Innovation has always been a top buzz word of outsourcing, often mentioned but rarely achieved. When outsourcing was in its infancy everyone perceived that innovation was just another deliverable to be defined in the outsource contract. When it was never actually delivered upon the clients blamed he vendors without asking themselves tough questions. If innovation is to be fostered by clients internally, management must set aside resources, perhaps the most valuable being their own time. Without this focus the status quo will continue. Clients are now realising that the same is true of outsourcing vendors.
Innovation can be talked about but if you ever want to achieve it there are a number of things that must happen. Many of these have been discussed in previous blogs but in summary. Sharing of any profits should be set up in ways that encourage vendor innovation. Resource should be set aside and specifically earmarked for innovation. Risk taking should be encouraged as innovation is inherently risky and finally, the right people must be on the projects, people that see options to innovate.
Get these factor right and there is a chance that innovation will follow. The next step is incorporating innovation into the day to day running of the project. This could mean fundamental changes to operational procedures which have to be transitioned towards, much in the same way that work was transitioned to the vendor in the first place. Even the smallest innovation will probably require some sort of operational change. Operational change can often mean governance change which will require executive signoff.
All these things mean that change costs money. This then begs the question. Is innovation worth it? Of course ROI projections will have been done to ensure that any innovation introduced does not loose money but the innovation effort as a whole must be justified. Perhaps innovation is not required in all cases. Perhaps managing the relationship and maintaining SLAs is enough. Perhaps clients should be steered away from innovation in some cases.
I am not arguing that innovation is unnecessary all the time. Often it is highly desired and both parties should continue to strive for it. what I am saying is that innovation doesn’t belong in some contracts and should be removed from the expectations of senior executives. The overall cost of innovation may not be something an organisation is ready to pay or experienced enough to handle.