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Outsource magazine: thought-leadership and outsourcing strategy | May 4, 2015

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Innovation: a hoary old scab, or something worth talking about?

Innovation: a hoary old scab, or something worth talking about?
Louise Beaumont

I have to say, my first reaction when innovation was suggested as a topic worth exploring was, “Oh for goodness sake, why on earth would anyone want to pick at this hoary old scab again?  Haven’t we heard it all before?”

Bringing innovation up for debate felt it would be more like resurrecting something that was better off left buried.

I expected people to just roll their eyes…

But no, everyone I spoke to did want to talk about it, and they were coming from some pretty interesting angles, which break down into three broad areas:

  1. What does innovation actually mean?
  2. Why do people talk about it, rather than actually do it?  Is it really that hard?
  3. What does it take to drive innovation through an outsourcing business?

As ever, people from a broad range of perspectives contributed to these articles:

  • strategists, like Dan Batts, from Microsoft;
  • practical business development types, like Chris Conroy from Atos Origin, Les Mara from HP, and Bindi Bhullar at HCL Technologies;
  • and people who have real track record in flowing innovation from ideas to results, like Gerben Mak and Danny Wootton from Logica, and Anita Bradshaw at Wipro.

In this first article, I’ll look at definitions and answer the ‘why bother’ question; subsequent articles will look at why people talk about innovation rather than actually do it, and what it takes to drive innovation through an outsourcing business.

What does innovation actually mean? 

Partly this is a definitions thing – is innovation just about ideas?

No, according to Danny Wootton, who works with this definition: “The successful exploitation of ideas that are new to you, and that drive a positive business benefit – economic, environmental, or social.”

The key here, is ‘new to you’, which means that re-use is fine – after all it might be the umpteenth time the outsourcer has implemented a particular solution, while for a client it might the first time. As Gerben Mak said: “For them it might be really innovative, while for us, it’s just business as usual.”

The second part of Danny’s definition that resonates is the real focus on business benefit – otherwise it’s just a nice idea unencumbered by consequence.

And this has been the problem with the vast majority of ‘innovations’ to date – they’ve been nice ideas – which is why people often do roll their eyes.

Even if innovation isn’t just about having that light bulb moment, it does start there.  And the traditional failure of management is, according to Anita Bradshaw, looking in the wrong place for idea generation. “Most organisations create an innovation hatchery – and it’s a total waste of time. With the familiarity of contempt, the innovation budget is the first thing to get axed when times start looking as if they might get a bit tough.”

I’d add that if you make innovation the sole accountability of a single team, then it exempts anyone else from ever having an idea.  Which then means not only do they not have ideas, but that it’s really difficult to get them to take on board your ideas – because, by definition, it wasn’t invented here.

So far, so good – it’s not just about an idea, even if it starts there.  It’s about application.

As Gerben Mak says: “Innovation is the sum of technology, creativity and organisation. The trick for an outsourcer is to be creative with existing technology and look for value-added services or products, rather than just applying state-of-the-art technology without any link to where the value is for the end user.”

And this is where innovation really makes a difference – the end user, who often gets forgotten.  This means we need to look at the whole value chain, not just isolated steps in it.

Chris Conroy, from Atos Origin, makes just this point: “Atos is about the process of delivering improved service to our customers and their customers.  It’s about how you aggregate, measure and integrate the service.  We all need more of an outcomes focus – we need to think about how the outsourcer gets paid on the customer’s outcome.”

Which brings us to ‘why bother’?

Because there’s margin in it.

That’s what it boils down to. Margin for the outsourcer. Margin for the customer.

In the next two articles, I’ll look at why this getting your hands on this margin has been so hard (why people talk about innovation rather than actually do it), and what it takes to drive innovation through an outsourcing business to improved margin for the outsourcer, and the customer.

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