Industry insight
partners. With multiple agencies involved in executing such programmes for various
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Week 5 framework
partners. With multiple agencies involved in executing such programmes for various organizations, the rate of innovation and experimentation is high with each year witnessing new ways to excite and engage the beneficiaries of the programme. While SC has outsourced the entire programme, still the central marketing team engages itself with the programme by regularly discussing the operations with the agencies and by keeping abreast of similar programmes in other industries. All key events of the loyalty programme are attended by senior officers and a post event feedback session is held to document and gather the learnings. Despite fast changes in the Loyalty programmes industry, the marketing team at SC is able to make relevant suggestions to its agencies. As it deals with multiple agencies, it is also in a position to make quick interventions if it detects sub-optimal performance. 6.2.2 Failed outsourcing in bright sunshine condition (Q2). A cement manufacturer (CM), with its operations concentrated in eastern India, had used an agency to prepare and circulate by post a quarterly newsletter to retailers stocking its brand. The newsletter carried industry forecasts, updates on activities related to the cement brand, details of promotional initiatives undertaken by retailers, etc. Over time, with the advent of low-cost Internet-enabled smartphones, retailers began preferring staying in touch with other retailers over Whatsapp and have subscribed to websites which send them daily updates on the industry, price trends, forecasts, etc. Yet, CM continued with its old format newsletter, which had little relevance by the time it reached the retailer’s counter. Having outsourced the content generation and newsletter publication, the team at CM did not invest any resource, nor devise any system, to stay connected to the activity. The agency too lost interest in the account and the quality of its output waned. With the newsletter in disuse, CM had to suspend the outsourcing arrangement and discontinue the publication. 6.3 Thunderstorms (Quadrant 3) This quadrant refers to processes which are deeply enmeshed with other processes in the organization and which could be impacting the organization’s competitiveness in various ways, socially complex and causally ambiguous to the focal organization itself ( Barney, 1991 ). It is the outsourcing of these processes that Hendry (1995) refers to as resulting in reduction of informal information transfer mechanism leading to lower combinative capacity in the organization across functions ( Hendry, 1995 ; Quinn and Hilmer, 1994 ). The innovations around such deeply and variously connected processes SO 7,3 240 would be of the “systemic” kind which would require deep coordination and communication with other parts of the organization ( Chesbrough and Teece, 2002 ). In such cases, the optimum balance between the extent of supplier’s capability and the strength of relationship with the supplier starts tilting towards the latter ( Hoetker, 2005 ). Many outsourcing relationships depend on high degree of collaboration between the client and the vendor ( Vitasek and Manrodt, 2012 ). In such cases, deep understanding and continual interaction between the employees of the focal firm and the supplier serves to reduce the risks of loss of combinative capacities ( Quinn and Hilmer, 1994 ). The need to develop unique communication codes across the two organizations is best met by working together all along the innovations life cycle ( Berggren and Bengtsson, 2004 ) and having the arrangement of “seconding” each other’s employees for development projects ( Quinn and Hilmer, 1994 ). Suppliers are selected very carefully by evaluating their management systems, values, vision and attitudes for long-term compatibility ( Berggren and Bengtsson, 2004 ). Relationships at the shop-floor level have to be complemented with relationship amongst the top management ( Quinn and Hilmer, 1994 ). Combination of knowledge bases between two firms can lead to unique advantages and they can capture “relational rents” when the partners commit to relation-specific investments ( Dyer and Singh, 1998 ) and such investments are facilitated by the length of relation to protect such investments. While equity swapping is a formal way of cementing such relations, the informal safeguards of trust and reputation are often more effective in generating idiosyncratic relational rents for the simple reason that they cannot be copied by other dyads easily ( Dyer and Singh, 1998 ). A strong relation also helps in various contingencies like the need to reconfigure the outsourced process which is eminently possible when a process of the focal firm interacts with multiple other processes in myriad ways ( McIvor, 2008 ) and firms are more inclined to give other “second chances” instead of walking away from the contract ( Hoetker, 2005 ). The processes in this quadrant speak to many other processes and are thus likely to be involved in combinations of various kinds in the organization leading to possibilities of new products and commercial gains. Thus, apart from maintaining strong collaborative relationship for such processes ( Vitasek and Manrodt, 2012 ), the other challenge for the focal firm is able to recognize the various advancements and innovations related to these processes and integrate them in the organization. The challenge, as in Q2 is to have Absorptive Capacity when the external changes are rapid and unpredictable but this time the imperative is all the more severe for the outsourced process interacts with many other processes in the focal firm. In the R&D space, firms respond to such imperatives by participating in cooperative research and at the same time, also investing in in-house research in the same domain, not in hope of doing better than the collaborative effort but to maintain a level of understanding and expertise which would let them absorb the new knowledge when it is generated from the cooperative effort ( Cohen and Levinthal, 1990 ). Maintaining in-house capacity also serves to provide better control on quality ( Berggren and Bengtsson, 2004 ). With increasing customization being required from the supplier which such a deeply enmeshed process is expected to entail over time, plural governance is also seen as a risk mitigation strategy and though not very relevant in the context of relational contracting, also serving to avoid adverse selection and moral hazard ( Heide, 2003 ). 241 Framework for performing outsourcing capability For such processes, thus, the emphasis is on maintaining Absorptive Capacity by actively maintaining some capacity in-house in combination with the outsourcing arrangement ( Cohen and Levinthal, 1990 )and managing Relationship with the supplier to ensure that the softer aspects of the process interactions and informal communication are not abstracted away with the outsourcing decision ( Hendry, 1995 ). Download 329.89 Kb. Do'stlaringiz bilan baham: |
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