We hear a lot about collaboration and innovation in the business press, but how do we bring the two together in a business to business relationship to identify and create value?
Collaboration is increasingly taking place regarding innovation and R&D activities, in particular where skills and knowledge can provide unique insights into core business areas. Some 32% of businesses surveyed by PwC outsourced some, or all, of their innovation and R&D activity.
Ideas can come from inside or outside the organisation which is why innovating with customers has become common practice in recent years. Starbucks, for example, ask their customers for new product ideas. Less common is the practice of regularly innovating with suppliers and partners and looking for opportunities to collaborate together on innovation.
In any client/supplier relationship there are challenges that can prevent effective collaboration and delivery of innovation, but untapped opportunities could also exist that far outweigh the challenges.
Challenges preventing collaborative innovation
- More often than not, the principal goal for clients is to receive cost effective services. Conversations about innovation tend to focus on continuous improvement and process simplification which is virtuous, but done at the expense of identifying opportunities that could provide long term sustainable value.
- Cultural dissonance can be an obstacle to effective collaboration. Getting the right people together to identify opportunities can be a struggle if there is no shared agenda, there is an excessive focus on service related issues, or both parties are simply on a different wavelength.
- Time is a limiting factor, or more accurately, a perception that innovation is less important than day to day demands results in low prioritisation. Bringing several knowledgeable people together for an ‘innovation’ meeting may seem like an expensive undertaking if the benefits are difficult to quantify and often do not materialise for some time after the event.
- A lack of structure in relation to idea creation can result in a lack of tangible deliverables. While associating formal processes with innovation and creativity might seem to get in the way of free thinking, it is important to effectively control the innovation agenda without hindering creativity.
- Company values sometimes favour using in-house skills for innovation activities. In a trusted partnership, all of the innovation doesn’t necessarily need to come from internal employees. Collaborating with suppliers can bring fresh insights and knowledge to the process.
Untapped collaboration opportunities
- Talent and capabilities with different perspectives exist across both partner and client organisations. Tapping into these attributes and providing them with the tools and processes to collaborate together can result in new insights.
- Senior sponsorship for the innovation agenda from both partner and client will help focus both organisations on the ‘big picture’. While profit and cost efficiency are essential components of an outsourcing contract, it is the achievement of strategic goals that will deliver the most beneficial relationships. In a rapidly changing world, innovation must take centre stage and collaboration can be key to success.
- New innovative products and services are rarely delivered by a single creative genius sitting in a dark room somewhere. It is teams that generally deliver innovation and bringing them together, from both partner and client organisations, can identify new solutions that deliver competitive advantage.
- Success often results when groups of people with different knowledge of the same business activity come together to discuss opportunities. When all parties working on different elements of a business activity collaborate together, the results can often be a number of quick-wins that can be delivered with moderate effort.
- In a client/partner outsourcing relationship, there is often undiscovered and valuable knowledge that could benefit both parties. Clients can learn from the outsourcers experience working within other sectors and benefit from an understanding of services that are delivered to other clients and sectors. The outsourcer benefits by learning more about the client and how to deliver services more effectively. Collaborative innovation is one vehicle that can facilitate the sharing of this knowledge resulting in improved services and a better client/partner relationship.
- Innovation is accelerating and new start-up businesses are disrupting many industries. For example, Financial Technology companies are revolutionising the way we manage our finances and large banks, and insurance companies are struggling to keep up. Multi-sourcing collaboration provides clients with the ability to tap into small innovative products and businesses while maintaining the security and risk mitigation of dealing with a large outsourcing supplier. Multi-service outsourcing contracts will usually bring in other partners and suppliers to deliver the overall service and these suppliers can give clients access to innovative start ups without the risk and complexity of a direct relationship. The outsourcing provider can manage the relationships delivering a portfolio of services including highly innovative products and solutions by partnering with small innovative start-ups.
- Appropriate collaborative tools can save time and improve the effectiveness of innovation for partner/client relationships. Online idea jams and idea management tools, for example, can bring numerous responders together without the need for face to face meetings and regardless of geographical or organisational boundaries. Collaborative project tools help to identify issues more rapidly and result in higher success rates during the delivery phase of innovation. Innovation tools should also be backed up by process, meaning that responsibility for deploying and managing the tools in the right manner will result in successful outcomes.
Outsourcers and their clients can mutually benefit by collaborating on innovation both in terms of cost reduction and identifying new innovative offerings. Creating more collaborative touch-points to engage on innovation, not just when problems arise, is key to the success of a value adding relationship. Regular opportunities and multiple channels should be used to collaborate on innovation providing a continual stream of ideas.
 Outsourcing comes of age: The rise of collaborative partnering, PwC