Letter W: If you can get really good at destroying your own Wrong ideas, that is a great gift – Charles Munger

This is a critical success factor in sourcing. Often the contract will contain a clause which, over the life-cycle of the relationship, will significantly disadvantage one side. This is unhealthy in any relationship and so it is important that both parties are prepared to make changes to maintain balance and fairness.


This aphorism is linked to ‘A, B, and G’.

Letter V: Never confuse a clear View with a short distance – Paul Saffo

This is the aphorism I use to describe IT projects. We know the outcome, the budget and the timeline. Yet, in IT there is a chronic inability to reliability meets these criteria.

IT Projects and the Wise CxO
For IT projects expect to pay 3/4 more, expect to wait twice a long, and expect to get only 2/3 of what you asked for.

But wait there’s more!
If the project does something non-standard then ensure you have provisioned Y-o-Y maintenance costs in the business case.

Letter U: When two men in business always agree one of them is Unnecessary - Wrigley Jr

We have seen many high profile firms in distress because they have violated Wrigley’s aphorism. The principle has been around for many years in many guises. I have supplied two of my favourites below.


‘A good manager doesn't try to eliminate conflict; he tries to keep it from wasting the energies of his people. If you're the boss and your people fight you openly when they think that you are wrong -- that's healthy’ Robert Townsend

‘The things we fear most in organizations -- fluctuations, disturbances, imbalances -- are the primary sources of creativity’ Margaret J Wheatley.

This aphorism is linked to ‘G’.

Letter T: Work expands so as to fill the Time available for its completion - Parkinson's Law

 In sourcing relationships both teams seem compelled to ‘do stuff’. Always qualify any work against aphorism ‘A’, and mindful of ‘D’. In sourcing relationships contract clauses around the account team staffing for both provider and customer will, over the relationship life-cycle, result in many idle hands. The aphorism is linked to ‘L’. It is better to change the contract clauses and re-align the teams within both parties to ensure value is maximised.


Related to Parkinson’s Law is, What may be done at any time will be done at no time’.

Letter S: The Simple test: results are true and fair versus comply with the rules - Unknown

This is the second aphorism pertaining to the contract. A healthy sourcing relationship constantly applies the Simple Test. Avoid slavish adherence to a contract clause. It is much better to solve the business problem first and then spend the time to amend/delete the contract clause. It is easiest to behave in this manner if there is adherence to principle rather than rules based standards.

The Twin Evils of Sourcing: paying for nothing and paying twice for the same thing.
All customers want to avoid the twin evils of sourcing. If there is a contract clause which over the lifecycle of the relationship means that the customer is paying for nothing, spend the time to make the contract change to fix this. One principle of the service business is that there is a tipping point for customer loyalty. Once the tipping point has been exceeded it does not matter what the next offer is, the customer will not work with that provider and vice versa.

Letter R: Only performance is Reality – Harold Geneen

In sourcing management too often there are complaints about the lack of performance. From the customer an example is, ‘the provider is just doing the bare minimum and I thought we had a partner who would truly help our business’. From the provider an example is ‘the customer doesn’t know what they want, they just want everything but are not prepared to pay for it’. Part of reason such complaints abound is that we have no clear explicit measure of performance. We use SLAs as our proxy for value.


This aphorism is linked to ‘O’. Ensure you can clearly state the financial benefit of the sourcing relationship and moreover ensure that you regularly market test this value. That is the first step.

Letter Q: The wisdom of the wise and the experience of the ages is preserved into perpetuity by a nation's proverbs, fables, folk sayings and Quotations - William Feather

Enough said.

Letter P: Pay for Performance not Presence - Zibert

This aphorism ties in with A, D, E, and G. It is critical to ensure that in your sourcing contract you have a mechanism which has an incentive for the provider to perform, not simply to go through the motions. Equally as important is to ensure you have a Performance Management system for your staff which is aligned to the value extracted from providers.

Letter O: The Organisational Rosetta stone is finance - Zibert

The bottom line here is that if the sourcing deal does not stack up financially it does not matter what other benefits are perceived the relationship will not survive. A sourcing relationship must have a clear and transparent financial benefit. This is the first law of sourcing which was articulated by Coase.


Coase’s Law
Coase's Law states that a company will purchase goods and services from suppliers (that is, outsource work) if the suppliers' costs, plus the costs of completing such transactions, are less than the costs of getting identical work produced by a company's own employees.

This aphorism must be tempered by the common law of business balance.

The Common Law of Business Balance from John Ruskin.
It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money -- that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot -- it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.

This is a classic quote on the possible folly of automatically choosing low cost as the best way to make a purchase decision. It appeals to those who believe, or who want to persuade others to believe, that price is a possible indicator of quality.

This aphorism is linked to ‘R’.

Letter N: Nothing fails like success – Gerald Nachman

In sourcing this is a hidden killer. The best sourcing relationships should be invisible to the customer. The more successful the sourcing relationship the more invisible it becomes. This is also seen in sourcing governance. In successful sourcing relationships you often get the customer and provider saying, ‘Well, everything is going well, so I don’t see the point in holding these meetings any longer’. What should happen is that the focus must change from a typically rear-view transactional approach to a proactive strategic approach. This change in focus has proven extremely difficult for both providers and customers alike to manage.

In sourcing it is the successful relationships which are often the target for cost cutting by new C-level executives. It is human nature to notice pain, and unfortunately when no pain is obvious it is assumed there can be further cost savings. Try to avoid this trap. Placing your firm into a strategic coma is not a wise business decision.

This maxim is related to the Peter Principle, which says: "In a hierarchy, every employee tends to rise to his level of incompetence."

This aphorism is linked to ‘I’.

Letter M: The optimum committee has no Members - Augustine’s Law #31

In this millennium a credible sourcing management alphabet must contain an explicit aphorism on governance. Sourcing governance has only 3 elements; People- the right number and type; Processes- a comprehensive set; and Tools – meeting structure. collaboration site, and minutes. Good sourcing governance ensures that the transactional part of the relationship (right invoice, SLAs met, projects on track, etc) is completed with the utmost discipline to ensure resources have more time to devote to innovation and other proactive activities.

Very few have made this leap successfully.

Letter L: The Letter of the Law brings death, but the spirit brings life - Corinthians (2 Cor 3:6)

The contract is the summon bonnum for an effective sourcing relationship. It is the Rule Book. Too often I hear that the best relationship is one where the contract is signed and then put into a draw and never referred to again. This is a delusion for both the provider and customer. The best relationships are those that have a contract which is aligned with the strategy of the firm. As the firm’s strategy changes over time one must therefore expect to change the contract to maintain the synchronicity. The healthiest sourcing relationships constantly amend/delete contract clauses to make them clearer to both parties. This is a natural and healthy reflection of a good and mature relationship.


“How successful would you be at football if you didn’t know the rules of the game?”
Sourcing is a commercial relationship. The rules of the relationship are detailed in the contract.

This aphorism is linked to ‘S’.

Letter K: Ignorance more frequently begets confidence than does Knowledge – Charles Darwin

IT tends to be the playground of the young. Partly this reflects the tremendous rate of change in the IT environment. One of the side-effects of this is that there is a predilection to jumping in and testing the depth of the water with your head. Not a wise move.


This aphorism is linked to ‘B’.

Letter J: No methodology can substitute for good Judgement - McKinsey

The beauty of this aphorism lies in its author. In IT Management there exist a few methodologies, such as ITIL, COBIT, and CMM. It is important to understand what is critical to your firm’s success and how the methodology can best support or strengthen this. Slavishly or religiously applying a methodology for its own sake is fraught with problems. The biggest one being IT yet again violating aphorisms A and D.

Letter I: If you can't measure it you can't manage it - Unknown

In the second generation of sourcing, measurement was seen as the panacea. Three simple nouns helped to provide more credibility to sourcing management, Service Level Agreements (SLAs).


SLA riddle
The SLA riddle is that invariably the providers meet and exceed all their contracted SLAs yet the customer remains dissatisfied. In other words there is a low correlation between SLA performance and customer satisfaction.

The rule here is to simply measure what matters and make the move from technology centric metrics (server availability) to business valued metrics (regulatory compliance, revenue/cost per customer, time to money)

This aphorism is linked to ‘E’.

Letter H: Happiness is when what you think, what you say and what you do are in harmony - Mahatma Gandhi

Another way of stating this aphorism is, ‘say what you think and do what you say’. Often there are clear problems in the design of the sourcing relationship which can be easily repaired. But invariably the people who see the problem do not have the authority to fix it. This is also more prevalent in the IT function where accountability and responsibility are often divorced. Set a mantra to fix at least one relationship element each month.


This aphorism is linked to ‘D’.

Letter G: Managers Get the behaviours they deserve – Chris Anderson

Management has become somewhat lost. The traditional rules for effective management are becoming increasingly redundant as a result of globalisation, mobile workforce (remote workers), collaboration tools (Web 2.0), and the increasing importance of work-life balance. Managers must start to better manage the new workforce of this millennium. It is not surprising that in IT the main complaint is finding and retaining great staff. Make certain that as a manager you have the right and effective performance management system in place. Otherwise, go home.

The story of the Vasa is recommended.

This aphorism is linked to ‘P.

Letter F: Fail to plan, plan to fail - Unknown

It is critical to effectively plan for all stages of the sourcing life-cycle, whether you choose a 6 or 7 stage model. Failure to plan effectively will attenuate the value sought and realised.

This aphorism is linked to ‘T’.

Letter E: Disorder and Entropy in an unmeasured or unmonitored system will always increase - Aron

This is one of the great modern aphorisms for management. In sourcing we need to remain vigilant to measure the critical few. We must in IT sourcing make the leap from technology metrics (server availability, capacity) to business metrics (time to money, regulatory compliance)


This aphorism is linked to ‘I’.

Letter D: Do the right thing, and Do it right - Unknown

One of the difficulties is knowing what are the ‘right things’. In sourcing we don’t even have a universally agreed business model against which to assess right from wrong.

‘The easiest outcome to achieve in outsourcing is failure’.
This doesn’t take any hard work or brains. To understand what are the ‘right things’, I use Domberger’s dimensions of value for contracting - Financial Benefit, Market Discipline, Flexibility and Specialisation. Customer Satisfaction is a dependent variable. See below for the Sourcing Value Compass.

This aphorism is linked to ‘J’.

Letter C: Change has no constituency – Jack Welsh

In sourcing this is arguably the most important aphorism. Sourcing is a change program and therefore impacts the power structures within the firm. One must apply Machiavellian principles and insights to best manage its implementation and continued success.

This aphorism is linked to ‘N,V and W’.

Letter B: Buyer is always right, and always right the buyer - Unknown

Particularly from a provider perspective this aphorism gets lost. The provider should always understand that the customer’s level of maturity might not equal that of the provider. The onus is on the provider to clearly point out the limitations/issues with customer decisions. This is part of the value they expect from providers. This aphorism is linked to ‘D’.

Avoid the Joker!
When in dispute, the customer invariably produces the proverbial Joker - claiming that the provider is the expert and sourcing is their core business. So if the provider knew of the problem why didn’t they bring it to the attention of the buyer.

Letter A: Never confuse movement with Action - Ernest Hemingway

In IT there is a prediliction for doing stuff without really knowing its value. This aphorism is linked to 'D'

The Hair In the Printer
A C-level executive was printing out their response to a tender due today. Halfway through the printing the printer broke down. the company had just outsourced IT support and so the exec called the Service Desk and logged a call. The technician came out to the site within the Service Level and started checking the printer. After two hours the technician yelled out. 'I've found the problem. There's a hair in the printer!' By this time the exec was frantic because the deadline for the tender was now less than one hour away. Both the exec and the techo did the right things, but the techo missed the point, vis; Print out the tender for submission today. What the techo should have done was to immediately re-direct the printout to another printer. The techo could have then taken the time to fix the printer without impacting the business.