It is obvious that the more investment that anyone has in gaining something the higher the value they place on it. This investment can take many forms, money is the obvious one, but hard work, pain, discomfort, shame are all “investments” that automatically increase our perception of value of that knowledge or item.

In product development outsourcing, this phenomenon can hinder the development of trust, set unrealistic expectations, and in general, make outsourced projects more difficult.

Example

Acme Widget Company decided to develop a new product internally. The product required (as all new products do) some new processes that have not been combined before. Acme spent considerable time testing to find the optimal combination. They launched the product and had some failures in the field that cost considerable money, time, and reputation to mediate.(i.e. the investment) Now the company is planning to develop the next generation product using an outside resource.

Questions You Should Ask

  • Given Acme’s history, how trusting do you think they will be of the external resource?
  • What will Acme’s perceptions of the difficulty of the project be compared to others who have not made the same “investment”? or perhaps to a company that has done similar developments many times before?
  • What is the value of the information now that it is known? is it equal to, less than, or more than the “investment?”
  • How skeptical would Acme be of an outside entity after making such an “investment?”
  • Would they fear that the same mistakes would be repeated?