Jitasa Nonprofit Blog

Comparative Advantage

Do What You Do Best

As you may know, I recently authored a book called "Do What You Do Best: Outsourcing as Capacity Building in the Nonprofit Sector". Over the last few months, I've had several opportunities to tour and share core concepts from my book.

After each seminar, attendees have commented that the core concept of "comparative advantage" was their key ‘a-ha'. If you boil it down, outsourcing is fundamentally about each company doing what you and they do best. If someone does something better than you, and you do something better than that person, you should help each other out. Economic geeks call this "comparative advantage".

In economics, the basic concept can be applied to explain why and how nations trade, how organizations interact, and how individuals structure their lives. Imagine a world where Florida tried to grow potatoes and Idaho attempted to grow oranges. Why not? In reality, neither does because of the concept of comparative advantage.

Outsourcing within an organization relies on the exact same logic.

Many nonprofit leaders are pioneers in their fields. They are inspirational social workers, artistic visionaries, and passionate advocates for their cause. They lead, motivate, and create. They are energized when they engage their mission. They are de-motivated and lose energy when they turn to the tedious tasks of accounting, complying with human resources (HR) regulations, and ensuring their insurance coverage is up to date. Strangely, there are people in this world, like me and our Jitasa staff, who are energized from taking care of the back-office tasks. We love being the support team and helping the people on the front lines.

Can you imagine if we switched our team of Jitasa accountants with the local corps de ballet, and we performed each other's jobs for the day? Our accountants would cringe at the idea of being on a stage, in tights, attempting to keep the beat while being graceful. We would surely sprain an ankle and bruise our egos. And most dancers would cringe at the idea of sitting behind a computer, adding up numbers, interpreting grant reports, and reconciling bank statements. They may not sprain an ankle, but they would certainly be frustrated and bored!

In the perpetually under-resourced nonprofit sector, the more productivity we can gain from our existing resources, the better. The more each of us focuses on doing what we do best, the better outcomes for our world.

There is no doubt in my mind, that outsourcing can increase the capacity of the nonprofit sector.
What do you think?

 

Jeff Russell, CEO / Founder, Jitasa

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