Seeking efficiencies

Biutou Doumbia lives in a tiny village in the West African country of Mali. Biutou (sounds like Bee-oo-too) and her family live in poverty, very close to the line between survival and, well, you know.

Oh, one more thing: Biutou is a small business owner. She makes and sells peanut butter.

In Mali, peanut butter is made the same way African women have made other staples for millennia: by grinding the seeds on a rock with a large wooden pestle.

You might say that Biutou’s operation is vertically integrated: She grows the peanuts, and then manufactures, sells, and distributes her product.

Over two centuries ago, in The Wealth Of Nations, Adam Smith explained how markets are made by the division of labor. And free markets created capitalism, which Ayn Rand called, “the only system geared to the life of a rational being.”

Biutou doesn’t know Smith or Rand from a warthog - she’s illiterate. But she is one of Rand’s rational beings. And as such, she recognized the efficiencies of division of labor when a diesel-powered grinder/blender was made available.

Now, for 25¢ and a 10-minute wait, Biutou’s 15 pounds of peanuts turn into better peanut butter than she could make pounding all day with a pestle.

One of the things every business must do today is focus on core competencies–what you do that makes your business valuable to customers. Everything else, theoretically, can be outsourced to specialists in your non-core activity.

Take a look at your own operation to see how you can find efficiencies by asking this question: Must this task be done in-house?

Your answer will be found in the answers to other questions like these:

1. How much control do we lose, and can we live with it?

2. What impact will our decision have on customers?

Remember, any decision to outsource–or not–should be driven by the desire to seek efficiencies and improve customer service.

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