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Outsourcing: Persistent Systems Interview (Part 11)

Posted on Wednesday, Jun 9th 2010

By guest author Tony Scott

Outsourcing and the Mind of the CEO

Tony: Anand, how have you changed the way you have gone about marketing and selling your services over the past few years? Have you changed your approach since the downturn?

Anand: After the stock market and the economy went down, from January 2009 until about June or July 2009, I met 100 to 150 CEOs and just asked them random questions. The market slowdown gave us this opportunity so I said, OK, let’s go find out what CEOs are thinking. I learned a lot of different things, but I will share with you how CEOs think in three key points that I have distilled from what I heard from them.

One point that I found that CEOs are very concerned about is management bandwidth – in fact, that’s probably their biggest concern. So they focus on a few things, and for everything else they want someone else to take care of it – and they want that person to take care of it completely. A CEO’s way of thinking is very different from the VP of engineering. The VP of engineering is micromanaging us. If I go to a CEO and try to make a presentation to him or her about the engineering details of what I am doing, he or she is not interested at all. The CEO would much rather know that I had complete responsibility for what I am doing. He or she could not care less if the VP of engineering existed, very honestly. But CEOs are very interested in ensuring that their business is being taken care of completely so they doesn’t have to worry about whether or not the team has the management bandwidth to handle it. Why companies outsource is because of this, actually. It’s not about the money.

Tony: A focus on core issues rather than wasting management bandwidth on context.

Anand: Correct. So management bandwidth is this number one factor that most CEOs are struggling with, and they very concerned about the next levels’ management bandwidth as well. So then their question is, “How do I trust you?  If I give it to you, how do I trust that you will deliver?” That’s why there is a business model change happening in terms of our saying, “OK, how do I have share risk, how do I put skin in the game to make that happen?”

The second observation I made was  that CEOs are more growth oriented than cost oriented. So if I go to a meeting and convince a CEO that I can improve the top line, that CEO is going to be very interested in listening to me. On the other hand, the CEO is not nearly as interested in listening to me on the cost side. So if I can go to a meeting and talk t about how they can use technology to sell better, how they can use technology to interact better with their customers – then they are very interested. Or if I can say, what are you looking at regarding entering other markets, India, China, and so forth – then that is interesting to them. I find that if I get a meeting with a CEO, and if I am able to convince him or her of some growth opportunities, we are going to have a very nice conversation. CEOs are very willing to follow up on those opportunities, and I get real business out of it at a very different price point than I would get if I were to simply go after the cost part of the equation. We have been having some good success using this approach.

The third thing we found is that CEOs are very interested in solving customers’ problems, and they are more relationship oriented rather than transaction oriented. When they go to a customer meeting, they are really interested in solving their customer’s problem. They find that when they are trying to solve the customer’s problem, they may not have all the solutions themselves, and therefore, they are open to partnerships.

I used to think that if I work with a customer, I’m really working for that customer. Now I have found that it is very useful to go to a company and ask that company what it is trying to do. I am very happy to introduce them to other people whom I work with, and I’m very willing to say, “I don’t do this, but you should talk to these guys. I will connect you to them and maybe they can solve your problem, or maybe we can solve it together.

This segment is part 11 in the series : Outsourcing: Persistent Systems Interview
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