{"id":1713,"date":"2010-03-14T09:59:00","date_gmt":"2010-03-14T09:59:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/busting-innovation-myth\/"},"modified":"2010-03-14T09:59:00","modified_gmt":"2010-03-14T09:59:00","slug":"busting-innovation-myth","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/busting-innovation-myth\/","title":{"rendered":"Busting the innovation myth"},"content":{"rendered":"
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Would you like to pay now, or when we have a measurable outcome?<\/dd>\n<\/dl>\n

The “I” discussion has certainly dominated debate on the Horses these past few weeks, and one of the finest outsourcing advisors in the business has anonymously volunteered us his thoughts.<\/em><\/p>\n<\/div>\n

This fellow has been working on some of the largest and most challenging outsourcing engagements in recent years and lives on a plane somewhere between London, Bangalore and the US (take your pick where he was when he wrote this, and\u00a0whatever fine\u00a0brand of fine screw-cap Merlot he was supping).\u00a0<\/p>\n

What I find most interesting about his anonymous submission is this following statement:\u00a0<\/p>\n

“I\u2019d argue that innovation has been a massive distraction in outsourcing.\u00a0 Any client that pushes innovation dollars towards the back office rather than their differentiating, market-facing offerings probably needs to re-connect with its shareholders”<\/strong><\/em>\u00a0<\/p>\n

Interesting point of view –\u00a0some would argue that outsourcing their back office is an enabler<\/em> for clients to focus innovation investment in market-facing offerings, while others hold the view that innovation in the back office isn’t an investment – it’s simply a quest to find new and creative ways to improve performance.\u00a0 And then there are\u00a0businesses who shun market-facing innovation and simply want to churn out their profitable products quicker, faster, cheaper… the argument goes on.\u00a0<\/p>\n

Personally, I’d question whether innovation should even be deemed an “investment”, but more of a culture and mentality enterprises should simply have embedded\u00a0in their DNA to be constantly trying to be unique and creative in their respective business.\u00a0\u00a0\u00a0\u00a0Anyhow, take some time out to read this piece and weigh in with your views:<\/p>\n

Busting the Innovation Myth<\/h2>\n

\u201cInnovation\u201d has been amongst the most used\u2014and overused\u2014buzzwords in outsourcing for the last three or so years. Until clients and providers can have an honest conversation about what it takes to innovate, and what to do with the results, I don\u2019t think it will ever happen. I\u2019ll stop short of saying it\u2019s impossible, but entire galaxies of stars will have to line up. Here\u2019s why:<\/p>\n

First of all, let\u2019s get serious about what innovation means. True innovation is new<\/strong>. New means \u201chasn\u2019t been done before\u201d. So implementing SAP to make accounting efficient is not innovation. Consolidating servers? Not innovation. Per-employee pricing in HRO? Sorry. Developing software ate PCMMI level 5? Please. All of these are good things, but none of them are innovative\u2014they\u2019ve been done before.<\/p>\n

Second, not all innovation is good. It\u2019s only good if it creates some kind of value. Seems fairly obvious, but all of the contracts I have seen that mandated innovation have resulted in lots of \u201cchanges\u201d that might even be \u201cnew\u201d but have made nothing better.<\/p>\n

So why is it so difficult to create something new and valuable in outsourcing?<\/strong><\/em><\/p>\n

Outsourcing providers havevery little incentive to create bespoke innovation.\u00a0 Their business model and brand is best supported by deploying any worthwhile innovation to as many of their clients as possible. When a provider creates something new\u2014their instinct is to spread it around, so the innovation becomes a \u201cbest practice\u201d and loses its differentiating value quickly. Can you call something new if all of your direct competitors could haveaccess to it? By the way, there is nothing wrong with best practices or what the industry now calls \u201ctransformation\u201d, but neither of those is innovative.<\/p>\n

Clients, on the other hand, have every incentive to keep innovations developed in their shop to themselves, and their attorneys generally write language into the contract to do just that. In the process, it\u2019s likely they discourage the provider from even trying. But innovation is also a bit of a gamble\u2014one must risk something to win. Many innovations just don\u2019t pay off; even if they seemed like a good idea at the time (see Betamax, New Coke, motorized seatbelts, etc.) So the scary scenario facing client executives is this: to get any kind of innovation, someone must invest. Providers, most of them not interested in the not-for-profit tax filing status, aren\u2019t likely to invest in my innovations out of the goodness of their hearts. So it\u2019s going to cost money whether I see it or not and I am not sure whether it will yield anything good\u2014hmmm, can\u2019t wait to take that proposition to the boss!<\/p>\n

Humans, regardless of which organization they work for, don\u2019t innovate on demand. Try it: Please invent something now\u2026<\/strong><\/em><\/p>\n

Time\u2019s up. Ok what did you invent? See? Not that easy. Now add the complexity that most of the people on either side of the transaction are there because they know how to standardize, repeat, execute\u2014hardly\u00a0 fertile fields for game changers. But even with an Einstein or two on the team, innovation takes trial and error, failure, non-standard approaches, and one-off solutions. Imagine writing the last eleven words into an outsourcing contract!<\/p>\n

Like anything else in outsourcing, innovation will only be successful if both sides stand to gain from it. Starting from there, providers and clients should engage in meaningful discussion about how much they want, how much it might cost, how many failures they are willing to withstand, and how they will create the environment in which game-changers\u2014not just incremental improvements\u2014will be conceived. Generally, when I have seen this type of conversation, one or both parties ultimately decides it is too complicated and returns to \u201cbusiness as usual\u201d<\/p>\n

I\u2019d argue that innovation has been a massive distraction in outsourcing. Any client that pushes innovation dollars towards the back office rather than their differentiating, market-facing offerings probably needs to re-connect with its shareholders. Any outsourcer that focuses on innovating for only one of its clients is betraying the fundamental economics of its business model. Both parties\u2019 interests are best served by pursuing broadly applicable process and efficiency improvements. That said, I am very interested to hear from the \u201cHorses\u201d readership\u2014have you found an example where innovation (not process improvement) was delivered in a profitable way?<\/p>\n","protected":false},"excerpt":{"rendered":"

Would you like to pay now, or when we have a measurable outcome? The “I” discussion has certainly dominated debate…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,81,86,88,832],"tags":[601],"ppma_author":[19],"yoast_head":"\nBusting the innovation myth - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/busting-innovation-myth\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Busting the innovation myth - Horses for Sources | No Boundaries\" \/>\n<meta property=\"og:description\" content=\"Would you like to pay now, or when we have a measurable outcome? 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