Strategic Partnerships: 2 Key Steps to Implement Innovation

By Allan Watton on May 22, 2013

LightbulbInnovation should be at the core of any successful outsourcing partnership.

The relationship between client and vendor should be defined by the ongoing development and growth of the business outcomes from an outsourced service, rather than the maintenance of the status quo. Furthermore, the importance of innovation is more relevant today than ever, as organisations are forced to ravage their overheads to cut costs while improving services.

The good news is that vendors are coming up with more ideas on how to save money for buyers (according to Supply Management (SM)). The bad news is that almost half of all partnerships have experienced no increase in innovation, according to the latest SM100 poll. A panel of a hundred purchasers were asked, “Do you get a greater number of money-saving ideas than you did two years ago?” A slight majority of 52% stated that they do, with 48% giving the opposite answer.

In our experience of dealing with hundreds of strategic outsourcing and shared services partnerships, we understand that innovation is perhaps not as prevalent as it should be in the outsourcing world. I felt it would be pertinent in this post to outline our own experience of how a couple of the key steps in the implementation of innovation should be introduced and managed within a strategic partnership.

The Challenges of Innovation

Genius is one percent inspiration, ninety-nine percent perspiration ~ Thomas Edison

In the context of innovation within strategic partnerships, ideas are relatively easy to come by. It is the respect for and implementation of those ideas that presents the real challenge.

Why? Because most organisations aren’t built for innovation; they’re built to strive for efficiency. The day-to-day pressure of business-as-usual leaves little room for implementing innovation. In our experience, limits on innovation are nothing to do with creativity or technology and everything to do with management capability. While most organisations have the kind of creativity (and technological ability) to innovate, they are lacking the management skills to convert ideas into reality.

This reality is borne out of a natural conflict between innovation and ongoing operations. True innovation is driven by mutual respect and true partnership between innovation leaders and the business-as-usual team — they must both recognise that in order to drive innovation, the active collaboration of both parties is necessary.

Step 1: Build a Collaborative Team

If vendors are going to come up with innovative ideas that drive cost savings and performance improvement, it has to be based upon a process of collaboration between them and the client. The client cannot expect to leave innovation up to the vendor; both parties’ involvement is crucial.

With the above said, the first step towards innovation should be the assembling of a dedicated team to be made up of representatives from the innovators (client and vendor) and the business-as-usual (services delivery) team. There needs to be clear dialogue between these two parties and that dialogue should be conducted via the dedicated team.

The dedicated team should be representative of a true internal partnership. The dedicated team will inevitably have more ideas than the business-as-usual team can actually implement, so an awareness of (and respect for) the limitations of the business-as-usual team is vital. Conflicts are likely to occur, but a well governed dedicated team should be able to spot these in advance and work towards creating mutually agreeable resolutions.

Step 2: Run Disciplined Experimentation

True respect between innovation leaders and the business-as-usual team will only be manifested by an understanding that an innovation initiative — even a major one — is just an experiment. While innovation may represent the future, the business-as-usual team is the proven foundation. If it crumbles, there is no future.

Therefore just think laterally for a moment; any innovation must be driven by the desire for learning, rather than “results”. An initiative that doesn’t yield specific results should not and must not be seen as a waste of time; it should be viewed as an opportunity to learn so that on-going experimentation does drive results from what you have learned. Both the innovation leaders and the business-as-usual team must understand that success is typically preceded by multiple failures and it is what you learn from those failures that ultimately drives success. To put it another way, the more times you fail, the more likely you are to succeed.

One other thing; you must not, under any circumstances, chastise either the dedicated team or the business-as-usual team for the failure of initiatives. Whilst focus is important – so is the volume of experimentation. Volume teaches you how to experiment more effectively – providing you learn from it. It is critical to always champion ideas coming forward and to never chastise ideas. You are looking for everyone to think outside of the box; this will not happen if the individuals coming up with ideas are concerned that they will be ridiculed if their idea is somewhat ‘off-beat’.

Innovation is a process of learning. The dedicated team should drive a culture of experimentation in which aspects of service delivery that were previously unknown become known (whether those outcomes are positive or negative). By filling in these knowledge gaps, the organisation is in a better position to innovate effectively on an ongoing basis.

The knowledge gained and the process you have undertaken to arrive at your outcomes from these experiments should be documented painstakingly so that there is no duplication of work. Once you have learned something, it’s important that the same mistakes must not be repeated. By documenting the process and results appropriately, you will avoid repeating efforts that do not yield appropriate learning. The focus should be on ideas as much as positive outcomes — in order to nurture success, one must nurture a true culture of innovation in which stakeholders are encouraged to put forth their ideas.

Commercial Trust

In order for innovation to flourish within a vendor/client partnership, it is vital that a strong culture of commercial trust is developed and maintained. Without this, there is simply no solid foundation upon which innovation can be built.

Commercial Trust is a topic we have covered in more detail within our free white paper on improving performance, rebuilding trust and maximising value in strategic partnerships. Click here to download your copy if you would like to know more about building trust in strategic partnerships.

Photo Credit: Paul Watson

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