Tag Archive for 'strategy'

Are you asking the Outsourcing Power Question?

Biutou Doumbia lives in a tiny village in Mali, in western Africa. She 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, as reported in a Wall Street Journal article, peanut butter is made the same way African women have made other staples for millennia: by grinding the seeds on a rock with a wooden pestle. You might say Biutou’s operation is vertically integrated: She grows the peanuts, 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 division-of-labor efficiencies offered by a diesel-powered grinder/blender when it became available. Now for 25¢ and a 10-minute wait, the sack of peanuts Biutou carries to the central grinding location turn into better peanut butter than she could make pounding all day with a pestle.

So Biutou now practices outsourcing, a division of labor process which is the employment of contractors to create efficiencies. Outsourcing is a valid business strategy, as is its opposite – you guessed it – insourcing, the process of removing vendor layers, usually to get closer to customers.

These two strategies are as different as chocolate and vanilla; but, like ice cream, choosing one doesn’t mean the other is wrong, just different. When Biutou practiced insourcing she didn’t have a choice. You have many choices; but are you choosing wisely?

One of the things every 21st century small business must do is focus on core competencies: what you do that makes your business valuable to customers. Everything else, theoretically, can be performed by a specialist in your non-core activity.

Take a look at your own operation to see if – like Biutou – you can find efficiencies and recover time through outsourcing. Ask yourself and your staff Blasingame’s Outsourcing Power Question: Must this task be done in-house? The answer will come from these three questions:

• How much control do we lose, and can we live with it?
• What impact will our decision have on customers?
• How much of not using outsourcing is about ego?

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

Write this on a rock … Blasingame’s Outsourcing Power Question: Must this task be done in-house?

A prediction becomes reality

Last week I compared the evolution of websites to that of social media adoption. I proposed that two things were likely in the future for small businesses: 1) They may be more likely to have a social media strategy than have a website; 2) More and more would employ both a website and social media to cross-collateralize content and e-commerce capability.

This line of thinking got me wondering how you’re using these two customer-connecting tools right now. So in our poll question last week we made this request: “Please choose one of these four options for how you connect with customers online.” Frankly, the answers surprised me.

Almost one-in-five respondents said, “We have a website for our business.” Of course, this would be way too low for this answer, except that we also offered this choice, “We do both - website and social media.” Those who chose this one represented more than 70%.

A very small percentage of our sample said they used social media as the sole method of connecting with customers online. In time, I believe this will change. And thankfully, those who admitted that they didn’t connect with customers online at all were also a small number of our respondents.

The good news I’m taking away from our responses this week is that my #2 prediction in the first paragraph is coming to pass sooner than I thought. Small businesses increasingly understand that in order to be relevant in the 2nd decade of the 21st century, you have to be prepared to use all methods of connecting with customers, the traditional and the new.

Recently on my radio show, The Small Business Advocate, I talked more about the connections between social media and websites, now and in the future. Take a few minutes to listen and tell us how you use social media in your efforts to connect with customers.

Comparing the evolution of websites and social media

What is the relationship between social media and websites?

Websites and social media will work together in the future




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