This is part five of a 10-part series designed to help you transform your company, gain a competitive advantage, and sustain long-term business success through staffing. Here’s what we’ve covered so far:
- Part 1: Are You Ready for the Future of Business
- Part 2: The Deadly Business Mistake You’re Probably Blind to
- Part 3: The Dangers of an Outdated Labor Blueprint
- Part 4: The Pros and Cons of Temporary Staffing
Today, we’ll get to the heart of why so many companies are failing to compete in today’s global economy and how you can start pursuing a more successful business blueprint today.
I recently spoke with a friend of mine who is an executive with a successful Tier 1 international automotive supplier. At each of the eight plants he oversees, the normal business model is in place: manufacturing, finance, engineering, IT, administration, purchasing, quality, logistics, and HR.
His plants were doing a great job of assembling products for his customers, but there was one major issue—all of them focused on non-core work, and because the product was made elsewhere and then shipped to the plants for final assembly, the incredible overhead he had maintained for years was adding no value to the product.
His predicament brought up a number of questions in me: Why do so many companies fail to shift away from dated, inefficient business models? Why are so many executives reluctant to focus on the activities that would differentiate their companies and make them more competitive? Why are today’s leaders failing to engage in new, strategic thinking?
I think the answers to these important questions all trace back to four main roadblocks:
It Seems Easier:For a number of companies, doing the same thing year after year—despite a steady decline in the marketplace—is better than risking the unknown.
They Don’t Know What They Don’t Know:Executives fail to question their own business models because they are unaware of other options.
Perceived Risk:Some leaders are worried that, if sweeping change occurred, their position would be affected
They’re Busy:Many leaders continue to follow their old business blueprint because their packed schedules don’t afford them the time to design a new one. They can’t squeeze in another project, especially one that would necessitate overcoming the tremendous inertia of their company’s old blueprint.
So, what is the answer? How can today’s business leaders shift away from their dated, inefficient business models and compete in today’s global economy?
I believe it starts with a strategic approach to the workforce—a model that helps leaders focus all their time, resources, and creative efforts on their core activities by outsourcing their non-core activities to third parties that focus on them as their core.
Download The Core/Noncore Walkthrough Worksheet
To tailor such a model to your particular needs, you must first identify and classify all the areas in your organization. Begin the process by walking the floors of your company and jotting down the different jobs, departments, and functions represented there. When you’ve completed your plant tour, move down your list and mark off your core business functions by answering the following questions:
- Which activities add unique value to your product or service and thereby differentiate you from your competitors?
- What are you known for?
- What are your customers willing to pay you for?
- If you had only one company dollar to spend in the next five years, which activities would you invest in to become more competitive?
As you answer the questions above, be sure to turn to your colleagues for their feedback and insights, and fine-tune your list. I’ve found that when executives finish identifying all their core functions for the first time, they are often amazed by the low total. In fact, at an average manufacturing facility, as few as 50 percent of the jobs and processes might belong in this category.
The remaining activities on your walk-through list are probably non-core and fall into one of two subcategories: critical or noncritical.
The non-core noncritical subcategory includes business activities that have little to do with the business itself but are necessary in some way. The non-core critical subcategory contains the remaining non-core jobs, those still handled in most cases by full-time employees, such as HR, payroll, accounting, IT, and maintenance.
Here’s a good visual breakdown:
Most of the items in both non-core areas are fair game for management by third parties that focus on them as their core.
As you’ll see in part six, it’s the outsourcing of the non-core critical activities that offer the best opportunities for securing a stronghold in the marketplace.