As
anyone who has a read a magazine, surfed a consumer Web site or spent the
pre-bed hour tuned in to Letterman knows, the world is in love with lists.
Lists that aim to show the best, worst, priciest, cheapest, sexiest - whatever
the metric, we are captivated by Top Tens.
And
that's fine. Humans by nature look to place the world around them into a
hierarchy.
But
you don't have to be a statistics student to know that lists by definition are
limiting and therefore limited in their ability to guide decisions. Think about
all those "Top Stocks/Clothes/Gadgets You Must Buy in the New Year"
lists plastered on magazine fronts at year end every year. Now think about how
well those lists stand up to the whims of an extraordinarily diverse population
over the next 12 months.
Which
brings me to the headline of my blog, which you now know was made in jest. But
this is no laughing matter. My company is data driven, so we understand and
support the development of effective measures for the sourcing industry. But
given our wide body of experience in a variety of sourcing situations -
situations as diverse and unique as the world at large - we also know that best
thinking critical to business decisions isn't captured in lists that purport to
reduce to 10 lines all you need to know about your service provider, offshore
locale or advisors.
Yet
every day we are seeing more of these rankings lists produced in and around the
outsourcing world. To the extent they garner headlines and further discussion
about an evolving, global industry, they are helpful (albeit often misleading).
But if they are the sole or main basis for a sourcing decision by an
organization, then the organization and its clients aren't being well served.
For
example, some rankings show that countries such as Brazil and South Africa are garnering more interest from corporations looking to source out select business services. Those are broad measures of interest, and valid ones.
Whether they prove prescient only time will tell, and a whole lot of really
relevant factors - local workforce quality, infrastructure, flexibility of
government - will shape and shift the final results.
Other
rankings, however, fall short by casting providers and advisors as being
categorically better or worse than their competitors at managing business
process, IT, HR or financial outsourcing. Among the problems with these
rankings: They don't make any allowances for the very different circumstances
of the organizations seeking sourcing relationships.
For
example: If your company is a large multinational that already has multiple
sourcing relations in place and wants to outsource an additional function, your
needs and goals may be sharply different from an up-and-coming firm that's just
dipping its toe into the sourcing water. The former may be comfortable dealing
with a certain type of counselor that's demonstrably good at its job. The
latter may want to be guided by a different set of advisors who are equally
good at their jobs but better tasked to serve the needs of this type of client.
As
for the Black Book of Outsourcing's "rankings" of service providers, advisors
and law firms, one must be wary of ordinal lists conceived from a "sampling" of
22,000 people. The industry doesn't have 22,000 decision-makers informed
enough to offer judgment. Further, a quick scan shows an uninformed
intermingling of providers and advisors - a sign of confusion among either/both
the survey-takers or survey-makers. Finally, the dramatic changes
year-over-year on such rank-ordered lists - radical shifts in players,
providers and advisors is an indicator that the ranking is not performance or
capability-based, but rather evaluation-based. It's easy to get a new
list if one changes the rules – and changes the sampling techniques.
Indeed,
the flaws I'm talking about here also get exposed in the fine print of many
rankings, where we learn that any and all respondents' views are reflected in
results, including multiple views from companies that end up counting for as
much or more as the views of a real decision maker at another company.
Thousands of responses without any polling control do not constitute a
categorical portrait of any industry or its participants. All in all, broad and general rankings are
poor, and often irrelevant, contributors to corporate sourcing strategies.
Anyway,
the larger point - the one above all the noise – is one you’ve heard from me
before: Sourcing has become part science, where the best deals have to factor
in a whole lot of unique data specific to each client. The very particulars of
your context matter most. The best provider is the one that takes the time to
learn the most about your needs, which is not necessarily the same as the one
at the top of all those lists.
Recognize lists for what they are: Fun reading, even a jumping off point – but not the
basis for a major budget initiative that’s going to go to your bottom line.
