In the field of mathematics, we have two types of statements. One is called an axiom and the other is called a theorem. An axiom is a statement that does not need to be proven and is accepted as the “truth” and a theorem is one that needs rigorous proof. If we draw a parallel in today’s global and connected economy, the axiom of the new economy could simply be stated as “Excel in your core areas of strength and partner for the rest”. This is a far different type of environment than one that existed even a decade back. Today we hear about companies outsourcing or partnering in areas of Information services; back office functions like payroll; accounts payable and receivable; human factors management; engineering and design services; procurement; logistics; etc; etc. The list grows larger and more innovative everyday.
It is not unfathomable to envision a day in which some of our activities have been pre or post processed in some remote part of the world, by a resource that knows us purely by a number and has no personal touch into our daily routine. We are already faced with some of that in claims processing as well as the hallowed land of medicine in which MRI reports and pathology laboratory reports are being read in India and diagnosis being sent across the web world for delivery in North America.
If we accept the axiom that vertical integration for all functions and services is not a sustainable value proposition in today’s extended economy, then it begs the question on methods that can be used to determine the core areas of focus for a company as well as metrics that need to be used to govern the behaviors and actions of partners.
There is never a cookie cutter solution or a one size fits all environments for all industries or functions. Having worked in consumer products; retail; high technology as well as the automotive industry, I am still trying to find the panacea that everyone can be happy with. Unfortunately, it does not exist. However, we can still find some core patterns and frameworks that can be applied to a somewhat nebulous process. However, we have found that frameworks applied in isolation cannot be successful or implementable.
To make a framework useful, I have always found that a balanced scorecard approach to verifying and validating certain decisions as well as the as well as answering the multi million dollar question “ To partner or not to partner?”. The remainder of this article focuses on putting forth a point of view on these topics that have worked well in the industry. It is by no means the only approach or the panacea but is one approach to answering a question that is complex, multi dimensional and extremely relevant in todays globally connected economy.