Perils of Commoditization

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Photo credit: Deb Achak Photography

Photo credit: Deb Achak Photography

 

One of the biggest mistakes you can make in business is allowing your product or service offering to become commoditized.

It is inevitable that price will be an issue no matter what industry you are involved in, however a successful business always strives to consistently add value in everything they do.

Commoditization is the culture killer. It creates reduced margins, which in turn leads to increased challenges across everything from R&D, to quality, to your eventual ability to properly pay and motivate your colleagues.

10 years ago at FCR, we were told that it was not possible anymore to do truly great outsourcing work in the United States due to cost constraints, increased competition and overseas challenges from countries such as India and the Philippines.

When faced with this challenge, we realized we had 2 options. Either continue to chase after low margin work and just get by or strive to do things differently and rethink how outsourcing is perceived and solutions are delivered.

Instead of taking on any and all business, we focused on companies we respected and programs to which we believed we could add consistent value.

We built a culture that encouraged employee retention, paid higher wages, added in benefits, 401k plans, career-pathing and profit sharing, and tied the success and well being of our people directly to the success of FCR.

Oftentimes we change directions at FCR when an opportunity presents itself rather than simply doing the same thing as others. I frequently remind our team to study what other providers are doing, then consider the opposite direction.

There have been and always will be challenges, and we continue to learn from mistakes along the way, but what this last decade has shown is that outsourcing is still alive and quite well here in the USA.

Matthew Achak

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