Do Business Well

The third delegation strategy involves more than the second. What we have been talking about so far is the deep delegation strategy, that is, off-loading a specific process or activity onto someone that specializes in that task. There is also a broad strategy, in which a customer contracts out entire business operations. As in the previous approach, the suppliers’ expertise and scale advantages motivate clients to delegate. What distinguishes this strategy is that it places a high premium on the supplier’s orchestration skills. The broader the scope and the more critical the nature of the work, the more customers have to trust that the supplier excels in coordinating and juxtaposing various pieces of the puzzle to form a solution and keep it running smoothly.

Responding to this demand, General Electric Power Systems, which builds turnkey power plants for thousands of customers around the world, will even run its customers‘ plants for them. For the company in need of a power plant, GEPS will take care of everything. In this case, all the delegators have to do is determine the spread between what they plan to charge and what they are willing to pay. Continue Reading »

6 Comments »

What collaborators value above all else are their suppliers‘ skills as consultants and expertise in project management. That explains why demand has surged for all kinds of advisory services, for instance, the offerings of the Big Five accounting-cum-consulting firms, and the likes of EDS and CSC. Outpacing them all on the basis of growth is IBM, which for decades has been portraying itself as a total-solutions provider. About 60 percent of its growth over the past six years was derived from value-added services, not products. With an army of 130,000 people working to ensure that customers glean the maximum benefit from technology and its complexities, IBM generated $32 billion in service revenues during 1999. Working with collaborators accounted for roughly half of that; outsourcing and related services provided to delegators accounted for the other half.

The trend toward embellishing offerings with value-added support has escaped neither other technology companies nor other industries. Continue Reading »

3 Comments »

Remember one of the most talked-about business events of the late 1990s—the year 2000, or Y2K, scare? Companies and governments scrambled to prevent outdated computer code from crippling their information systems. Bracing themselves for power outages or actual disasters that were expected to mark the end of the twentieth century, untold numbers of consumers stockpiled staples, candles, and water. Then, at the stroke of midnight on December 31, 1999, the Y2K scare fizzled like a burned comet. All but forgotten in a matter of months, it was overshadowed by weightier pressures such as coming to grips with the Internet and the bobbing stock market.

Some critics called the scare a blatant marketing ploy, fanned by consultants, technology providers, and litigation lawyers planning to intimidate gullible managers into parting with half a trillion dollars worldwide. Even though that is a staggering number—it is more than. five times what the United States spent in the Gulf War from 1988 to 1990 to fight another menace, Saddam Hussein—the financial toll of Y2K was not excessive. Continue Reading »

6 Comments »