Attention As An Asset In Outsourcing
SPaMCAST Version
Thomas M. Cagley Jr.
Organizations manage many assets; some tangible such as people, buildings and hardware and their processes, and some that are intangible such as knowledge, goodwill and attention. The process of outsourcing transfers many tangible and intangible assets from one organization to another on a contractual basis. Outsourcing, however does not transfer the need for attention to paid to transferred assets by everyone in the equation. This is unlike the direct sale of an asset, and in practice it is easy to loose track of attention. Outsourcing agreements require the development of mechanisms that provide focused, constant, balanced attention to the process and transferred assets. Without this type of attention the gains that were promised in the deal can melt away to be replaced with higher costs, lower quality and miserable satisfaction levels (for everyone involved).
Many outsourcing agreements recognize the need to manage attention through the inclusion of many techniques, such as metrics, service level agreements and stipulations for benchmarking against process standards, such as the SEI Capability Maturity Model Integrated (CMMI). These tools, at least initially, provide the focus and attention they are designed to address. Entropy becomes the worst enemy of attention-focusing devices during the life of an outsourcing agreement.
Based on my observations, numerous outsourcing agreements problems begin in a state of hyper-focus. Everyone is interested in how the new agreement is working and evolving (the reasons are not always benign). The hyper-focus stage is not sustainable and typically reduces productivity and slows the new organizations ability to bring functionality to market. As the relationship matures and trust is built the mechanisms for providing focus need to evolve.
The monitoring portion of the focus tends to relax (the agreement is no longer the next new thing) and the focus moves to capabilities (compliance should not be ignored, just de-emphasized). This stage of the agreement is far more sustainable; the attention paid to the contract by all parties’ swings back to a more rational level. The pendulum swing needs to settle at this point. The contract needs to provide provisions that allow for refinement of how transparency and insight are going to be managed. Without these types of provisions trouble will occur (I have been amazed at the number of large deals that do not include provisions for orderly evolution). Trouble ranges from the aggressive, contract conflict to the passive-aggressive, flooding the monitoring processes with information. The passive-aggressive pattern is seen more often as conflict begins and is a leading indicator of more serious issues yet to come.
The insidiousness of flooding the system with information is based on the axiom that as information increases so does its demand for attention. Data becomes overwhelming, swamping the ability to create information and drive decisions. Kernels of truth are obscured; the analysis to determine what is actually happening becomes more difficult. In extreme cases overload occurs (additional stress) which can cause both parties to back away from constructive measurement when negotiations are reinitiated on the governance components of the contract. The time before the reinstitution of balanced governance leaves the outsourcee blind to potential impacts to the cost model they have forecasted for the deal. Contracts must include covenants that allow for evolution to be effective over the entire lifecycle.
Attention focusing devices such as benchmarking against the CMMI coupled with a simple set of balanced metrics (including indexed an indexed productivity metric) are typically found in agreements that have evolved to a point where capabilities and capacity are important to both parties. These types of devices help focus attention on areas that are business critical and can be sustained for long periods of time. The ability to sustain focus is important since as soon as focus/attention begins to waver it is difficult to re-establish. They are also positive views that help organizations and individuals preserve and extend their ability to deliver value to both organizations. Observed best practices to address this issue include including personnel that are experienced in outsourcing governance while the contract is being negotiated (not just the sales team) and including measurement professionals as part of the team when developing the contract.
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Hebert Simon wrote, “What information consumes is rather obvious: it consumes the attentions of its recipients. Hence a wealth of information creates a poverty of attention.”
Nature abhors a vacuum, attention follows a similar pattern. Stop trying to control or maintain attention and it eases away finding other areas to settle in, much to the chagrin of those who understand W. Edwards Demming’s point about constancy of purpose.
Outsourcing agreements typically do not explicitly recognize that attention is one of the assets that are transferred as part of an outsourcing agreement. Inexperienced outsourcees are always surprised that an arrangement actually requires a substantial investment to manage attention in the governance components of a contract and that managing attention evolves over the lifecycle of the contract.
