A sizable portion of IT executives seem to be missing that point. According to a recent survey cited in CIO magazine, “67 percent of IT leaders say they rely on outsourcers to turn ideas into new and improved processes, but just a third actually measure the impact of innovation delivered by their service providers.”
Sounds like a recipe for disappointment.
The survey, conducted by the United Kingdom’s Warwick Business School and sponsored by offshore outsourcing provider Cognizant, also found that most CIOs would welcome some sort of framework for innovation, and half would be willing to pay more for such a framework.
From Compass’ perspective, a process for measuring innovation has to address some basic questions, including:
- What’s my current state?
- What’s the potential benefit of the proposed innovation or improvement?
- What’s the investment, risk, and change involved to implement the initiative?
- What are the alternatives to the proposed change?
- What will we need to manage the future state?
A broader consideration is to make a distinction between productivity improvements on the one hand, and true innovation on the other. Client organizations and service providers will admit they often make unrealistic demands for (and promises of) both. Yet true game-changing innovation requires specific mutual incentives that allow both parties to envision the art of the possible and work towards a transformative future state.
That’s a very different proposition from optimizing the efficiency of the existing environment.
Bill Huber, a TPI Partner and Director of CPO Services, suggests building a certain number of consulting hours into service provider contracts that are devoted to identifying and exploring truly innovative ideas. Gainsharing incentives can also be effective, as can governance frameworks that include a specific focus on tracking the introduction, acceptance, and lifecycle of innovation initiatives. (A recent column in Global Services magazine discusses TPI insights into innovation, specifically in the BPO space.)
To put the improvement vs. innovation distinction into perspective, consider the business world of 100-some years ago. When efficiency-minded organizations were equipping messengers with bicycles to increase productivity, a few saw an opportunity to make a step change with this new telephone thing.
What were the telephone people doing differently?