Guess who is most interested in your company’s environmental sustainability efforts? Your customers!

Once in a while in this blog, I like to take a look at business jargon we use all of the time and try to figure out what it really means. So in the realm of business jargon, what does “going green” mean to you?

I recently read an interesting article from IndustryWeek about companies that are “going green,” that is, making their operations more sustainable for the environment. The article reports on an increasing trend: Shareholders are looking past any so-called “greenwashing” and asking for audits in the form of Corporate Social Responsibility Reports.

Shareholders want to know exactly how the corporations and their boards are going about their environmental efforts, and how much of an impact they are really making.

Customers and shareholders will want to see concrete efforts, with clear, transparent disclosure. The jargon of “going green” won’t be enough; details of the actions being taken are now being demanded.

Read more in this article and see more details on what customers and shareholders are asking for in the sustainability area today.

Go!Go!Go!

Jim

More Resources

Sustainable Supply Chains

Photo Credit: Kevin Jack

I don’t drink coffee much anymore, but I know more than a few folks who have a limitless passion for gourmet versions of the brew. And they tend to talk quite a bit!

Something a friend recently said about coffee production made me start thinking about how the jargon “sole source” and “single source” are used when referring to supply chains.

Although most coffees are blends of different beans, you can buy coffee that is sole sourced. Coffees produced in this way will often be labeled as such, so that buyers know that the bag of coffee beans they are purchasing is from only one place in the world.

What this means for coffee is that the end product is not a blend of beans, but that every bit of it has come from the same farm – and in some cases — even down to the same field.

In fact, the place where the coffee was grown leaves its unique influence in the taste, which isn't the same result as you get from a coffee bean blend. For example, the nutrient-rich soil left behind from volcanic activity that can be found in Costa Rica creates a unique coffee taste as compared to a cup brewed with beans from a farm in Kenya.

Now, if I were to find the perfect cup of single source coffee as a buyer, and suddenly lose access to it because that one farm that it is grown on stopped producing it for whatever reason, that would leave a very bitter taste in my mouth!

It's the same for single sourcing and sole sourcing in the supply chain: The rewards are great, but the risks are also a major concern. If that single source or sole source was unable to deliver the service that only it can provide, the buyer is majorly out of luck.

For those new to the concepts, the two ideas of single source and sole source are not the same.

"Single source" refers to a supplier that is one of many. The buyer could technically go elsewhere for the service, but for whatever reason – higher quality, speed, a good relationship – the buyer only works with that one single service provider.

"Sole source" refers to a situation where a service provider is the only one that can provide something to the buyer. The service can't be acquired anywhere else in the way that it can be from the sole source provider.

A rigorous decision-making process needs to be in place for the buyer to have a successful future relationship with either a sole source or single source provider. And every single time a service provider is required, this process needs to be repeated.

Although cost, speed, and limitations on available options may seem like good reasons to select a provider, what should be paramount is trust. A buyer needs to be able to trust a provider due to the major risks that having sole or single source services can introduce.

There are many benefits to single and sole sourcing – with speed being one of the biggest ones. But before committing to this type of sourcing, the reputation and proven abilities of the provider need to be understood and verified.

I know that coffee drinkers can be very particular and specific about what makes a good cup o’ joe, and buyers looking for suppliers should be just as careful and exacting when looking for a sole source or single source provider.

Do you single or sole source or know an organization that does? Let me know about your experiences.

GoGoGo!

Jim

Listen to the Global Supply Chain Podcast series on Procurement and Sourcing

Strategic Sourcing and Procurement

Photo Credit: Alisdair

Once in a while in this blog, I examine words and phrases that we use every day in business and try to remember the origin of their real meanings. And as it often goes with business jargon, we overuse it so much that the actual meaning gets lost.

I have noticed lately that some prominent news web sites that cover high technology, including Forbes and the Wall Street Journal, are changing their categorizations to just say “technology.” The “high tech” category has disappeared. Are you noticing this too?

I think this is happening because what was once considered “high technology” has become fairly commonplace. We’re buying and reading books on inexpensive portable devices, and we’re able to carry around an entire library on one small device. Companies that make this technology, such as Apple, used to be minor players in the general marketplace; now they are major movers and shakers with incredible influence.

In the supply chain business, we have traditionally considered key segments of the high-tech industry to include contract manufacturers, semiconductors, consumer electronics, and telecommunications. It may well be time to redefine this definition based on how technology has evolved.

What high technology is there left in the world? What’s the distinction between high technology and technology? I think the addition of the word “high” indicates that it’s not supposed to be just for anyone to use. It is so advanced that it sits on a shelf just out of the grasp of most people. But this distinction is certainly beginning to fade.

The more democratized our technology becomes, the easier it is for anyone to use. For example, there are software coding languages created just for kids, so that they can program their own software to solve problems.

Are you seeing this phenomenon occurring in other places, as in the way we refer to technology changes? What do you see happening in the future?


Go!Go!Go!

Jim


More Resources

Top Ten List of Issues/Opportunities Facing High-Tech Companies

Photo Credit: WebWizzard

Are you hearing or using a lot of business jargon these days or is it just me? I know that over-used words and phrases catch my attention almost on a daily basis.

Once in a while in this blog, I take a look at some of these jargon words and examine what they really mean, because their meanings tend to get lost over time and with repeated usage.

I thought I would take a look at a pretty commonly used word this time: The word "challenge," especially versus using the word "problem." (As we move from 2009 to 2010, I thought the word challenge would be worth examining in terms of anticipating what's coming in the New Year, because when I think of 2010, I think it's going to be a exciting challenge!)

What's the difference between a problem and a challenge? Sometimes when we refer to a particular situation as a problem, we switch to calling it a challenge because the word problem seems to conjure up something that is causing trouble or creates a hassle. It has a negative connotation.

This is especially true when we are talking about data collection on projects. I think we balk at calling anything a problem when interacting with a client, within business consulting or any other kind of work done for clients, because we don't want the work to sound like a hassle for us or an impossibility. Instead, we refer to the missing data as a challenge that both parties can identify with and move toward resolving as a team.

Saying challenge instead of problem does seem more positive. The word challenge conjures up a more exciting picture than the word problem. Challenging something sounds more demanding, as if we are championing a cause or engaging in a particularly difficult or stimulating battle for our desired results.

To the contrary, the word problem sounds distasteful, even emotionless, as if it were a mathematical inquiry we were working on with a uniform solution that offers no room for creativity or excitement. On the other hand, saying something is a challenge seems to leave room for fresh ideas and new ways of operating and thinking.

Although the word challenge is a little over-used as jargon, I do believe it has its place. For instance, I would not call the coming New Year, 2010, anything except a challenge. 2010 is going to be a major year for many companies recovering from the Great Recession, and although 2009 definitely had it share of major, major problems, 2010 is going to be a year of challenges.

I think 2010 will also be defined by another word that is over-used but applies here very well: Opportunities.

So as 2009 closes, what kind of problems, challenges, and opportunities are you anticipating? I’m ready to meet the challenges head on. Happy New Year and don’t forget to Go!Go!Go!

Jim

Business jargon is something we all use at work to describe common situations or concepts. In fact, we use jargon so much that over the years the words themselves tend to lose meaning, or their meanings get skewed.

As a regular feature on this blog, I take a minute to examine some of these jargon words in an attempt to help us remember what these words really mean.

"Innovation" is one of these words. I would define this word as "finding a new way of doing something that works better than the previously established way."

The part about finding the new way is important. Innovation can happen purposefully due to years of research and work. But, innovation can also happen by accident. One famous example is the Post-it, which was actually the result of an attempt to make stronger glue. It resulted in an accidental creation of a less-sticky glue that, when applied to paper, allows Post-its to be removable and re-usable today.

The word "innovation" has been around since the 1500s, and shares similar roots with the words "alter" and "renew." Because of these roots, innovation goes hand and hand with change, which we are seeing now with the automobile industry. Great change has swept through the industry, as the market redefines what it wants from a car as a product. As the car producers adapt, innovation has cropped up. An example of this is the hybrid car, which consumers like, because they are green and save on fuel.

A more extreme example of innovation, not in the auto industry but in personal transportation itself, was recently covered in a Wired Magazine article. It described a Florida retirement community with 77,000 residents, many of whom use electric golf carts to get around.

But they don’t just use the carts to get around the golf courses and recreation areas of the retirement community - they drive them in the city itself, which has built golf cart access around the roads and shopping centers so these residents can easily access them by golf cart.

Car-sharing is another innovation in transportation from ZipCar, a service that allows you to reserve a car, for a few hours or for a day, that’s already parked at a designated spot. You reserve it online, then go to the parking spot and drive away. When you’re done, you return it to the same parking spot. It’s applicable not only to the general public, but to businesses and to universities, where sometimes students aren’t able to bring their cars.

Paid car-sharing and electric golf carts for running errands around town may sound like strange concepts, especially since they are new. With the many universities and colleges in Raleigh, North Carolina, where I live, I’ve been seeing ZipCars on the roads once in a while. I don’t expect to see any golf carts any time soon though – they would be crushed on the I-440 Beltline!

But back to my word: the way to make innovations like these really work is to try them out in the appropriate market. Innovation, when it’s really good, catches on like wildfire through adaptation as people come to view the new way as better, easier or faster.

How can you foster innovation in your company? This is a burning question now, as the innovators during this recession could be the winners when it’s over and recovery and new growth commences. I suggest you create your company’s Great Comeback plan, as outlined in this Executive Briefing, which has the steps to allow for innovation while keeping ahead of the competition.

What innovations are happening in your industry now that you would have never expected? Leave a comment below and point out some examples.

Photo credit: jdanvers

I’ve been saying for a while now, with a little trepidation mixed with excitement, that "the new norm is that there is no new norm."

What does that really mean? I want to look closer at this phrase in our monthly installment of Supply Chain Jargon. And please bear with me here as I get a bit philosophical.

Working under the intense economic pressures we’re all experiencing now, "the new norm is that there is no new norm" means there’s no reliable understanding of what the future has in store.

It means forecasts aren’t really all that useful anymore, which brings to mind the mildly sarcastic headline from an August edition of The Wall Street Journal: "Forecast: Next Year Will Arrive in 2010-ish." Not even the unbreakable march of time seems certain when so much is up the air.

If there are no norms, then that’s your new norm: Drop everything, forget what’s right in the past, and assess today’s new set of limitless possibilities.

If the new norm is that there is no new norm, then what is possible? The impossible is now possible. The ancient Greeks said that there was poetry in talking about the impossible while never saying anything except the truth. Are you doing today what you thought was impossible yesterday, all the while realistically understanding and assessing the changes in your industry? If so, I’m sure the work you’re doing now doesn’t feel like poetry. I’m guessing that, without any norms to guide us, it feels pretty messy and out of control.

Yet there is a certain level of excitement to it: Once this recession ends, there will be more amazing things being developed than we can even imagine right now. That messy work now will look like poetry later, when it pays off!

With all of this in mind, I think we can also look at the word ‘impossible’ and redefine it. It’s a word we use often to describe something we don’t believe can happen, but the impossible is happening now. Businesses are finding new ways to reinvent themselves and considering different strategies (including a renewed focus on supply chain strategy), products and ways of operating that would never have occurred to them before.

Are my impressions accurate? What are you doing today in your job and in leading your company that you thought was impossible in the past? What should you be doing now? How are you going to grow your company through opportunities presented in this recession? How are you providing leadership with scenario planning instead of single dimensional budget planning?

Next week in my blog, I’ll be presenting some concrete ways to plan, recover and prosper as you implement your Great Comeback Plan.

Go!Go!Go!

Jim

That old saying "All bets are off" seems to apply in more than a few situations these days, especially when it comes to predicting anything with any certainty in business. Due to the recession's effects on most all industries, inventory management is like walking the razor's edge.

Demand is a concept that even the most seasoned supply chain managers must guess at in many circumstances. In part, this is due to consumers' unpredictable purchasing habits and the US government's economic stimulus getting placed into savings accounts instead of being used for purchases as intended.

Inventory costs money to have on hand. As a way of managing those inventory costs, some companies slashed inventory as the recession's impact grew deeper and deeper in the past two quarters of this year and late last year.

For suppliers during this recession, having enough raw material, works in progress, or finished products on hand to fill customer orders has been difficult and potentially costly, especially as demand was tougher than ever to predict. Buyers who purchase inventory from suppliers found that there wasn't enough available to stock their retail shelves.

Sectors that are starting to recover from the recession – such as necessities like pharmaceuticals, food and beverage, and inexpensive consumer electronics – are finding that although customers are coming in the door, their inventories and the inventories of the partners they buy from don't support the demand due to its unpredictability. And often, what consumers are finding is that the shelf is empty when they are ready to buy.

Now as signs are pointing to an economic recovery, I wonder if it's not time for a refresher on inventory management? Every once in a while in this blog, I choose a piece of jargon we use in our lives every day and look at its true meaning, which can get lost from over-use and misuse over time. "Inventory management" is my pick this month.

Examining the meaning of the phrase 'inventory management' might be revealing of the state this economic mess has left some companies' inventories in and what can be done to plan ahead for even more changes that are on the way. We know what the phrase means now, but how is the meaning going to change as the unpredictable markets affect demand planning?

In the immediate past, the recession created a situation where "inventory management" seemed to be spelled "cut, cut, cut." Cutting costs, through the reduction of inventory and other means, was being done across the board without enough forethought.

In the face of the economic downturn, the advice we gave our clients was to maintain talent, maintain business strategy, and cut all other costs. Doing so strengthens the company and helps with recovery, along with growth and prosperity once the recession ends. In terms of inventory cost reduction, we recommended that companies consider selling inventory sooner, holding less of it, owning less of what is being held, reducing inventory holding costs, planning demand more effectively, measuring all progress, and as a final effort, liquidating if needed.

Stocks are running low, and some companies are in a place to increase inventory now. As you plan inventory levels, consider that the question isn't, "When will the economy recover?" Instead, ask, "When will my industry recover?" Certain sectors are set to recover or are recovering now from the recession. Your inventory management techniques will be affected by the bottoming out of your industry. See the table below on when certain sectors will recover:

Inventory management will also be affected by the nature of the post-recession consumer. The consumer today is significantly changed and still uncertain. Reports show that people are putting more money into savings than they have since 1993.

Consumer confidence is still unsteady. Even the markets themselves are worried and distrustful of news of that the economy is rebounding, so you can imagine how the consumer feels. But this is not true of all sectors, as the table above shows, where the buying is already starting and where it’s set to start up in upcoming quarters.

Apply a fresh perspective to inventory management best practices and consider the new forces that will affect it. After all, it’ll be the holidays soon, and the last thing anyone wants then, consumers included, is the dreaded stock-out.

How is your company managing inventory differently these days? What are your plans in the near future?

Rarely do I look at weather forecasts, but I really wanted to know on the 4th of July how the weather was going to be around 9 PM as my wife and I had two of our grandchildren at our beach house for fireworks. Well, unfortunately the forecast was not good. Scattered thunderstorms with a 70% chance of rain at 8 PM, 60% chance at 9 and 10 PM. 

My wife overruled the weather forecast and had the kids take naps so they could stay up late for the excitement. Well, as you could have guessed, the weather was beautiful with no rain until about 3 AM, and so we had a great time.

I know we all have made jokes about the inaccuracy of weather forecasts. I guess it is really hard to do this well. This really makes me think, though, why do we put so much credence into forecasts for the economy? Economic experts make big news when they make predictions for the macro economy. They enjoy explaining to us what happened last month and then forecast what they think will happen next month, next quarter and next year.

Are the economic forecasters any better then the weather forecasters? Or are my expectations of these forecasts unrealistic? I am not sure, but I do know these macro predictions are not applicable to many of your companies or your industries. Right now, many of these macro economic forecasts are about as useful as the weather forecast I got for the 4th of July.

In thinking about this, I decided I wanted to use this space to examine the word "forecast" as it applies to business strategy. I think we say the word "forecast" so often, it has lost its true meaning over time. As a regular feature on this blog, I look at jargon like this to help us remember what over-used words actually mean.

Personally, I think of the word forecast in terms of the two words found within it: "fore," which you yell in the game of golf to warn others to duck, and "cast," which when you go fishing, means to throw out. For me, if there is a forecast around, it means: Duck! And then… throw it out!

That’s my simplified definition, but there is more to it. I chose to look at a definition of the word forecast more deeply because there is just too much that can't be predicted within individual business sectors right now. Forecasts no longer apply (and I realize how baffling and frustrating this development has become). Looking through business news, you can find lots of examples of forecasts being revised by public companies because they aren't right, or new information affects them, or forecasts turn out to be totally wrong.

I included an example of how forecasting plays out in the real world in the business novel Caught Between the Tiger and the Dragon. The main character Rich Morrison, a CEO of a lingerie manufacturing company, is constantly being badgered into creating new forecasts.

His private equity bosses who own the lingerie company become alarmed at the smallest market changes – from gas price swings to the financial state of the companies that buy from them.

Rich gets phone calls from the bosses at all hours of the day and night to submit new forecasts based on others’ forecasts, which, as you can imagine, is incredibly frustrating.

Even though Rich dutifully creates forecasts to the best of his ability, his bosses only want to listen to the latest trends and alarmist news instead of the longer-term facts and figures that Rich is sure are the most appropriate for his company.

Even so, Rich knows that forecasts are not worth the paper they are printed on. He understands that forecasts must always be revised, because they are based on uncertainties. As Peter Drucker said, "Uncertainty – in the economy, society and politics – has become so great as to render futile, if not counterproductive, the kind of planning most companies still practice: forecasting based on probabilities."

Forecasts can be useful, but depending on them and adjusting them for every little thing can be counterproductive, as Drucker points out. It can make you lose sight of the actual core goals of your business. This is especially true when depending on a macro view of the economy to make sense of your industry.

This is also why some companies aren’t providing future predictions of their quarterly performance any longer – it is counterproductive not only for them, but for their investors. In the June 8 Fortune magazine article "Five Moves to Make Now," it recommends "that companies stop forecasting their quarterly earnings, before and during the quarter." The article also notes that "Respected firms [such] as Aetna, GE, Intel and Unilever have stopped giving quarterly guidance in recent months." I hope more consider joining them, especially now in this time of major uncertainty.

You can keep reading and creating the forecasts if you want, but I suggest taking them with a grain of salt or determining if it is really a productive use of your time right now.

Go!Go!Go!

Note: I've got a series of podcasts coming up on the topic of The Great Comeback that will illustrate the micro-economic strategy that businesses should use to recover, grow and prosper after the recession ends. Go here to subscribe for updates when these podcasts are released at

http://www.tompkinsinc.com/podcast

Also, for a rundown on The Great Comeback and what it means for your company, you can download the white paper I wrote about the subject here.

It’s time for another installment of Jargon Watch, a recurring feature in which I examine jargon that we use every day in business and in talking about our supply chain strategies. Every once in a while, I'll be looking at these kinds of words and phrases and digging into their real meanings. Because we use these words so much, the true meanings tend to get lost from using them again and again over long periods of time.

This time, the word is: "China." Obviously, of course, it’s a huge, growing country. Let me explain.

China is a significant force in the world, comprising an area so large that saying you have been to "China" is almost too vague of a description of your trip to mean anything. A place so big and so significant can’t be jargon, can it? Surely we haven’t forgotten the meaning of what an entire country is?

Within the business world, it often does seem like the meaning of China gets confused and overlooked. Getting operations into China is considered the key to a vast kingdom of riches.

But it’s not that easy. Moving all of a company’s operations to China to reduce manufacturing costs without considering that company’s core business can prove disastrous. If the product is cheaper to produce, but also lower quality, customers will feel the pain. They won’t hesitate to tell you about their dissatisfaction – whether with lost sales or angry phone calls. There’s many examples of this happening in real life, but here is an illustration I wrote recently.

In the new novel Caught Between the Tiger and the Dragon, the main character Rich, CEO of the Stabler lingerie company, determines that part of Stabler’s lingerie line manufacturing can be moved to China. However, he recommends to the private equity firm that owns Stabler that their high-quality lingerie line needs to stay in the United States to keep up excellent quality and customer satisfaction.

Rich does his homework. He doesn’t put it all together solo – he brings together a team of experts throughout Stabler to help him understand all of the operations in the company and where its core competencies lie. He concludes that because of the special process they have for producing the high-quality lingerie line, a move to China wouldn’t save the company any money.

The actions Rich takes shows he sees the real meaning of China and its effect on business here in the United States: cost savings are possible, but it’s not as easy as simply packing up everything and moving it. By defining his company’s needs, Rich understands what China really means to his company, even though the private equity firm wanted him to move everything to China (in two weeks, no less) in a blind attempt to save money without strategy.

Instead of chanting "China, China, China," try asking yourself what moving operations into a low-cost country ultimately means for your company. Where are the savings really going to come from? Are they there at all? China’s not going anywhere, so take the time, like Rich at Stabler, to understand what the benefits lie.

Once in a while in this blog, I like to point out jargon we use so frequently that we sometimes forget its real meaning. Brace yourself, because today I'm going to be looking at the word "optimism."

But wait ... is that word even a part of our vocabulary any more? 

For a lot of us right now, the glass is looking half empty. It may even seem like it has a hole in the bottom and there's nothing in there at all. The unending layoffs, the recession-related news, the unending problems in the credit markets and the global economic performance are creating very challenging times as businesses scramble to respond. Many of us can't see the half-full part in that glass anymore, but it is there though. Really!

An economist from right down the road from me at the University of North Carolina-Charlotte recently went on the record with MSNBC with his diagnosis that the recession's worst part is over.  In fact, we at Tompkins are also seeing positive signs that we have hit bottom and the upside is coming soon.

Understanding how to win after the recession needs to be something business leaders are envisioning right now. Think of it this way: "In the face of an economic meltdown, you can retrench, pull in your horns, protect your balance sheet, and preserve cash. Or you can realize that this is about humanity screaming for change." This is a quote from Sam Palmisano, CEO of IBM, from a December 2008 interview with Fortune magazine. Changes are coming along with the recovery, and leaders need to know how those changes will affect a business's vision and strategy.

Get back on the track toward optimism: Do something today that makes you stronger for the future. An end to the recession is coming to the global marketplace, along with all the changes that humanity keeps screaming about. Your competitive edge depends on responding to these factors in the near future and understanding how the world is not only flat, but also curved and unpredictable. I will be covering more on how to deal with the recovery in upcoming blogs.

How do you think companies need to respond once the recession is over or has ended? What about your organization?

Go!Go!Go!

As with many of the phrases we use in business and in our lives, I think that sometimes when the terms 'benchmarking' and 'best practices' are brought up, their meanings aren’t getting through.

That's why I chose these two terms for this recurring post feature I've got on my blog to examine jargon. Every once in a while, I'll be looking at the words and phrases we use in business and pointing out their real meanings. These are meanings that tend to get lost over time and from constant usage.

The phrases "Benchmarking" and "Best Practices" are in danger of becoming meaningless. But to the contrary, they are so very important! Why?

For the answer, let's consider Archimedes' bathtub. He's the mathematician from ancient Greece who exclaimed "Eureka!" after getting into a tub and noticing the water level rising – which made him realize that volume could be calculated in the same manner.

This story may only be a legend. But it helps to remember that these kinds of "ah-ha!" moments are really exciting when they happen. It's possible to improve operations by benchmarking and best practices, and when efficiency and cost savings are found along the way, it's really rewarding.

The really good part is that you don’t have to wait for the knowledge to come to you through random inspiration like Archimedes. By benchmarking your operations and applying best practices, you can control what’s measured and forge your own improvements.

Benchmarking and best practices require not only innovation, but also being a part of that innovation. When someone has a new best practice for some operation that upsets "the way we do things around here," it is definitely time to pay attention. New and better ways of doing things takes effort and special consideration, because it's easy to settle for the usual process. That's why it's important not to lose the meaning of these phrases. When we talk about best practices, we are talking about sharing the personal discoveries and progressions that innovate our work and our lives.

These are the Eureka moments that really make our careers interesting, and I think, satisfying and rewarding.

In the podcast I host, I did an installment that covers benchmarking and best practices and the reasons that companies should be incorporating them. I discuss a reaction that I got from an executive about benchmarking and best practices. Not everyone embraces the idea immediately, as I found, but eventually, he saw how useful they truly are. I also define these terms further and talk about the Supply Chain Consortium, the benchmarking and best practices forum that has a lot of great members like Target and Ingram Micro. You can listen to it or read the transcript here:

http://www.tompkinsinc.com/podcast/transcripts/10-21-08_podcast5_supply_chain_story.asp

Lastly, if you have had an "ah-ha" moment lately, I hope you will share your experience by commenting about it below. I also hope the next time you hear "benchmarking" or "Best Practices," you will think of it as the bottled lightning that it is instead of just another piece of meaningless business jargon.

This is the first of what I intend to make a regular installment on this blog: "Jargon Watch," where I look at a word or phrase we use in this supply chain business and try to figure out what it really means. This sounds pretty simple, but actually, after years of using terms we are all used to, their meanings tend to get skewed.

I think this concept can be best summed up in a word made popular by comedian Stephen Colbert of The Colbert Report on Comedy Central: "Truthiness," which is actually in the dictionary now.

"Truthiness" describes something that someone intuitively believes to be true, but that is not actually based in fact, or it could mean choosing certain facts but ignoring others that don't agree with one's preferred idea of truth. Often, "truthiness" is based on someone's passion or emotional feelings.

For example, the Dot-com bubble of about 10 years ago, and its subsequent bust, started because people really wanted to believe that they could make money with an Internet business, to the point of ignoring the creation of an actual business model that would stand up to the facts of the market. In a remarkably "truth-y" moment, people went with their emotions instead of facts, which resulted in a lot of failed business models later on.

So, for this first jargon-spotlight post, I chose the word "outsourcing." I can see little alarm bells going off in people's heads now as they read this word. For many, it definitely has moved from its true meaning to the business world's dirtiest word.

To avoid being "truthy" myself about the word, we should look at why outsourcing has a bad reputation. Outsourcing conjures up images of Americans losing jobs to countries overseas and other negative connotations. It's important to remember though that offshoring and outsourcing do not always go hand-in-hand. Bringing up offshoring reminds me of the wider topic of globalization. I believe that globalization and its effects are inevitable and not going away. I've written more about globalization in this article if you would like more in-depth thoughts on the subject.

With outsourcing, it's also true that some organizations have had major difficulties -- ranging from annoying to nightmarish – after outsourcing an operation to a third party. It is risky business, and I would be the first to tell that to someone considering it. Tread carefully!

However, knowledgeable businesspeople understand that outsourcing can be a positive part of a company's strategy and offers great competitive advantage, which in turn, creates sustainable future growth. Failure is avoidable if the approach is right.

I have written a lot about outsourcing tactics and risks, and I even published a book on the subject. But here, I don't intend to go into great detail on the whole concept of outsourcing. I only want to make you think about the meaning of the word.

When I think of outsourcing, the next thing I think of is core competencies. You should outsource non-core functions; that is, functions that if they are not done well, will not create any problems for your customer or hurt your business in a significant way.

If you aren't sure what part of your business is a core competency versus a non-core process, ask yourself one simple question that operates like Occam's Razor on the confusion you might have: How does the function affect your customers? The answer to this question tells you what would happen to those customers if the function were outsourced and how they might be affected. If any negative effects are possible, well yes, then it's a core function and should not be outsourced. It's too important to the success of your business and what it is that you do.

For example, if you outsource landscaping to another company, and they inadvertently kill all of the trees on your property, that probably won't affect your customers. But if a retail store outsources its logistics operations, and all of its shipments get sent to the wrong customers weeks late, then your customers are severely affected. Don't expect them to order anything from you again soon, if ever.

I could write much more on this subject, but if you were to ask me to define outsourcing, this is what I would tell you: Outsourcing is one of today's most unique business challenges because it is both a solution to other business challenges and a challenge in its own right. But the real beauty of outsourcing, when done properly, is that it reduces the work required of organizations and improves efficiency and effectiveness.

Then I would probably also hand you a stack of materials as tall as you are, because if you are thinking of outsourcing, the first thing you need to do is to get educated! I will spare you that mountain of materials for now.

I do hope this post has given you pause to consider the meaning of the word the next time you hear it or talk about it. If you have a definition for the word "outsourcing," share it in the comments. Also if you have a suggestion for future posts exploring the meaning of business jargon we use all the time, please leave me a comment, and I'll give it some thought.

Jim