Johnson Conley

Leadership is a Matter of Performance

Category: Sourcing

Sourcing

23 and me

Mar 25, 2025 #Contract Management, #Sourcing by Dennis Conley

The 23andMe bankruptcy saga presents a fascinating privacy dilemma that highlights the challenges of managing agreements and commitments for a vast customer base of 15 million individuals. This situation serves as a cautionary tale for both businesses and consumers in rapidly evolving markets.

The Privacy Predicament

23andMe, once a pioneer in direct-to-consumer genetic testing, has filed for bankruptcy. This development has raised significant concerns about the fate of customers’ sensitive genetic data.

Unlike typical business transactions where a limited number of contracts are involved, 23andMe’s situation affects millions of customers who have entrusted the company with their most personal information – their genetic code. These customers now find themselves in a precarious position, with limited control over their data’s future.

Lessons from Corporate Acquisitions

In the business world, acquisitions often lead to changes in supplier relationships (see 300 percent price hikes push disgruntled VMware customers toward Broadcom rivals). From personal experience with a large number of contracts, new suppliers may initially honor existing commitments, although some may employ heavy-handed techniques to replace pre-existing contract terms. In such cases, businesses with a limited number of contracts often retain some leverage and can consider alternative suppliers if necessary.

However, 23andMe’s customers face a different reality. They lack the collective bargaining power and face significant obstacles in ensuring their data’s privacy, including difficulties in deleting their information. This power imbalance underscores the vulnerability of consumers in data-driven industries.

The Broader Implications

This situation illuminates the potential outcomes for companies in fast-growing markets characterized by annual losses:

  1. Success: Achieving profitability and sustainable growth.
  2. Acquisition: Being bought out by a larger entity.
  3. Failure: Filing for bankruptcy or ceasing operations.

23andMe’s journey from a promising startup to bankruptcy filing serves as a stark reminder of the volatility in emerging tech sectors, particularly those dealing with sensitive personal data.

Conclusion

The 23andMe bankruptcy underscores the importance of robust data protection policies and the value of consumer vigilance in an era where personal data has become a prized commodity. As we navigate this new landscape, it’s crucial to strike a balance between innovation and privacy protection, ensuring that the benefits of technological progress don’t come at the cost of individual rights and data security.

Leadership, Sourcing

Outsourcing Benefits and Risks

Mar 29, 2024 #Sourcing by Dennis Conley

An interesting although an expected outcome of outsourcing challenges (Fired Americans Say Indian Firm Gave Their Jobs to H-1B Visa Holders).

Early on, outsourcing was a strategy leveraged to obtain better services than could otherwise be delivered with in-house staff. Firms could focus on their core business without having to manage an area of the business that they were unwilling to invest in. Employees would join a service provider that provided the support and access to state-of-the-art tools and techniques, not to mention career advancement opportunities. Corporate leadership championed outsourcing initiatives as part of their strategic vision. In many cases, it was a win-win-win for customer, service provider, and outsourced employees.

It was not too long before the strategy turned into a tactic to cut costs. All too often, the strategy devolved into other objectives. Creative financing to get assets off the books. Promising reduced costs that could only be delivered with staff reductions; “efficiencies.” It is no surprise that in the objective to reduce costs, labor arbitrage entered as a significant way to deliver cost savings. I recall the CEO of a major US firm reveling in the fact that he saved one hundred million dollars in operating expenses because of outsourcing. I also recall the many engagements I led providing “marriage counselling” to companies and their service providers for failed outsourcing deals.

Done well, outsourcing can be a significant strategy that delivers positive outcomes. Done poorly, outsourcing leads to higher costs, lower quality service delivery and human carnage.