It seems like a relatively straightforward proposition: Fill certain specific and disparate business needs by securing contracted expertise or allocate something as broad as an entire area of competency to an outsourced CxO partnership. Regardless of how tactical or strategic the needs are, getting contracted assistance or outsourcing whole program elements are both governed by one unifying feature: Interpersonal relationships.

Ensuring that outlooks are aligned
The top reasons why contracted work or outsourced relationships fail are:

• Mismatch between intended expectations and delivered results;
• Lack of processes to specify the agreed work;
• Lack of or inappropriate metrics to define progress and measure success; and
• Poor project management on either side.

Avoid the mismatch
Both the sponsor organization and the contracted parties need to first rationalize their individual requirements and offerings. Not every contract or outsource requirement can be fulfilled by any given company. In fact, Conway’s law suggests that because organizations will tend to produce systems that reflect their own organization’s designs, the interfaces that work best between the sponsor and contracted organizations will be the ones which reflect homogeneity between the two or more partners’ social structures in their respective organizations. This results in a partnership that just feels right. If the outlook between the two or more sides doesn’t align, there exists the mismatch listed in the first bullet above. This usually results in the sponsor organization expecting results, which look materially different from those provided.

Everything should be a process
An incredibly frequent cause of failure in work done between sponsor organizations and contract organizations is a lack of process design and specificity governing the work occurring. As W. Edwards Deming observed, “If you can’t describe what you’re doing as a process, then you don’t know what you’re doing.”

Getting out ahead of prospective communication or interface differences by pre-defining the work as a series of proceduralized processes can produce dramatic reductions in errors of between 80% and 95%. Simple ways to ensure this happens include having two-party partnership discussions and whenever a new operational activity becomes the topic ask, “Is there a clearly-defined process for this which is documented?”

Poorly designed metrics can be worse than no measurement at all
While it may seem counterintuitive on the face of it, especially in a measurement-heavy industry like pharma, making the incorrect decision choice because of spurious metrics can pose more of an operational risk than deciding with a lack of measurement. Given a choice of three alternative decisions, choosing one based on flawed assumptions can produce worse results than chance alone. It’s almost like the Monty Hall conundrum in reverse.

There’s no question that metrics can drive behaviors within organizations and partnerships, but incorrectly specified metrics can drive wasteful and incorrect activities. In statistical parlance, we sometimes call a related analytical gaffe a Type III error, arriving at the right answer to the wrong question. Pressure-testing prospective dashboard metrics by asking, “Will this measurement drive the right behavior?” as well as, “Will getting desirable results on this measurement translate into appreciable business achievement?”

Watch out for groupthink
One of the principal jobs of the project manager either on the sponsor side or contracted side is to keep decision-making rational, and within social groups an incredible source of irrationality comes from groupthink. Oftentimes, looking for personality traits in a project manager that are perceived to be synonymous with team engagement such as extraversion, gregariousness, salesmanship and humor are given undue weighting, especially when the data suggest that those managers who use evidence rather than consensus are more successful.

The very difficult job of the successful project manager on both sides of the partnership is to keep the teams on-track, and limit the effect of groupthink on the teams’ decision-making choices. Groupthink is the phenomenon where individuals in a group will tend to make decisions that will minimize individual differences and retain cohesion and ingroup uniformity. Similarly, another bias that’s present in a lot of groups—the false consensus effect—tends to have team members overestimate the degree to which others have shared beliefs and similar conclusions, even when such uniformity doesn’t exist.

Even more insidiously from a team dynamics perspective, once a team-derived decision is made, it is nearly unassailable by new information or evidence, even if the original decision is shown to be flawed. They are almost never converted from their original group choice, and the defense of the original position tends to be an emotional one rather than a rational one based on updated information—this same cognitive bias is also at play in politics when discussing favorite candidates.

Keeping the partnership on-track by managing the very human relationships that comprise it is a very different business posture from allowing poor practices in the relationship to compromise it. In the long-run economics view, more partnerships will persist because of mutual successful performance than will ever occur by avoiding making tough decisions or fear of it leading to conflict on the teams.

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Ben Locwin
Healthcare Science Advisors

Ben Locwin, PhD, MBA, MS writes the Clinically Speaking column for Contract Pharma and is an author of a wide variety of scientific articles for books and magazines, as well as an acclaimed speaker. He also provides advisement to many organizations and boards for a range of healthcare, clinical, and patient concerns.