Dean Barber

Why Companies Should Outsource Site Selection

In Corporate Site Selection and Economic Development on September 7, 2013 at 11:15 pm

 

His writings contributed to the philosophical and practical foundations of today’s modern corporation.

And yet Peter Drucker, the historic business consultant, said it was his lack of knowledge that served him so well in helping companies find their way. This quote from him has always stuck with me.

“My greatest strength as a consultant is to be ignorant and ask a few questions.”

Now I can truly identify with that statement. The only difference is that I ask a lot of questions, having been a former newspaper reporter.

It is Drucker’s views on the need for companies to outsource certain business functions that serves as the basis for my consultancy, which specializes in site selection/location analysis for companies. I also do economic development consulting for communities, essentially trying to help them become more competitive for corporate investment.

While advising General Electric in the 1980s, Drucker had a huge influential effect on CEO Jack Welch. Drucker’s advice was simple and to the point:

“Make sure your back room is their front room. In other words, don’t you do guard services at your plant. Get someone who specializes in guard services to do them for you. Get rid of in-house printing, in-house conference services, any business that isn’t at the core of your focus.”

Core of Your Focus

Ducker believed that any time-consuming function that is not at the core of company’s focus amounts to a distraction.

By its very nature, corporate site selection is a very specialized exercise in data gathering, analysis, and culling. I suggest that 95 percent of companies should not attempt to do it, as they do not have the knowledge and experience of collecting the needed information, much less analyzing and culling.

And the reason is simple — site selection/location analysis is not, nor should be, a core focus for the overwhelming majority of companies. Rather, they should concentrate on what they do, their core business, and outsource the site selection process to to a specialist, dare I say me.

Our role at Barber Business Advisors is to to gather, analyze and provide information and recommendations to our client companies based on their specific wants and needs. Near the end of the site selection process, we take the client companies to visit the finalist communities, because ultimately it is the client’s decision.

Because of our experience at determining optimal locations for future operations, we know and understand the multitude of factors that go into determining costs and opportunities. In essence, site selection is a risk analysis process.

And it’s by our experience and knowledge  that we are able to save a company time, money, and to some degree from itself. Choosing the wrong location can be a very costly error with long-term ramifications.

Naturally, I have a bias, but I believe that because most companies don’t know what they don’t know,  they will not choose the best locations if they undertake a site search on their own. That’s because they are inexperienced and lack the specialized knowledge to do it right

To the prospective company CEO, I would respectfully offer this:

“I would advise that you continue to concentrate on what you do best, and allow us to perform the site selection process for you.  You see, this is our core business. This is what we do. Rest assured, the final decision will be yours,  but we can save you time and money in the long run. We can save you from yourself if you let us. Trust me, a wrong location will come back to haunt you.”

The truth is that corporate site selection is part art and part science. Most CEOs/CFOs might make a stab at it once in their entire career, whereas we do it on a fairly regular basis. Who do you think would be better at this?

Beyond Dirt

I’m not convinced that many if not most real estate brokers, ever so consumed with chasing the deal, will ever understand that site selection should be a process and goes far beyond considering a tract of land or an empty building.

We have nothing against real estate brokers. Most are conscientious and want to serve their clients to best of their abilities. But their abilities are often limited to real estate alone, whereas true site selection transcends real estate in that there are many other business factors to be considered on any given project.

They include labor availability and skill sets (quantity and quality of the labor force) logistics and transportation, utility infrastructure, energy costs, taxes, permitting, regulatory climate, presence of organized labor, quality of life, and on and on.

Most real estate brokers, not all, have scant knowledge or interest in applying these factors to a site search. For them, it’s about a building or a site and ultimately a deal in which a commission is paid.

Employing Special Operators

On any given project, BBA will typically bring in certain well-qualified and trusted consultants with specialized knowledge and expertise.

I have my GIS specialist. I know my logistics-transportation expert. We even know tax accountants who have a sense of humor. These are trusted allies, people who we have worked with, who bring specialized knowledge and value to a site selection project and the client benefits in a big way as a result.

Essentially BBA runs special ops teams, employing experts in their fields to perform certain analytic functions. In short, we took Drucker’s advice to outsource to trusted subcontractors who have specialized knowledge key in determining optimal locations in the site selection project.

People are the Solution

In his 1954 book The Practice of Management, Drucker came up with this concept of management by objectives, also known as management by results. It is a process of defining and agreeing upon objectives within an organization so that everyone essentially knows what they need to do.

“Management by objective works – if you know the objectives. Ninety percent of the time you don’t,” he said.

Most importantly, Drucker believed that employees are assets and paramount to making a business work. He saw knowledgeable workers as being the essential ingredients of the modern economy.

We also subscribe to that belief that people do make the difference, that they are the solution. It is why we employ knowledgeable experts on every project and look for knowledgeable workers when surveying and analyzing communities on behalf of our clients.

In the movie, The Outlaw Josey Wales, the protagonist tells a bounty hunter “a man’s got to know his own limitations,” thereby backing him down. I would suggest the same for companies that attempt do site selection on their own.

I’ll see you down the road

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-890-3733.

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  1. Dean, I totally agree with this post. We don’t know everything and it is o.k. to admit that. Outsourcing what you don’t know saves time and money. It definitely alleviates the frustration of spinning your wheels for 20 hours trying to do something that would take someone else 5 hours to complete.

  2. Reblogged this on Barberbiz and commented:

    Here’s a past blog that explains what and why I do what I do. I hope you all had a Merry Christmas and will have a Happy New Year. I’ll see you down the road in 2015.

  3. I do agree your points regards to site selection, some points on the same from NAHB’s latest update on Land development sounds valid for me.

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