Everything You Need To Know About Strategy – A Baker’s Dozen Eternal Verities: Sourcing

By Tom Peters

8. Do you elaborate on and enhance Jerry G’s dictum by adding,“We subscribe to ‘Best Sourcing’—and only want to associate with the ‘best of the best.’”

I was described in public as a “radical” by a senior Japanese official, during a Summer 2004 conference in Nagano. (Actually, which I guess even amplifies the label, he was a Japanese-American, who spent much of his career in Silicon Valley.) I retorted sharply that I was no such animal! Alas, he’d been taking detailed notes during my presentation.“But didn’t you say you could readily imagine a $50 billion corporation, per- haps in pharmaceuticals, which had only two full-time employees—you and one other. And ‘outsourced’ everything else?”Then he added (see Number 3 above) that “one of the two would, of course, be a woman.” I agreed he’d taken accurate notes—but still denied the radical label. I waffled a little, and allowed as how I didn’t expect to see anything so extreme in the near future—but the concept made perfect sense to me.

And it does.
(Particularly the bit about the woman.)

I’m cribbing here from British management guru Charles Handy,who said years ago,“Organizations will still be critically important in the world, but as ‘organizers’, not ‘employers.’” The conference I was attending was aClient get-together, sponsored by India’s Infosys—the most exciting, farsighted company I’ve come across in years and years. Thus I could imagine Infosys doing our IS/IT. The best-most inte resting of the biotechs would do our R&D. UPS would handle any and all supply chain issues. Best of breed specialists would also perform clinical trials. Omnicom would execute the entire marketing chore on a turn key basis—and perhaps we’d contract with one of “old pharm a” to do the selling (though I believe that specialist, Internet- based“sales”firms may usurp Big Pharma’s sales role, too). And on. And on. ( And on.) Finally, my female partner and I would cont ra ct with a pro j e ct management consultancy to orchestrate the overall network.

Economist writers John Micklethwait and Adrian Wooldridge also beat me to this piece of “radical” turf in their book The Company. They imagined tomorrow’s Ford Motor Company as simply a “vehicle brand owner” which would “design, engineer, and market cars, but not actually make them.” My punch line in the Infosys presentation had been: “Not ‘out sourcing.’ Not ‘off shoring.’ Not ‘near shoring.’ Not ‘in sourcing.’ But …‘Best Sourcing.’”That is, while I acknowledge the increasingly nasty politics of “off shoring,” I believe it miscasts the long-term economic excellence debate. Companies that attempt to be “best at everything” are doomed. I further believe that every unit in the tradi- tional firm (logistics, IS/IT, HR, finance, R&D, marketing, sales, etc.) must offer proof positive that it is, to mimic Mr. Garcia, “the only ones who do what we do”—or at least equivalent to the best of the best.

Meanwhile, my partner at Lean Staffed Pharmaceuticals Inc. and I will be photographed in the subcontracted Annual Report seated behind a desk over which one can see a gilt-framed picture of Forrest Gump, with his immortal quote in bold lettering at the bottom: “DON’T OWN NOTHIN’ IF YOU CAN HELP IT. IF YOU CAN, RENT YOUR SHOES.”