Marketing Online

Your company can be great at only a few things. For the other things,
hire those who can do these things better. Outsourcing originally applied
only to the company’s noncore activities, such as office cleaning
and landscaping. But today’s mantra is that a company should outsource
everything that other parties can do better or more cheaply.
Outsourcers are able to offer lower costs and better results because of
their scale and specialization. Thus Nike decided not to manufacture
its own shoes; Nike hires Asian firms that can produce shoes more
cheaply and better. Companies need to know which marketing activities to keep inhouse
versus outsourcing them. They usually outsource advertising
services and marketing research. Some are now outsourcing direct
mail services and telemarketing. A few are outsourcing new product development and a sales force. I know of companies that have outsourced
their entire marketing department.
A company hired me to help management decide what to outsource.
After examining all of their activities, I delivered a report to
the board. “Gentlemen, you should outsource everything. You are
not good at anything.” They were stunned. “Are you saying that we
should go out of business?” “No,” I said. “I am telling you how to
make more money. Your costs will go way down. The only competence
you need is to manage outsourcers.” Essentially I was proposing
that they become a virtual organization.
Yet a company may go too far in outsourcing. What makes a
great company is that it has created a set of core competencies that
link ingeniously and would be difficult to imitate in total. This is
what companies such as IKEA, Wal-Mart, and Southwestern Airlines
have done. They have outsourced some activities, but what
makes these companies great is they have reserved for themselves
an interrelated set of competencies and capabilities that defy ready
imitation.