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Outsourcing Innovation?

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Much has been made of the concept of core competencies.  In a hypercompetitive world, a CEO can easily argue that a firm should do what it does well and outsource the functions that others do more efficiently or effectively.  Emphasis on outsourcing has grown to encompass entire business processes or entire functions.

What, then, can we say about outsourcing innovation?  If a business can readily outsource its procurement functions, or its manufacturing processes, can it, or should it, outsource its innovation functions?  And if so, to whom?

Let’s start by stipulating that few firms can claim innovation as a core competency.  If we follow the logic that a firm should outsource functions or processes that aren’t a core competency or that the firm doesn’t do well, then by all means, clearly most firms should outsource innovation.  But it certainly doesn’t seem to make much business sense to follow that dictum.  Innovation is critical to growth, profits and long term strategy.  Outsourcing innovation may lead to short term gains, but over the longer term can an innovation “outsourcer” fully understand a firm’s goals and strategies?  Does a third party offer that much better insight into your customers’ need and wants?

If we then argue that it is dangerous for a firm to outsource innovation entirely, then perhaps we can argue that certain functions can be safely outsourced to third parties with deep capabilities or experience.  We consider innovation to be an end to end process defined by these phases or steps:

  • Trend spotting and scenario planning
  • Identifying unmet or unarticulated needs
  • Idea Generation
  • Idea management, evaluation and selection
  • Prototyping
  • Concept testing
  • Commercialization

Let’s examine the possibilities of outsourcing one, or several, of these phases.

Trend Spotting and Scenario Planning

Few firms do a good job of trend spotting and scenario planning, so this is a capability that can be outsourced to third parties that understand how to collect and assimilate trends and develop scenarios.  However, any third party developing scenarios must understand your strategy, your vision, your customers and your time horizons in order to develop meaningful scenarios.  That work can’t be done in a vacuum, and your strategies and definitions must be carefully communicated to a third party, otherwise the scenarios and their implications won’t amount to much.

Identifying unmet needs

The concept of ethnography and other qualitative research can help identify unmet needs or unarticulated needs, yet few corporations have these skills in house.  This work can be outsourced to firms that specialized in identifying customer needs and wants using qualitative research tools.  However, these firms must be educated about your products, your strategies and your goals.  While ethnography and other tools can provide compelling insights, differing scope definitions, a poor understanding of your purpose or needs can create meaningless insight.

Idea Generation

Many firms assume they can outsource idea generation – to customers, consumers, business partners.  This is a reasonably safe assumption if your firm does a good job providing scope, strategy and context.  If this “framing” is provided effectively, others can generate ideas in your behalf.  If you fail to provide strategy, scope or can’t define a problem or opportunity effectively, then the people who attempt to provide you with ideas will return a large quantity of ideas, but with little applicability to your needs.

Idea management and selection

While you could conceivably outsource idea management and selection, this work should be done by people on your staff.  Picking a new product which will drive new revenue and defining the features and attributes of that product should be driven by your internal teams, in conjunction with your development teams. 

In fact, after idea generation, I’ll argue that it is exceptionally risky to outsource any step, with the possible exception of testing a potential solution with consumers.  If your product development capabilities are on par with your industry, there should be little reason to outsource anything after idea generation.

Note as well that even in the phases where it may be possible to outsource innovation work that there are several consistent caveats, mostly focused on strategy, vision and scope.  Innovation, whether accomplished with internal resources or external agents, simply can’t function effectively without these factors, well-documented and well communicated.  It won’t matter if you have leading third party consultants or an embryonic internal innovation team.  If you can’t provide clear strategy, clear guidelines and clear scope, you can’t outsource innovation.

One last barrier

Finally, let’s assume you’ve successfully outsourced innovation, and a brilliant consulting team has identified an important need, generated ideas and selected an idea for development.  Now, all that’s required is to translate that idea from the consulting team to the product or service development team.  Simple, right?

Not typically.  Product development teams have their own priorities and most likely weren’t involved in the development or generation.  Rather than seeing the consulting team as a partner in innovation, they may see them as a threat.  So it is entirely possible that good ideas originating from a renown consulting firm can’t be commercialized effectively due to a transition barrier from idea to product, external to internal.

Conclusion

While core competencies matter, and firms should stick to what they do best, it is difficult to outsource innovation effectively even in the best of circumstances.  There are certainly specific steps or phases of an innovation effort which may be outsourced without difficulty, but only if the goals and strategies are well defined.  Any firm outsourcing an entire innovation process is likely to discover it has also outsourced its strategy as well.

Written by Jeffrey Phillips. Jeffrey is a senior consultant and VP Marketing for OVO Innovation.

Entrepreneurship

Women on Top in Tech – Laina Raveendran Greene, Co-Founder at Angels of Impact

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(Women on Top in Tech is a series about Women Founders, CEOs, and Leaders in technology. It aims to amplify and bring to the fore diversity in leadership in technology.)

Here is our interview with Laina Raveendran Greene, Founder of GETIT Inc. and Co-Founder of Angels of Impact, an impact network focused on women social entrepreneurs helping to alleviate poverty. She is an entrepreneur and social impact investor, whose passion is female empowerment, and enabling women to be key agents to help alleviate poverty in Asia.

What makes you do what you do?
As a minority female Singaporean from relatively humble beginnings, I have never taken anything for granted. I learnt early on that I have to work doubly hard to overcome the “glass ceilings” but if I persevere, I can succeed. That is why I chose to focus on helping women-led social enterprises as I know how hard things are for them and I hope to make things a little easier for them.

How did you rise in the industry you are in? 
I rose by being courageous enough to push against the “glass ceiling” and seizing opportunities open to me no matter where they were. Early on, I realized I would have better opportunities overseas, so I worked in many countries, including Switzerland, USA, and Indonesia and used these opportunities to learn and open new avenues for myself. I now come back to Singapore with many more networks and skill sets.

Why did you take on this role/start this startup especially since this is perhaps a stretch or challenge for you (or viewed as one since you are not the usual leadership demographics)?
Yes, as a minority Singaporean, it may appear that I am not the usual leadership demography in Singapore. In my own way, however, I think I have amassed my own international accolades and work experience such as serving as the first Secretary General for the Asia Pacific Internet Association, CEO of one of the first few tech startups in Singapore in the early 90s, being on the International Steering Committee of the Global Telecommunication Women Network, and most recently selected as one of the 2nd cohort of Edmond Hillary Fellows in New Zealand.

I am now moving to the next phase of using these networks and skills to help other women to social enterprises, which seem to be exactly what I want to do in my next phase of life (after more than 25 years of global work experience).

Do you have a mentor that you look up to in your industries or did you look for one or how did that work? 
It was harder in my younger days, as one of the few women in tech to find mentors but today I do.  Men were reluctant to mentor me for fear of rumors.

How did you make a match if you did, and how did you end up being mentored by him? 
I found my mentor when I was taking an executive program at Stanford. He was one of the keynote speakers and I went to talk to him. Intrigued by my background, when I asked if he would mentor me, he said yes. I meet with him at regular intervals and I always ensure I have put his ideas to test before reporting back to him. I feel that I value his time if I do actually listen and act on his advice.

Now as a leader how do you spot, develop, keep, grow and support your talent? 
The key qualities I look for is an eagerness to learn and humility to be open to new ideas. Also, when asked to be a mentor, I usually give homework and see how proactive they are. Only the ones who do their homework, take the advice and act on it, are the ones I actively mentor.

Do you consciously or unconsciously support diversity and why?
I consciously and unconsciously support diversity, as I see the importance of diversity on true innovation. You never get anything new, talking to like-minded people. It is always good to have different perspectives to create new ideas. I am also an active supporter having faced racial and gender discrimination in my life and want to ensure that others are given a better chance.

What is your take on what it takes to be a great leader in your industry and as a general rule of thumb? 
A great leader to me is one who has empathy and humility, and a genuine spirit of service. Today’s challenges such as climate change and social injustice, requires many players to apply their knowledge and skills to solve and have a sense of ownership in solving these issues

Advice for others?
The only advice I can think of is do what you are strongly passionate about. You need to persevere to succeed so it helps if you truly care about the endeavor you are working on.

If you’d like to get in touch with Laina Raveendran Greene, please feel free to reach out to her on LinkedIn: https://www.linkedin.com/in/laina/

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Callum Connects

Denise Morris Kipnis, Founder & Principal of ChangeFlow Consulting

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Denise Mossis Kipnis’ curiosity in people and the world, lead her to set up ChangeFlow Consulting.

What’s your story?
I’m driven by curiosity. Having been the only one in a room who looks like me for most of my life, I developed a curiosity about who stays, who leaves and who thrives in minority/majority situations including when and how connection and collaboration happen. I was a systems thinker long before I knew what that was, always asking why and so what; and seeing the pieces, the whole, and the places in between. So helping people and organisations move through the complexity of transformation feels natural to me.

What excites you most about your industry?
I see change and inclusion as two sides of the same thing; I don’t practice one without the other. Some people see change as death, as loss, as exhausting. And it can be. But I see in the work I do as an opportunity for something new or hidden to emerge. When an organisation understands that it is first a group of people, who themselves represent and belong to groups of people, and it begins to tackle what it would mean to understand and learn from all that talent, all that diversity, to have them all working for and not against the organisation, to truly unleash all that their people have to offer; that’s magic.

What’s your connection to Asia?
Change and inclusion are personal values as well as professional strengths. For me, living and working outside of the States was a bold experiment to see whether any of the stuff I’d learned about change and inclusion would work outside of the US. My husband and I targeted Asia specifically: it would be the greatest contrast, culturally speaking, for me; and a unique career springboard for him.

Favourite city in Asia for business and why?
Although I’ve practiced in other cities, I am biased towards Singapore. In some ways it’s what Los Angeles is to the rest of the United States, a microcosm of sorts. The regional/global nature of it means that so many different nationalities and cultures are represented. As a result of this mix, you never know what you might get. In some situations, cultural dynamics are obvious, sometimes subdued. The variability is compelling.

What’s the best piece of advice you ever received?
“Never ask anyone to do anything you wouldn’t do yourself.” Michael Rouan.

Who inspires you?
Often it’s a “what” not a “who.” I can get inspiration from a passage in a book or a situation in a movie, as well as a turn of a phrase or watching people interact. I often make the biggest connections between the various threads I’m working on when I’m sitting in someone else’s event.

What have you just learnt recently that blew you away?
I’m honestly not blown away by much. Instead, I’m struck how circular things can be: ideas often come back around with a slightly different twist and I watch the way it shakes things loose for people. I recently sat through a workshop on Self as Instrument, and despite being thoroughly versed already, I learned something. In preparing for a panel on design thinking, I unearthed a new language to describe things.

If you had your time again, what would you do differently?
You’ve caught me at a good time. I’m sitting in appreciation and gratitude for all my experiences, because I wouldn’t be who I was today if all that has happened, didn’t. And yet one thing comes to mind: It wasn’t until I redesigned my website two years ago (shout out to Brew Creative!) that I realised I hadn’t made explicit agreements with my past clients as to what I could share publicly about our engagement, or whether I could use their logos in my promotional materials. In my business, confidentiality is so important, and yet I need to be able to talk about the work as reputation and experience leads to the next success, and so on. It turned out a lot of the contacts I had known had left the organisations where the work was done, so they couldn’t help at that point. So the practice I’m carrying forward is to get those agreements up front, and to make sure my relationships in client systems are broad as well as deep.

How do you unwind?
Science fiction, puzzles, wine.

Favourite Asian destination for relaxation? Why?
Home. I don’t travel to relax, I travel to learn and explore.

Everyone in business should read this book:
Built to Change, by Ed Lawler and Chris Worley. To my knowledge, it’s the first pivot from advising organisations away from stability and toward dynamism, from strategic planning to strategizing as an action verb; to blow up the traditions and rigidity that impede organisations from developing change capability.

Shameless plug for your business:
We’re taught that there are two kinds of people: those who see forests, and those who see trees. There is a third type, my type, and we see the ecosystem. Worms, climate, birds, the spaces in between. This is the perspective organisations need to be successful in solving complex problems and thriving in change.
ChangeFlow uniquely blends four disciplines (two of which are multi-disciplinary in themselves): organisation development, culture and inclusion, change management and project management.

How can people connect with you?
Facebook: https://www.facebook.com/ChangeFlowConsulting/
LinkedIn: https://www.linkedin.com/in/dmorriskipnis/
LinkedIn Company page: https://www.linkedin.com/company/4862954/
Email: [email protected]
Website: http://www.changeflowconsulting.com

Twitter handle?
@ChangeFlow

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started, built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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