When asked what are the top reasons to outsource an aspect of their manufacturing process, the 9th most popular reason given was to share the risk with the outsourcing company.
Well what does that mean? If I were to approach your firm, and outline a new and innovative approach to an aspect of your operation, that would yield lower total process costs, improve productivity and increase the focus for your team, you would have to have a deep level of trust in our ability to deliver before you committed to moving forward.
Trust has many elements, and in Steven M. R. Covey's book, The Speed of Trust (go to summary here), he talks about the four levels of trust that need to be established between two parties in order to maximize the rate and effectiveness of that relationship. Without trust, progress grinds to a halt as both companies work to protect their interests.
The four Levels of Trust that need to be established and maintained in order to maximize the benefit two parties can have when working together are:
Integrity: To trust a person or another company you have to trust their integrity. You need to know that they are honest and say what they truly believe. You need to know they are not embellishing the truth, lying outright or misrepresenting their capabilities. You may not agree with their position, but at least you trust that you know their position.
Intent: For deep trust to occur, you need to be confident that the company you are considering doing business with has an intent aligned with your own. If the deeper intent of one company run at odds with the others best interest, mutual intent is not compatible and therefore a trusting relationship will not occur. (ie I will sell you a cheaper product, but you will end up using much more of it, so your total cost will be higher). If one is always questioning the others intent, recommendations will be questioned and progress will stall.
Capability: You could be dealing with the highest integrity company in the world that has the greatest intentions, but if they cant deliver on their promises then eventually trust fails. Big, well intention-ed promises without the ability to actually execute on the plan, creates false starts, slows progress and inevitably destroys trust.
Results: Trust dies when there are no results realized. If the promises made early on don't happen, even through both companies stepped up and delivered on the requirements, and a realistic time has passed to realize those results, trust dies a quick death. If the plan has integrity, is well intention-ed and executed flawlessly but doesn't have any impact on the organization the relationship will be limited.
Sharing the Risk, speaks to aligning intent early on in the relationship. It vests both parties to ensure that the efforts being made and the trust put forward will yield the results both companies are looking to achieve.
The speed of trust is an amazing thing. When you are able to find a company that is able to provide a level of expertise your firm lacks, and your companies align in integrity, intent, and they are capable of delivering, results quickly follow. Shared risk helps establish the desired results early, motivate both parties to push forward quickly and when structured correctly it helps to establish and deepen the level of trust early on in the relationship.
One of the reasons Zimmark is a non-contract company, is that we feel that our on-site services need to bring results to our clients on an on-going basis. It requires a strong and trusting relationship that we work at to maintain and reinforce our integrity, intent and ability to execute month after month. By sharing the risk, we stay aligned and calibrated with our clients, and become a trusted member of their technical team.