OUTSOURCE AGGRESSIVELY

Focus on your core competencies and be willing to outsource everything else. Biotech companies continue to face cost pressures, and along the way, they explore outsourcing. However, we are not yet realizing all the benefits of a robust outsourcing strategy because we forget to tell our people how to operate in a new way. I hear two comments from biotech managers that reveal this problem.

One: "I don't like using contingent workers or consultants because at the end of the day all of the expertise walks right out the door."

Both of these statements show a lack of understanding of outsourcing. Companies that have learned the secrets of making stuff know that the object is to find the combination of in-house resources and outsourcing that yields the lowest cost and highest quality as fast as possible. So the question isn't whether outsourcing can do that for you. The question is whether you can do that with outsourcing. The answer depends on your ability to execute. When I am helping clients with outsourcing strategies, someone will always say to me, "But sometimes outsourcing ends up costing more." I always acknowledge that there is no magic in it. "You can screw this up just like anything else," I reply. "It's about execution." When companies focus on what they can do with outsourcing, they get a different result. Instead of managers standing around and hoping everything goes well or talking in the lunch line about how they wish they had more full-time staff to work with, they go out and get better at working with contingents. When a manager is good at working with contingents, she recognizes that she needs to manage the outsourcing company behind the workers too. The manager needs to be clear with expectations and feedback for the service provider. This seems simple but it's not getting done. Instead, client companies sit back and assume that the company that employs the contingent will handle everything.

Focus on managers and provide training in how to manage contingents. Then, hold the managers accountable for hitting the budget target. When contingents are used just like full-time staff, waste ensues. The contingents spend time in unnecessary meetings and blend into the local pace of work. Then, when you do the math on the hourly rate you end up seeing that it costs more. The point is, companies need to clarify their expectations for managers and hold them accountable for running the business. There is a learning curve involved. To get good at making stuff, a company must move through that learning curve and drop its reluctance to outsource aggressively.

IT'S NOT JUST ABOUT SCIENCE; YOU MUST COMPETE TO WIN

This one seems obvious, which is why it doesn't get the attention it deserves. The best operational companies are full of team members that know what it means to work in a competitive business. Here's a quick example. If you're in a company that has multiple manufacturing locations or outsourced manufacturing sites, consider how transparent your company is about comparing one site to the others. The best companies get to the point where they don't try to tell their team members that the objective is to have one big, non-competitive family. Instead, they make it clear that in a competitive business environment, you are either aggressively competing or you are waiting to be defeated. That applies at the company level and it applies at the intra-company site level too.

Some companies are good at discussing competition when it's about their product versus someone else's. But they resist encouraging internal competition. The argument is that they don't want to lose sight of the big picture, which is about "all of us" winning. The truth is, we can't compete with other companies if we're not comfortable competing internally. There is a first violin chair in an orchestra and all of the violinists would like to sit there. Along the way, they play their part to the best of their ability. But make no mistake: They want the first chair. Acknowledging the need to compete drives behavior change.

The primary behavior change comes from understanding that you have to improve to survive. You simply can't stay the same and be around in a couple of years. When managers understand this and hold their teams accountable for behaving this way, performance improves. Instead of complaining about how uncertain everything is and longing for the imagined days before cost pressure, people get to work and find a way to improve. Or, they go work somewhere else, and that's okay too. The companies best at making stuff understand that their objective isn't to retain all staff; it's to retain the right staff. By helping everyone understand that they must continue to improve to remain competitive, a company focuses energy in the right place and drops the waste involved in any other perspective.