Dr Cuross Bakhtiar, founder and chief executive of Harley Street Cosmetic, is planning to bring out a new skincare product called Happy Cream. It's an extract of chocolate that is supposed to increase endorphin production. "They're the happy molecules in the body," explains Bakhtiar, a chemist who quit an academic post at Imperial College, London to start his company.

Bakhtiar has his own reasons to be happy. HSC will crash through the £1m turnover barrier this year even though the company is still a one-man band. Bakhtiar has succeeded because of leadership with a difference.
Instead of motivating employees, he leads a team of outsourced suppliers that handle everything from manufacturing to distribution. "I'm a great believer in collaborative work," says Bakhtiar.

With more companies relying on outsourced suppliers, many will need to learn the skills of leading external rather than internal teams. For Bakhtiar, it's a question of picking suppliers who can adhere to the high standards he demands, rather than building close working relationships with them.
"A lot of the people I deal with, I look on as friends rather than business colleagues," he says.

One of the differences between internal and external leaders is that the latter need to be great networkers. For example, Bakhtiar hasn't been shy about asking celebrities to speak up for his products. He persuaded friends in the cosmetics business to make the introductions.

"People such as Madonna and Elle McPherson have been very good in helping us by endorsing our herbal gels in their kids' names," he says. "The cost to the company was a good lunch—and we also got lots of laughs."
According to Colin Coulson-Thomas, professor of direction and leadership at the University of Lincoln, Bakhtiar is displaying just the kind of leadership style that other SMEs will have to adopt it they want to win competitive advantage from extensive outsourcing.

"If you are running a virtual operation, then the key to success is to vet your suppliers carefully," Coulson-Thomas says. "Think about your future intentions and your ambitions for growth—and where you want your organisation to grow—and try and fit in a number of core suppliers that will go all the way with you."

Business leaders need to motivate their core suppliers to go that extra mile if they want to achieve the greatest success, says Coulson-Thomas. "You have to appeal to their heart by persuading them that you have an exciting opportunity they ought to be part of. And you have to appeal to their head by structuring a long-term agreement that is mutually beneficial," he adds.

But Bakhtiar's outward focused leadership style also means forging contacts with customers. "A lot of companies erect barriers so that customers can't talk to directors," he says. "My customers can pick up the phone and talk to me—which means I can help them with advice in ways that a lot of companies can't."

And, even without the cream, that makes them very happy.