Sourcing Selection: A better way and the Synaptic shift

Since day one, we here at CAPTO have talked about how outsourcing is broken. The way companies have gone about obtaining additional help via outside resources has failed on a number of levels. This failure, which is due to universal flaws, typically results in reduced value, underperforming economics, lack of innovation, increased risk, and compromised service levels.

It’s one thing to identify a problem and even use a PowerPoint slide to sum it up, but it’s quite another to hone in on how to remedy the situation. 

The significant problems we face cannot be solved at the same level of thinking we were at when we created them.
— Albert Einstein

So how can you get to the point where sourcing arrangements will reliably deliver measurable value and drive the types of innovation that will transform how work is performed?

CAPTO came up with a way that really shifts traditional thinking about how sourcing deals should be executed—especially in how partners should be selected. We refer to it as SYNAPTIC, a catch-all term for the combination of tools, methodology, and know-how that we’ve used and refined over the years in numerous real-world engagements with Fortune 500 companies and private equity firms.

For example, early in the sourcing process we do an extensive assessment [link to Assessment Insight] that ensures we are focused on solving the real problems and not just alleviating the symptoms. Then, as we move into selection phase, there are several “shifts” worth noting:

  • Thinking about “candidate-partners,” not “vendors”
  • Harvesting the eco-system for the best ideas
  • Requiring a qualifications questionnaire before the RFI
  • Obtaining better info in for better results out

Candidate Partners Not Vendors

The “shift” here is in thinking of the service provider as a partner rather than a vendor, of looking for someone to work collaboratively rather than someone to provide services on a transactional basis. This change in thinking ensures that both parties are working toward common, long-term business goals.

Early on in the sourcing process there may be 18–20 service providers on the radar. What we do, as part of the SYNAPTIC shift, is make it clear right away that we are seeking a partner who comes to the table with innovative ideas and can demonstrate that they have experience working collaboratively with their clients, not merely a vendor who sells services. This one shift can reduce those 18–20 service providers down to a handful.

Harvesting the Eco-System

We believe in Joy’s Law - the adage attributed to Bill Joy, co-founder of Sun Microsystems, that “No matter who you are, most of the smartest people work for someone else”. So if you want to solve a particular problem, you need to track down those smart people and work collaboratively with them. This is a win-win for both the client and the partner. The client wins because they want to hear what the partner has to say. They’ve reached out because they recognize that they don’t know how to get where they want to go. The partner wins because they get to focus on coming up with solutions and approaches without constraining themselves. It’s that simple.

The SYNAPTIC environment I’m describing is refreshing for both sides. And for anyone who seeks to create synergy, this is really how it happens—by creating an environment where smart people collaborate to come up with innovative approaches to accomplish the stated objectives.  It is our job to help you find those partners; establish a relationship with them using tools and techniques that that drive value for your company.

Qualifications Questionnaire First, Then RFI

But how do you quickly identify these “smart people / partners”?

In a traditional sourcing provider search, a company will issue a request for information (RFI) that vendors fill out, providing a canned set of answers to a bunch of standardized questions. To us, it was apparent that this was just not an effective way of identifying “smart people / partners.”

Stepping back and thinking about the selection process, we realized that we had to come up with a way to extract truly meaningful information from those interested in partnering with our client. With that in mind, we invented the qualifications questionnaire and injected it into the selection process. Unlike traditional questionnaires that only seek to elicit information from the candidates, our candidate questionnaire is a two-way communications tool, providing as much information about the client as we seek to acquire from the candidate.

In the first few pages of the questionnaire we provide information about the client and the potential engagement. We also share the findings from our earlier sourcing readiness assessment work where we identified the areas that the sourcing initiative is designed to improve. We ask the candidates questions about themselves in the following areas:

  • Company overview (2 questions)
  • Technical competencies (3 questions)
  • Improvement initiatives and competencies (3–4 questions)
  • Progressive, Outcomes-based engagement (2 questions)
  • Industry experience (3 questions)

In addition, we ask them to explain the assumptions they used in preparing the response and to describe any issues or concerns they may have with the approach we describe.

The timeframe for turning around the questionnaire is pretty quick—one week. On a recent project, we started with about twenty candidate partners. Five opted out before the questionnaire was filled out. Based on the responses, eight candidates made the cut and were invited to present their responses in an interactive, 60–90 minute session with the client and CAPTO in attendance.

Out of that process, the number was reduced further to just three or four. Those were the ones who are asked to respond to the RFI.

Better Info In / Better Results Out

From our experience we know that there are certain intangibles, different in each engagement, that are key to a successful client-partner relationship. We use an “Active RFI” with “SME Sessions” to serve as a focal point for identifying and evaluating these intangible factors.

In brief, the RFI doesn’t end with a written response. The “Active RFI” is an interactive process that plays out over several weeks or months, during which we determine not only which candidate has the best mix of capabilities, but also which one will work most collaboratively and productively with the client. The subject-matter expert (SME) sessions are where the client briefs the candidate partners on their business and environment (e.g., how they work, what the current processes are like, what metrics they currently use).

While this data dump is going on, we observe the candidates and then score them on factors like:

  • Is the candidate asking good questions?
  • Does the candidate seem to know what they are doing?
  • Do they work together as a team, or does one person dominate the conversation?
  • Is the candidate developing a rapport with the client?

We point out what we see as the pros and cons of each candidate, and with the client we rank the candidate partners. This scoring winnows the pool down further.

Worth noting is that the selection process can take up to four months, with the bulk of the time spent here, in the Active RFI segment, where CAPTO’s role shifts from the single-point-of-contact and gatekeeper to that of matchmaker. 

A Shift for the Better…

We will address different aspects of the SYNAPTIC sourcing process in other Insight posts. The point of these posts is to show that there has to be a shift in thinking—what we refer to as the SYNAPTIC Shift—in order to gather the best information and make the best decisions regarding sourcing, specifically how to select the ideal partner.

Want to learn more about our SYNAPTIC sourcing process? Click here.