August 26, 2005

Stretch and Leverage

A couple of years ago I had the pleasure of working with Murray Simser. Murray is the Founder and President of One Source Partners. One Source Partners is a professional services firm specializing in managed offshore Business Process Outsourcing (BPO) for Customer Care and Call Center Operations. BPO is a growing space full of innovative companies. One Source’s strategy of “Stretch & Leverage” takes dead aim to enable effective business and technology reinvention. I thought there would be great value in interviewing Murray for this Blog. This is the first in a series of CEO/President level interviews to appear in this space.

Background:
Murray, a proven, meticulous and experienced leader, is the Founder and President of One Source Partners. He co-founded eAssist Global Solutions
a global leader in Customer Service, Support, and Marketing software. Prior to eAssist, he was a VP Business Development for a Stage B startup in the Wireless communications space. In addition he was Manager, PCS Activations at Telus Mobility in Toronto where he launched and managed multiple call centers across Canada.

Interview Q&A:

Q: Why did you create One Source Partners?
A: Between 1995 and 98 a trend began to emerge. Canada became a destination of choice for American companies wishing to expand domestic operations. The reason: Cheaper and equally qualified labour pool or in economic speak the PRICE PARITY LAW. This scenario would begin to play out around the world. In many verticals, it seemed that market forces were conspiring to allow an Australian, Indian or Venezuelan to provide the same high quality service but at dramatically different prices. Alas the early adopters of this policy were made into pariahs by the media. It would take another few years for this trend to mature beyond the early adopters.

At the turn of the millennium the “connected world” emerged as the vehicle that would allow people across the globe to compete in a global marketplace for services.

Outsourcing to other continents presents a set of challenges that generally could not be addressed by in-house resources. Enter OSP.

Q: What does “Stretch & Leverage” mean to you?
A: Spent capital is lost capital. Optimizing the use of capital in the long run is the single most important issue facing corporations that peddle “commodity” products. An example is the PC industry. Another, the retail sector. These businesses tend to experience decreasing price points and compressed margin over their life cycle. The management philosophy that works best under these circumstances is based, in principle, on extending the lifetime value of a given commodity while constantly reducing the cost of offering it.

OSP developed a framework that allows OSP Consultants to optimize the operational environment by building a plan to transition resources, where appropriate, to a lower cost equal quality environ (see other countries). In so doing we STRETCH the corporation’s ability to compete by unlocking underutilized capital. This capital in turn is funnelled back into top corporate priorities, creating the leverage effect.


Q: What is the “Innovation Economy”? And what opportunities does it offer?
A: The innovation economy is the zenith of the information age.

It is the maturation of everything that began with the invention of the telegraph. Breaching distance and accessing lower cost models has confounded business leaders for centuries. Though cheap labour, processes and services have always been plentiful, the savings wrought was generally offset by the transport cost.

Technology has finally caught up to the vision. Distance no longer matters. Capital is being freed up from corporations at an astonishing rate. Optimizing the use of capital is unlocking value in corporations that until now could not be contemplated.

The result is a massive influx of capital into the coffers of corporations everywhere. The market economy takes care of the rest and INNOVATES.

Proof: Dell vs. HP – two styles of innovation

Dell decided to aggressively pursue cost reduction in the interest of its long-term survivability. HP chose to pursue the traditional R&D model to guarantee a future.

On the surface both seem like reasonable decisions. The difference is found in sustainability. The Dell model has generated several orders of magnitude greater return on capital than the HP model while still delivering an impressive rate of product innovation and extension.


Q: What motivates a company to embark on Business Process Outsourcing (BPO)?
A: The need to innovate generates an equally important need for capital. The need for capital requires a capital optimization strategy. That strategy typically begins with an analysis of current capital utilization.

This exercise shows corporations where capital is underutilized and points to solutions. One is of course outsourcing. Business Process Outsourcing is the latest term used to describe the handoff of non-core competencies that do not make up a corporation’s proverbial “knitting”.


Q: What should business decision makers do to ensure success with BPO?
A: Three things:

Hire a Knowledgeable Guide – the cost is insignificant when compared to having a customer facing element come crashing down. The guide, such as OSP, can help you do it right the first time and can pollinate your organization with knowledge useful in later stages of offshore development.

Cost Is Not The Be All – BPO should never be undertaken solely for cost sake. BPO should form a strategic imperative within the context of a larger strategy. Without this most BPO exercises are doomed to failure. Many who seek BPO simply for cost do not fully consider the implications of the decision and therefore end up playing firefighter or worst harming their customers.

Plan For a Bumpy Road – Many expect that BPO can be implemented easily and quickly. This is simply not true. Many BPO projects failed because the corporation was unprepared for challenges. There will be many challenges, some avoidable others not. BPO ROI is significant if your organization is ready to take on the challenge. Leadership is the most important factor here. Leaders responsible for this must act to ensure corporate buy-in and must marshall a well thought out plan to achieve success, anything less will hurt.


Q: You had great entrepreneurial success; do you have any advice for new entrepreneurs?
A: Thank you very much. My success is largely due to two beliefs: 1) Luck is the residue of design and 2) Luck favours the bold.

In other words, think and plan just enough that it does not get in the way of progress and don’t take failure too hard, everybody experiences it, the winners learn from it.

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