This month’s column pays a tribute to Elinor Ostrom, who shared the Nobel Prize award in economic science in 2009 with Oliver Williamson. Ostrom, who died at age 78 on June 12, was cited by the Nobel Committee for “her analysis of economic governance, especially the commons,” a term that refers to resources that are owned or shared in common among communities.
Too often people and businesses are locked into either destructive I-win-you-lose relationships, or what I often call a “ping pong” match where you are in a so-so relationship but either don’t know there is a better way or don’t have the courage to get out because things are not actually bad.
Luckily, things are changing and people are starting to wake up to the fact that win-win approaches are real – and offer real advantage and are worth the extra effort.
If you follow this column you know I am a fan of some of the behavioral and transaction cost economists, including John Nash and Oliver Williamson. This month I am adding Dan Ariely to my list of big thinkers.
Outsourcing involves major changes in your business model, your teams, your approach to core and non-core business lines and cultural mindsets.
That aspect of the outsource decision – change – is inherently psychological because when you come right down to it, it’s always about your people, their relationships and attitudes, and the way they adjust to new thinking and new patterns that will make or break an outsourcing partnership.
This article originally appeared in Outsource Magazine Issue #27 Spring 2012
Deciding to outsource demands a thorough make/buy analysis. However, far too many companies take the concept of make-or-buy as black and white. Dr. Oliver E. Williamson challenged the traditional make/buy decision process with his Nobel Prize-winning work in the area of transaction cost economics. Williamson received the Nobel Prize in 2009.
This month’s column remembers Julian L. Simon, a PhD business economist. Simon is famous (or maybe infamous) for being ‘The Doomslayer’ because he devoted his life to counter the purveyors of doom and gloom who bemoan global deterioration from overpopulation and resource drains.
By design this column has, for the most part, examined the theories and research of academic and economic luminaries that have helped form the basis of modern outsourcing and my own research and development efforts in the realm of collaborative outsourcing.
The (r)evolution in the outsourcing industry is happening. Innovative win-win outsourcing relationships are replacing traditional cost-focused procurement methods. The University of Tennessee calls these innovative approaches “Vested Outsourcing,” because the company and the service provider work together to align the success of the service provider with the achievement of success for the client’s business. Each party employs its core competencies to accomplish what each could not achieve on its own.
I hope you have enjoyed the last columns focusing on the “economics of outsourcing.” I promised to explore other scholars and how we can learn from their leading work. For the next several columns I’ll be featuring the most influential “Big Thinker” psychologists that have directly or indirectly influenced the development of modern outsourcing.
My last two columns on Umair Haque and Joseph Stiglitz have shifted the focus a bit to the adaptations that global businesses face as more and more challenges to the traditional ideas surrounding capitalism and globalisation emerge.