Is outsourcing the answer to IT innovation?

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I recently blogged asking the question: Can you outsource innovation?

In this guest blog post Matt Cooper, CEO at Imaginatik, tells us why the answer is yes. In fact he thinks outsourcing could be the answer.

This is interesting because one of the biggest criticisms of outsourcing is often that there is no innovation. But there is a counter argument that if you outsource it frees up internal staff to innovate.

Ready for Innovation? Outsourcing may hold the answer

By Matt Cooper

"Can companies outsource their innovation function? The answer to this questionis a resounding 'yes' with an important caveat - companies need to know when to outsource innovation and toward what end.

At a growing number of large organisations, innovation is now an identified organisational group, with a specific mandate, roles and responsibilities, metrics, processes, resources, and governance. According to a 2012 Capgemini study, 43 per cent of large global companies now have a formally accountable innovation executive. Innovation has become a corporate function, and the trend is gaining steam.

Yet despite the trend, today's innovation leader has a very difficult mission, for two reasons. First, most corporate warriors in middle management persist in thinking of 'innovation' as a management fad - a distraction from quarterly goals and core objectives. As a result, the innovation leader faces a constant uphill battle for legitimacy - unless he/she demonstrates clear, powerful business results from innovation's efforts. And there is a limited time window before faith and confidence are lost permanently.

Secondly, innovation has a distinct rhythm from the daily business. Instead of driving to efficiency and operational excellence, successful innovation requires space and time to create, tolerance of failure and a culture of open experimentation. In a corporate setting, individuals with 'innovative' personalities have long since learned to hide or downplay them, for the sake of career advancement. So the natural rhythm of innovation inevitably feels strange and foreign within a large organisation.

Yet senior leaders increasingly view innovation as a strategic imperative, allowing the firm to adapt and respond to competitive pressures, customer needs and technology change in a rapidly changing, information-rich 21st century world. Most of the time, a great deal is riding on the success or failure of the Innovation Leader. In some cases, the C-suite has staked the company's future on it.

In this environment, outsourcing is a critical enabler of success. Experienced innovation firms use proven methods and tools to produce those crucial early-stage results, while also injecting the DNA of innovation process into the organisation. Typically this outsourcing takes one of two forms.

When the need for a specific innovation is clear - breakthrough new product designs, for example - the innovation leader may outsource the entirety of an innovation project. This is called Innovation Project Outsourcing - in which an innovation firm acts like a design agency, working independently and producing ready-made innovations as deliverables. These projects can range from R&D and engineering work, product and/or industrial design, to innovation process design.

Ultimately, however, the innovation leader cannot be wholly dependent on an outsourcer to produce innovation. Innovation Process Outsourcing is a critical step in embedding innovation habits into an organisation's DNA. An experienced innovation firm will be intimately familiar with the difficulties of involving broad sets of enterprise stakeholders in a collaborative process. Working underneath the innovation leader, outsourced programme managers can be embedded into the organisation as change agents and campaign managers. Through careful scoping of innovation initiatives, combined with skilful management of the campaigns themselves, dramatic results can be achieved while also socialising the behaviours and rhythms of successful enterprise innovation.

The end goal of these outsourcing efforts is innovation skill transfer and discipline-building within the corporation. Over time, the outsourcer trains its client on the core Innovation Management skills and methods, which allows the innovation programme to achieve sustainable scale as an enterprise program. As a result, the organisation begins to treat ideas as valuable intellectual capital - and consistently collect, vet and leverage this capital for business benefit.

In the longer term, there is a permanent home for innovation outsourcing in most companies. Innovation strategy is a core competence any organisation needs to build, refine and invest in - it's the future of the company. But aspects of how innovation is built and executed may be outsourced, as external parties have skills and competencies which the company may not have or even need to be in-house."

Also read:

Has Outsourcing 2.0 arrived and is innovation built-in?

CW500 in the City: IT innovation in financial services


1 Comment

Great piece on innovation, there needs to be more of it around the place but it's just a question of how to get it in place. In fact there's a great piece on how the marketing department should be a key driver of innovation here - http://innovation.blurgroup.com/blog/innovation-and-marketing-a-natural-fit/.

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This page contains a single entry by Karl Flinders published on May 16, 2013 10:49 AM.

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