From Win-Win to Win-Win-Win

In the midst of working out a win-win outsourcing deal, the two parties striking the deal can inadvertently set themselves up for problems if they forget one key person:  the end user.

Whether the end-user is internal or external, it’s the end-user’s satisfaction that will make or break the deal.  I’d go so far as to say the end-user’s satisfaction (or lack of it) will make or break the outsourcing company’s bottom line.  Making sure that end-user is satisfied means that any agreement has to provide benefits to all three parties.  So if you’re not going for win-win-win, you will lose-lose-lose.

And if the company’s ability to satisfy end-users doesn’t improve over time (and relative to competition), the suffering will grow exponentially.

Many outsourcing agreements fail.  I see a variety of reasons for this, usually boiling down to rushing the deal, sucking the life out of the vendor or outsourcing for the wrong reasons:

·      Rushing through planning and transition kills performance.

·      An all-too-frequent pattern of beating up vendors on price blocks investments in transformational process change and service improvements.

·      Outsourcing for any reason other than getting better at what you do as a combined entity will undermine the project’s effectiveness (think balance sheet moves).

Without continuous improvement in performance for the end-user, the company enters a downward spiral toward its eventual death.

Focusing on the end-user breaks that pattern.  An agreement built around measurable benefits to the end-user creates a framework for working together.  When the company and the service provider work together, they become vested in each others’ success.  Neither can accomplish alone what the combined entity can produce.  Cost never stops being a factor, but cost decisions get made in the context of external performance measures – based on the preferences of end-users – and mindful of the many alternatives end-users have to buy similar products or services from others (think market share). 

So if you’re having problems with your outsourcing agreements, bring the end-user back to the table.  Make sure the agreement rewards all three parties and “vests” the company and the supplier in each others’ success.  Collaboration will assure maximum benefits to all involved.

A true win-win is a three-way win:  one for the company outsourcing, one for the supplier, and one for the customer.  After all – isn’t the customer why everyone is in business?  Let me know what you think.