“Say that an activity is a core competency if it provides substantial value to the customer and is difficult for competitors to copy.”
“I am not aware of any successful companies which largely outsource labor on their core competencies.[3] All companies outsource secondary priorities (e.g. use outsourced lawyers), and some will occasionally pull in consultants to help with specific initiatives, but I don’t know of any successful company whose labor force on their core competencies primarily consists of contractors.”
I think that appeals to successful business/management models make some sense at least to give some contextual perspective. However, CEA is not a “business” with “competitors” in the sense that 1) CEA’s primary mission involves producing large amounts of positive externalities, and 2) CEA is funded by grant makers and is thus less dependent on “customers’” (grant/service recipients’) funding.
Additionally, the situation seems to be a major funding overhang relative to talent, and one of CEA’s primary purposes is to improve the talent pipeline (e.g., by supporting community building).
Ultimately, in a competitive market, shoveling money at a “core competency” to attempt to scale up may indeed be unsustainable, especially if your primary value is money and if you have a competitor that will continue to profit and may use those funds to outcompete you later. A firm will not choose to indefinitely produce 200 widgets at a profit of $0 per widget vs. indefinitely produce 100 widgets at a profit of $6 per widget if it cares about profits instead of net widget production/sales. But in this context it seems that even if outsourcing some core competencies produces inefficiencies on a per-dollar basis (e.g., it requires hiring more managerial support such as secretaries even if their work is not as “efficient” as the average secretary), it might still make sense.
Of course, it might be the case that no (tolerable) amount of throwing money at the problem produces efficiency gains, I’m just trying to say that the appeal to standard market practices might not be justified if the reasoning is “they need to do this to compete/profit.”
I think that appeals to successful business/management models make some sense at least to give some contextual perspective. However, CEA is not a “business” with “competitors” in the sense that 1) CEA’s primary mission involves producing large amounts of positive externalities, and 2) CEA is funded by grant makers and is thus less dependent on “customers’” (grant/service recipients’) funding.
Additionally, the situation seems to be a major funding overhang relative to talent, and one of CEA’s primary purposes is to improve the talent pipeline (e.g., by supporting community building).
Ultimately, in a competitive market, shoveling money at a “core competency” to attempt to scale up may indeed be unsustainable, especially if your primary value is money and if you have a competitor that will continue to profit and may use those funds to outcompete you later. A firm will not choose to indefinitely produce 200 widgets at a profit of $0 per widget vs. indefinitely produce 100 widgets at a profit of $6 per widget if it cares about profits instead of net widget production/sales. But in this context it seems that even if outsourcing some core competencies produces inefficiencies on a per-dollar basis (e.g., it requires hiring more managerial support such as secretaries even if their work is not as “efficient” as the average secretary), it might still make sense.
Of course, it might be the case that no (tolerable) amount of throwing money at the problem produces efficiency gains, I’m just trying to say that the appeal to standard market practices might not be justified if the reasoning is “they need to do this to compete/profit.”