I have never been a fan of outsourcing. In fact, I was even quoted saying as much in a 2004 BusinessWeek article on the subject. While I still believe a company should never outsource “mission critical” components of their business, I recently discovered areas in our business I believed were core competencies actually were not. And this got me thinking about outsourcing differently.
A company’s core competencies define what the business is and serve as its competitive weaponry. A business’ core competencies should remain within the business so they can be protected, managed, cultivated and enhanced. Cogent Road is a software manufacturing company – we design, build and distribute three enterprise software applications. Naturally I assumed that software coding was one of our core competencies – and thus off limits when it came to outsourcing.
Now this may be a blinding flash of the obvious to everyone else – but I only recently discovered that software coding was not among Cogent Road’s core competencies. It happened during a recent Focused 40 session in which my partner and I were unpacking Cogent Road’s competitive advantages. What was Cogent Road, what business were we in and what made us competitive?
We came up with the following list:
Our software engineering methodology. Cogent Road uses a software development model called Extreme Programming, developed by Kent Beck in 1997. Over the years we have customized the XP process for our type of work at Cogent Road. We all speak in shorthand which helps get large projects completed quickly and under budget – something not easily duplicated by competitors.
Our product ideation methodology. My partner and I have a natural ability to think abstractly – which is good and bad. While no one at the company is going to ask Alan or I to plan the company’s Christmas party (in our minds it would be great, but in reality we’d neglect to book the restaurant) – we easily come up with scores of software features that have never before existed. The result is that Cogent Road’s applications are full of beneficial tools our clients can’t get anywhere else. Again, a significant competitive advantage.
Our customer service commitment. A significant portion of our software is never even used by our clients. In order to better serve our clients, Cogent Road regularly devotes significant R&D resources to developing automation and back-end tools that route, manage and distribute customer service orders and requests. (You can see our latest example here). While it’s true spend time (never enough!) training our account managers – our service commitment transcends the individual to create an overall positive experience with our software, even if the client never contacts us. This too is difficult to duplicate.
On a side note, during this process we made the painful discovery that our sales process was not a core competency. It actually should be, but we have some work to do.
What else did we learn? Writing software code was not a core competency at Cogent Road. This meant that if we found qualified, highly competent outsourced partners – we could plug them in to specific areas of our engineering process. In the same way an architect can use any number of building contractors to assemble her blueprints, Cogent Road can use outsourced programmers.
Still, we are starting slowly with one specific highly compartmentalized project. However, so far I am very pleased with the speed and quality of the work. If the project is successful, and I have every reason to believe it will be, Cogent Road will likely incorporate more outsourced coders into the mix.
I’ll keep you posted.
Posted by Caped Crusader 
