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Sunday, December 12, 2010

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’.

Sunday, December 5, 2010

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.

Sunday, November 28, 2010

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’.

Sunday, November 21, 2010

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’.

Sunday, November 14, 2010

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.

Sunday, November 7, 2010

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.