Innovation and Bobby McGee: just another word for something left to lose

June 03, 2010 | Phil Fersht

It can't be... surely not... is that... is that... innovation?

We get some great emailed contributions over here, and "Sumitb" (remaining anonymous for fear of a lynching from the marketing police) has a great perspecitve on some of the realities of today.

While I agree his educated viewpoint represents many of the the realities of today's innovation "issues", I do believe our new data reflects operational leaderships' increasing onus on delivering new and creative ways to find value.  The focus on innovation is starting to shift – and shift quickly.  Anyway, here's Sumitb's viewpoint:

Innovation in BPO is more of a must-have cliché that features prominently in corporate presentations and RFP prefaces rather than as a delivered reality which significantly impacts business performance.

And the reason for this is easy to figure, but hard to fathom:

Neither the Client nor the Service Provider really wants it!

From a client perspective Innovation is fine providing:

a. It’s the Service Provider’s dime and time


 b. it delivers the gain without any major internal pain in terms of change management

From a Service Provider perspective,  to paraphrase ‘Me and Bobby McGee’:

‘Innovation’s just another word for something left to lose’ since usually the second or third word after ‘Innovation’ in a BPO contract is the dreaded word ‘reduction’

Enlightened clients have often asked me why as a BPO Service Provider I would drive Innovation if meant reduction of future revenues. At this point, I usually assume a beatific expression of sublime bliss and reverently chant the mantra: Gain-share…Gain-share

Unfortunately – like a lot of mantras – Gain-share ain’t the cure it’s cracked up to be because:

a. The Gain is often difficult to identify and measure in terms of realized business value


b. The outcome of the Innovation often does not result in a tangible business gain – a classic example is improvements in C-SAT often do not correlate to Churn/Conversion/Wallet-share.

It is not surprising that Innovation is becoming the major differentiator for the first time BPO buyer not only because he can select proven BPO innovators but more importantly because he is may be inadequately aware of the real implications of the 3 C’s of Innovation: Collaboration – Co-investment – Change Management.

Even today, BPO is perceived as an answer to a problem rather than a solution for a business objective –i.e. reactive and tactical rather than proactive and strategic.  Consequently, the selected Service Provider is perceived as a provider of services rather than a co-owner of defined business objectives.

It is this set of initial perceptions that shape the structure and remit of the engagement governance as well as tone and tenor of the relationship between the Client and the Service Provider. Consequently the subsequent value delivery – or the lack of it – in terms of measureable business impact and results is almost a self-fulfilling prophecy.

 Bottom line is Innovation is like the Tango – it takes Two.

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesOutsourcing Heros

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  1. Kate Vitasek
    Posted Jun 24, 2010 04:48 AM | Permalink Reply

    This is a SPOT on blog. The "business model" of outsourcing is broken (or at least ailing) and was the focus of some recently released research from the University of Tennessee. The findings from the research? Use an outsourcing business model where the service provider has a vested interest (aka Vested Outsourcing) and they get PAID to use their brain power to improve efficiency and REDUCE their revenue.

  2. Collaborate – and Innovate – or Else! | Vested Outsourcing
    Posted Jun 27, 2010 06:05 PM | Permalink Reply

    [...] month his site began delving into BPO innovation in theory and practice. One view from a commenter said BPO innovation “is more of a must-have cliché that features prominently in [...]

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