Genesis of the Thinking Behind The Utilisation Paradox
I have explained elsewhere that the thinking behind the software inventions that underpin Skillspeak was in the incubation process for a significant number of years. There were many indicators that the type of information needed to drive better use of intellectual resource, had never been gathered and thus made available. It was also difficult to have accountant-centric businesses recognise the true value of the available talent allowing better management of its development and especially its retention.
One of the strongest motivators of the need to harness the talent in a business and the associated insights required came through a work assignment in 1992. At that time, in my role at the multi-national organisation, it was my job to travel abroad, especially to North America and to Europe. My job was to visit the company’s software development centres in those places and sell them on the idea of outsourcing some of their systems development to our partner firms in Australia with superior development skills.
On one occasion, this had me visiting Research Triangle Park in Raleigh, North Carolina. This is not far from both Duke University and the home field of the Durham Bulls, the local Minor League Baseball Team made famous in the movie Bull Durham. I was scheduled to meet several software development directors over the next two days, but on this occasion, I had not cleared the reception desk when a passing executive recognised my Australian accent and summoned me post haste to her office. She explained that whereas I was seeing her the next day, what she wanted to tell me could not wait.
Once in her office, she pointed to a well-worn whiteboard. On the top left were the names of about 8 firms they used around the world as outsourcing options and on the top right, there was just one name. That name was a firm in Brisbane, Australia and she explained why they were differentiated on her board. Those on the left were the subject of regular review and some would be dropped for various reasons from time to time. The lone name from Australia was “never to be dropped”. She revealed that this was despite their hourly rate being almost double the highest of all the others.
Why was this? Well she went on to explain that this team in Brisbane not only delivered high quality code on time, as well as meeting their cost estimates, but they also critiqued the specifications allowing for a far more advanced piece of code delivered. This was because they were such specialists in their field, they were able to monitor changes in the market demand for certain features needed over time. They would then typically deliver these, often leaving the price at the same relatively low estimated figure.
What Did This Company Achieve?
Put simply, they avoided direct price competition with alternate suppliers. Notwithstanding the very high hourly rate charged, they retained the engagement based on the quality of the services delivered. Once this perception is achieved, it becomes almost impossible to over-charge. Most clients will pay the going rate if there is no doubt they are benefitting from having the services of the best9D. This is unique in the market. The premium value belongs to the best because there is only one of these in each situation.
How then does one reach this privileged position?
This can only be as a result of having the best people, best processes, best tools, best methods and best practice. This requires investment to attain and represents a belief in the people such that it is worth making time for them to remain at the top of their profession. It means fewer billable hours allowing for training and research. By recouping the cost of the development hours in the charge-out rate, the company can prosper without the threat of having some competitor under-cut them on price. It means a client would be very brave indeed to change suppliers with no guarantee the work product will not suffer as a result.
Where to for this Company?
Market leadership can assure a long period of excellent profits and the retention of staff accordingly. We know that they valued their people such that it involved them in business decisions which affected them. This allows the triple value that I believe will limit the risk of attrition E2??
- Are they paid better than the market norm for this type of work? A0Security
- Are they given assured opportunities for continuous development of skills? Growth
- Are they working mostly on challenging and fulfilling projects which sharpen their skills and make them even more valuable over time? A0Self-Actualisation
Recently, I decided I would try to track this organisation down and indeed found a link to their alumni. I learned first-hand how proud they were of their reputation and the feeling of making the ideals I outlined in The Utilisation Paradox a reality. They did not know I was aware of their international reputation nor did they see it as a paradox9D. They gave me insights into how the discovery of the benefits of their working arrangements affected each and every one of them and bonded them into a winning team. It is indeed a pity that many organisations will never see the truth so evident in this real life example. They will bat on at the direction of the bean counters in their business and burn out as they attempt to compete in a downward pressure price spiral.
Len NormanA0- Copyright Conquest ConsultingA0 April 2011