conversation deeper into the realm of “how” and at least gotten me a face-to-face interview.  And once I’d satisfied Dave that I had the skills and experience that would make it likely I would succeed, we might have talked about how he might pay for me…

…bringing us into the realm of Rule 4 of Vested Outsourcing:  "Pricing model incentives are optimized for cost/service tradeoffs."  I doubt Dave would have signed up for a straight salary.  We probably would have worked out a lower-than-market base plus a bonus tied to specific revenue and profit margin goals.

A focus on desired outcomes rather than activities (Rule 1) coupled with an incentive structure that motivated my best efforts to achieve those desired outcomes (Rule 4) would have made for a mutually beneficial, rewarding and – I would bet – fun working relationship with Dave and his company.

Considering this example, how can you sharpen your definition of the desired outcomes you or your client wants from your outsourcing relationship?  And how would you design the pricing model to best deliver those outcomes?  I’d love to hear your story.