TON Program: The Learning Curve of Outsourcing and Offshoring

June 1, 2015
DTU’s Executive School of Business hosted a great TON program this past Thursday. The topic was The Learning Curve. 
We had a chance to hear from members, FLSmidth Airtech and COWI, on aspects of their own learning curves. 
The team from FLSmidth Airtech; Lars Gamborg, Jørgen Christian Iversen, and Henrik Furbo Rasmussen; discussed the 15 year journey in offshoring engineering which originated with very simple tasks and has grown both by design and by demand into more complex engineering work. One key learning noted was that it sometimes took the organization a considerable amount of time to accurately understand the issues and to take corrective action. Another key learning was that it was absolutely critical that top leadership firmly supported and valued this work in order to get the rest of the organization on board. A third learning was that the more we get to know each other as people, the better we are able to communicate and cooperate.
Jesper Hjerrild, VP Group IT, COWI, gave the network a look into COWI’s experience developing their offshored IT help desk set-up into a global business services center. Central to Jesper’s message was that focusing on delivering value for the business via IT was key to securing success. Jesper also noted that it was critical for the effort to first show that they were able to secure greater efficiencies with the IT help desk before being able to get the go-ahead to expand to other areas. Doing so meant establishing baselines and becoming good at measuring the right things, not just technical KPIs. Critical learnings included obtaining a clear mandate and support from leadership; the need to get rid of “old school” management to deliver success; and the necessity of establishing shared responsibility.
As Michael Mol, Professor, CBS, who drew “the red thread” through the program noted, learning can happen by both abstract conceptualization and concrete experience, that is by engaging in reflective observation and active experimentation. Michael emphasized the critical differences between organizational learning and individual learning. 
Our afternoon Open Space workshop gave us a chance to focus on issues and challenges on the minds of our participants. Some of the topics under discussion were:
  • Unlearning: what are the consequences of outsourcing activities to the extent that knowledge no longer resides in the company?
  • What should you do if a supplier’s business case dies (i.e. they begin to loose money on your business)?
  • How do you measure collaboration?
  • How to remedy low-performing teams?
  • How can the proposed CBS research project bring value to TON members?
  • How can we manage our own organization’s behavior so as to make our suppliers more effective?
Some of the most interesting points harvested from these discussions include:
  • Efficiency is more important than cost.
  • Physical presence is critical for building relationships and bonds.
  • It’s critical to celebrate success together.
  • Risk needs to be appropriately assigned and shared.
  • Creating mechanisms, for instance, a “common day” where client and vendor are both working at the same time, can go a long way towards cementing properly working distributed teams.
Our Open Space workshop, facilitated by René and Lucy Herlaar, was a great way to surface some current issues in a way that let us leverage the collective knowledge and experience present in our members. I’m sure we’ll use this format again in the future.
Our next program will be held on September 10 at FLSmidth in Valby. The topic will be: Cultural Challenges in Outsourcing and Offshoring.