Vested’s Rule #2 directs companies on the Vested journey to focus on the what, not the how. After the initial groundwork (in connection with Rule #1) of business model mapping (Element #1) and developing your Shared Vision and Statement of Intent (Element #2), the real spadework under Element 3 begins: enabling the parties to do what they do best by formulating their Desired Outcomes, a Statement of Objectives and their workload allocation.
Once you’ve mapped the business model, developed the Shared Vision and finalized a Statement of Intent, you might well ask why a Statement of Objectives is needed. In short, the SOO gets into the nitty-gritty of building an effective Vested relationship: depending on the scope of the partnership, the company transfers some or all of the activities needed to accomplish the goals of the Vested Agreement to its service provider. They both do this through the SOO, which describes intended results, not specific transactions or tasks.
A primary difference between a conventional business relationship approach and the Vested model is that with Vested approach, the company specifies what it wants and moves the responsibility of determining how the work gets delivered to the service provider.
Following the Vested approach for documenting workscope avoids a common trap from the 10 Ailments, the Outsourcing Paradox, which occurs when a company outsources a non-core function or functions, but the workscope is written too specifically, as if the company is the expert, strictly defining how the work will be done and thus tying the hands of the service provider. That’s where the SOO and workload allocation enters the picture.
The Vested Agreement includes documentation of the Desired Outcomes and the associated SOO. Desired Outcomes set the expected high-level outcomes, and the SOO establishes the required objectives that the parties will strive to accomplish under the agreement. Under a Vested Agreement, the company outsourcing avoids the Outsourcing Paradox by enabling the service provider to make significant changes to improve overall processes and flow within the workscope assigned. Work is allocated to the party that provides the best value to the overall agreement. It specifies who does what.
An effective Vested Agreement ensures that the company and the service provider work together to optimize operations and end-to-end processes. Workload allocation goes hand in hand with the SOO because it allows the service provider the flexibility to change processes significantly to improve performance, and the detail needed to meet the Desired Outcomes. The SOO also ensures that the parties have a clear understanding of the end-to-end process, and which party is responsible for those processes.
In brief, Element 3 works to help the parties define with a high degree of specificity what success will look like under their Vested Agreement.
See chapter 4 of The Vested Outsourcing Manual for much more detail on how to implement Element 3. And don’t forget Vested’s free online self-assessment, another tool to help guide you on the Vested journey.