Outsourcing Innovation: Six Baby Steps to Consider

Outsourcing-innovationCIOs are looking for innovation. They're hungry for innovation. They need innovation. Their bosses  are breathing over their shoulders, saying "Where's that innovation you promised?"

Although innovation is one of those fuzzy, nebulous words, it pops up often in conversations with CIOs, and its priority was documented by the latest Harvey Nash CIO Survey — which is one of the best annual snapshots you can find of what IT managers (and their bosses) are thinking about, and should be required reading for anyone providing outsourcing services).

"Most CIOs believe that to achieve the business-related objectives set by the CEO technology
innovation isn’t simply an option; it must be at the heart of their strategy. Almost three-quarters
(74 percent) of CIO Survey respondents believe that if they don’t innovate and embrace new
technology, their company will lose market share."

Yikes. But only about a third of those CIOs think they are close to achieving their "innovation potential."  And so, many of them are turning to their outsourcing partners for help. The Nash survey finds this has become one of the drivers behind outsourcing activity.

That makes good business sense, because the right progressive outsourcing partner would have the chops to innovate, would have the expertise and the people to develop innovative mobile applications or cloud services or whatever niche is required. Find an outsourcing provider that has already proved it can innovate the kind of solution you need and you're halfway home, or closer. They've been doing that kind of work, while you and your team have been focused on the daily work of keeping the systems running.

Once you've found that partner to take on the innovation project, though, the client's challenge becomes managing and measuring that innovation, making sure you're getting what you need, it has a positive impact on the bottom line, and the C-level guys are satisfied.

A new study by researchers at the Warwick Business School could help. Their report, "Innovation in Outsourcing: A Study of Client Expectations and Commitment," offers a set of guidelines meant to help clients "achieve return on innovation from outsourcing partnerships and aims to help CIOs and CFOs link this innovation more closely to bottom line growth."

The researchers came up with six steps that they call the Innovation Ladder:

1. Strategize innovation

2. Design measurement instruments

3. Assess the vendor’s innovative capability

4. Design a contract for innovation

5. Build relationships

6. Measure innovation

Like any ladder, you have to navigate the steps carefully, soberly, and make sure it's on solid ground, not propped up on a couple of cinder blocks. Several of these steps are things you are probably doing already, like number 5. And some of them are not as easy as they might sound, like number 1, "Strategize innovation." But this is new territory in many ways. As one of the Warwick researchers, Ilan Oshri, says: “The journey to achieving innovation in outsourcing is in infancy..."

And so anyone beginning on this journey of outsourcing innovation should follow the advice given by the psychiatrist (Richard Dreyfuss) to his annoying, obsessive-compulsive patient (Bill Murray) in the movie What About Bob?:

"Baby steps."