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 »
