Managing Innovation – Do You Have An Intelligent Supplier? (Series: 5 of 9)

By Allan Watton on

managing innovationManaging Innovation – Welcome to article 5 in our series of 9 on the vitally important, but often overlooked, subject of the ‘intelligent supplier’ – what to look out for, what behaviours to support and what to avoid when it comes to choosing and managing the strategic partners you’ll work with.

So far we have covered the way an intelligent supplier would contribute to a client’s Business and Operating Strategy, how they evidence Commercial Trust, their role as a Constructive Critical Friend and how they support a client’s Business Objectives. And, should you wish to recap on any of those elements, all you have to do is to click on the relevant link. This article, however, is on the subject of Managing the Innovation Process.

Managing Innovation in Strategic Partnerships

One of the most common complaints we hear when talking with clients whose strategic relationships are not achieving the business outcomes they expected, is a lack of innovation from their suppliers. Though it would be unwise to expect their strategic partner to single-handedly inundate them with daily ideas for enhancements, cost savings and efficiency multipliers, clients do expect suppliers to show their experience and ‘willing’ by offering:

  1. A system to encourage client involvement in the innovation process
  2. A regular stream of innovations for the client to pilot
  3. Evidence of lessons learned from similar relationships to advance the innovation process and rapidly and effectively identify when innovations do or do not ‘have legs’.

Should you find a supplier with the wherewithal to offer this then hold onto them, they are truly worth their weight…

Innovation is very different to idea generation. Ideas come thick and fast; effective implementation of those ideas, less so. During the bid process, many prospective suppliers/bidders will wax lyrical about the innovations they can bring to a relationship. They will often show case studies of how they approached a problem in a novel manner and describe how this has saved many millions through its implementation. But the question you should be asking yourself when you hear such a story is, to what degree was that supplier either driving the innovation process, or working collaboratively with the client to implement the client’s own ideas? Yes, it may come as a surprise, but some would-be strategic partners will, on occasion, stretch the truth about the level of their involvement to improve their bid prospects.

In fact, it can be difficult to prove where the concept of an innovation originated. Therefore, it is important to treat all such stories with a healthy amount of reality-laced scepticism, though they do help to identify suppliers who recognise the need for innovation and the ways in which they may be able to evidence their willingness to innovate, should you choose to work with them.

The most common misconception about innovation

One of the perceived fallacies about innovation is that it is led by, managed by, and is the sole responsibility of your supplier. In fact, innovation in a strategic partnership will not be achieved on a consistent and sustainable basis unless both client and supplier are bringing that innovation to the table as part of a formal innovation governance process.

This process requires that the supplier should have a seat at a senior level on the client innovation board to ensure that any ideas it brings, either on its own or as part of a shared process between it and the Intelligent Client Function (which is preferred), are heard by the board and are advocated in the right way.

A trait found in many struggling strategic relationships is the client management team that looks to filter supplier ideas, standing in the way of the board’s direct contact with its suppliers. Client management teams that operate in this way often feel threatened and, therefore, can sometimes hold back the supplier from any client-related board director ‘air-time’. Again, in the most successful strategic partnerships, both the supplier and client-side teams often compliment (and complement) one another to push the experimentation of new initiatives where there is a clear outline business case to do so.

Intelligence within the innovation process

An intelligent supplier’s role is to ensure the collaboration between its own team and that of the intelligent client is robust, positive and that each holds the other to account for achieving a client’s business outcomes.

At frequent intervals throughout the lifecycle of the relationship, an intelligent supplier will know that it will need to evidence any additional added value it is providing over and above the contract value. For this to be effective, the supplier needs to be able to provide evidence of:

  • the innovation model/process being used
  • how it is embedded within the client’s innovation board and governance process
  • how the supplier’s other clients have used and implemented it
  • the results it has gained for the supplier’s other clients (with specific examples)
  • what specific ideas the supplier and the client-side management team have generated between themselves
  • which ideas, in its opinion, have an outline business case to pilot/experiment with
  • the results of the pilot/experimentation and how it impacted the client organisation
  • which pilots/experiments should be rolled into BAU service delivery and the business case of benefits expected.
  • lessons learned from:
    • the pilots that were and were not successful and can be applied to future innovations
    • pilots from other clients that can also be applied to future innovations.

Managing Innovation – Conclusion

Innovation is vital to the success of most complex service delivery relationships, but it is not something that can be left to chance or the goodwill and professionalism of your supplier. An intelligent supplier knows that innovation is a two-way street, there needs to be some input from both sides, some commitment and some show of trust from both sides that will literally give everyone who needs one, a seat at the table.

Innovation requires collaboration, support and open communication, and innovation requires a plan, a strategy that can be rolled out in each relationship in order to ensure that the right behaviours are encouraged and the right environment for a free flow of ideas and the resources to assess and implement them is created.

The next article in this series will be focusing on the complex and delicate question of ‘Contract terms reshaping and development’. But if you would like a recap of the articles we have already published in this series, click on the links below:

8 core elements to assess whether your supplier is an ‘Intelligent Supplier’:

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