Art Markman on looking back to go forward
I hope you have enjoyed the last columns focusing on the “economics of outsourcing.” I promised to explore other scholars and how we can learn from their leading work. For the next several columns I’ll be featuring the most influential “Big Thinker” psychologists that have directly or indirectly influenced the development of modern outsourcing.
I have long been a proponent of building governance structures that help both parties behave in a long-term and more united fashion. So it was no wonder I got my “ah-ha” moment to change gears to explore what we can learn from leading psychologists after reading the psychologist Art Markman’s recent article in his Harvard Business Review blog.
Markman is the Annabel Irion Worsham Centennial Professor of Psychology and Marketing at the University of Texas at Austin. He is also the editor of the journal Cognitive Science, and consults regularly through his company Maximizing Mind.
Markman wrote that some time ago he was talking with a colleague about a project he was thinking about doing. “We were both solidly in the middle of our careers, but his evaluation of the possible project surprised me. He said, ‘There are a limited number of things that I’ll be able to say I’ve done in my career, and I’m just not convinced that this should be one of them.’”
What struck Markman about the conversation was that “it took a backward-looking perspective. That is, my colleague projected himself to the end of his career and looked backward over his contribution. In contrast, most people and businesses tend to be forward-looking. This strategy can be seen clearly in politics, where politicians often make decisions based on what will help them get re-elected.”
Markman addressed the duality of perspective. For example younger people often regret actions taken that did not go well, while older people often regret actions they did not take. A backward-looking perspective highlights the missed opportunities and the things left unsaid or undone. He continued, “Throughout your career, there will be many potentially pivotal moments — times when you make decisions that might shape the next several years of your life. In these moments, there is a tendency to be risk-averse. People shy away from opportunities that might go wrong for fear that they will regret failing.”
Markman’s ideas strongly apply to the business world and how we structure outsourcing deals. Taking the time to add perspective to your outsourcing planning is an important element in building a collaborative partnership because the decision to outsource is often described as a “pivotal moment,” to use Markman’s words.
I like the idea of basing an outsource decision on what you and your partners hope to say about the outcome when you look back on the entire endeavour.
The University of Tennessee’s Vested Outsourcing approach employs a backward-looking approach much like Markman’s friend because it starts with clearly defining the goals of both parties, which I call Desired Outcomes. Companies project the future and then work backwards to craft a deal structure that incentivises the service provider to achieve those Desired Outcomes.
Finally, Markman offers sound advice when it comes to reflecting on your performance: “At least once a year, though, it is important to take stock of how you are progressing on your larger goals. An organisation that consistently looks back on the present from the desired future has an excellent chance of achieving those goals.”
We all know how easy it is to fall into the day-to-day minutiae of business. The best way to reflect on the performance of an outsourcing relationship is through a sound governance structure. My co-authors and I provide some guidance on this in my second book, The Vested Outsourcing Manual. We recommend doing monthly strategic reviews in the first year of an outsourcing relationship and at least quarterly after that. We also suggest adding further perspective by leveraging a tiered management structure.
As I often say: business happens! Take a breath and begin looking back to go forward. It is a valuable exercise both on a personal and outsourcing level.