Outsourcing Innovation

I am just struck by the differences in the role that outsourcing innovation has taken for different companies. Disruptive innovation is good. The question is how to acheive it, knowing “The Innovator’s Dilemma” exists and other systemic, cultural issues. Design Management Institue has a list of resources for managing innovation in an organization.

Apple is perceived as an innovator keeping product design and direction in-house. Where as Dell, an equal innovator but in terms of manufacturing and direct-to-consumer-sales and corporate finances, seems to be willing to outsource the design of their products instead focusing on their key strengths of marketing and manufacturing. BusinessWeek demonstrates that many big manufacturers are looking to smaller firms for new solutions (hence hopefully avoiding the Innovator’s Dilemma), and using their competency at bring products to market, reducing manufacturing costs to differentiate. Scott Hirsch provides an analysis of the risks in looking for a quick fix for innovation. Companies that continue to innovate (Google , Apple , Amazon , etc.) have all built a culture that fosters innovation. As BusinessWeek elaborates by outsourcing innovation there are risks, such as, after Motorola outsourced the design and manufacturing of phones to BenQ, and BenQ deciding to sell it’s own phones in the Chinese marketplace.

Steve Portigal provides and excellent look at things to consider when shopping for a design firm or partner. These won’t necessarily help avoid a situation like the Motorola/BenQ mobile phone manufacturing and distribution, but it can help to ensure that you are bringing in the right firm to do help with the right thing.

  1. The Problem: Defining your goals
  2. The People: Understanding the archetypes
  3. The Partnership: Anticipating the relationship

It is a very insightful look at how innovation requires the right mix of all 3 areas. Steve used this example at CanUX , but it is so simple and elegant about defining “the problem”:

In real terms, this can be the difference between asking a designer to create a new vase, versus asking for a new way to display flowers in the home. The first problem statement already converges on a solution—perhaps prematurely. The second opens up new design opportunities, new target markets, and ultimately potential new revenue streams

Thinking about the role of design and innovation in an organization is what Jess McMullin calls “Design Thinking”. Being able to frame the problem in the flower vase example, is a sign of design maturity and it is becoming evident by others (Jakob’s Enterprise Usability is a first step of usability thinking maturing).

Why is this kind of thinking so hard? Why is it so hard to accept? Dave Pollard conclude that it is very complex problem that may be dependent on your clients/organizations reaching a level of design maturity.

  1. People don’t like to change.
  2. Everyone thinks they can do it themselves
  3. It’s a ‘dragon’ issue, so it involves a lot of trust.
  4. It requires understanding of how and why the market has moved on without you.

Dave concludes that the first 3 reasons are difficult to over come. They require clients/organizations to be “emotionally” ready for innovation consulting services, this works for intrapreneurs helping to refine products and processes internally in organizations. The fourth reason requires leadership from the community. Dave brings a new level of design maturity to the innovation community describing new products and services that could help customers:

I believe there is a great opportunity for innovation advisers to help their clients understand where the market is going (and has gone, and will be going soon) in a radically different way from what marketing consultants have done. It’s another opportunity for cultural anthropology—going out into the complex (not merely complicated) marketplace of ever-changing self-forming and self-defining communities, constituencies, and affinity groups and discovering how customers are redefining themselves, and how their wants and needs are simultaneously and constantly evolving. It is through looking at the patterns in customers’ stories that we can provide our clients with a startlingly different and enormously useful picture of the market and its direction—the most valuable input into an innovation strategy that anyone can offer.

This sounds incredibly similar to the services that Steve Portigal offers. Maybe there is a marketplace for these services in Toronto. Helping organizations innovate the programs and services they offer for employees. Just thinking back to my recent experiences at Ryerson. What happens if I reframe the “design problem” of the Human Resources department?

  • Steve Portigal

    <p>David &Atilde;&cent;&acirc;&sbquo;&not;' thanks for the mentions. FYI, I nicked the vase example for the article from Marc Rettig&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;s CanUX presentation, actually.</p> <p><br />
    (the concept itself wasn&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;t new to me, of course, and I&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;d been using different examples for years, I think I just liked this one so I snagged it!)</p>

  • http://chittahchattah.blogspot.com Steve Portigal

    David â€' thanks for the mentions. FYI, I nicked the vase example for the article from Marc Rettig’s CanUX presentation, actually.

    (the concept itself wasn’t new to me, of course, and I’d been using different examples for years, I think I just liked this one so I snagged it!)

  • Jonathan Dampier

    <p>I am a marketing executive on the client side. I&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;ve just read some brilliant excerpts about innovation from Douglas Rushkoff&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;s upcoming business book, Get Back in the Box. He speaks of customers involvement in the innovation process:</p> <p><br />
    &Atilde;&cent;&acirc;&sbquo;&not;?…the people we used to call &Atilde;&cent;&acirc;&sbquo;&not;&Euml;&oelig;customers&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent; are now in the lead, and should be welcomed into the process of innovation as equals&Atilde;&cent;&acirc;&sbquo;&not;&Acirc;&brvbar;Those who are confident in their own core competency have nothing to fear from employees or customers with good ideas.&Atilde;&cent;&acirc;&sbquo;&not;?</p> <p><br />
    Amen Mr. Rushkoff! I think it&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;s common wisdom you can&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;t innovate in a vacuum. However, it&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;s not common thinking you can&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;t innovate without customers&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent; input. I like to put it this way: Innovation is a team sport and your customers are on your team. My company learned this lesson earlier this year when we began inviting our customers to contribute in our innovation process (development of our product road map and strategic conversations about future areas of growth opportunities).</p> <p><br />
    However, not everyone in our company was supportive, much less enthusiastic, about this approach. These detractors said things such as &Atilde;&cent;&acirc;&sbquo;&not;&Aring;&ldquo;customers don&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;t really know what they want&Atilde;&cent;&acirc;&sbquo;&not;? and &Atilde;&cent;&acirc;&sbquo;&not;&Aring;&ldquo;they don&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;t understand the true complexity of what we do&Atilde;&cent;&acirc;&sbquo;&not;?.</p> <p><br />
    I think this last statement veils a fear of open source collaboration. If our customers find out what is in the black box they won&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;t need to pay us to provide our hocus-pocus. As one who has worked as a marketing executive in both large and small companies, I have experienced this attitude among marketing types to be prevalent.</p> <p><br />
    As marketers, we often feel it is our duty to keep the curtain closed around our particular brand of Oz&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;s wizard. To make what is being done behind the scenes seem so utterly complicated that a prospect would never consider finding out how to do it themselves and come to the conclusion they must buy it from us.</p> <p><br />
    The simple fact, though, is people buy what they understand. Nobody wants to feel inadequate or looked upon as the village idiot for asking &Atilde;&cent;&acirc;&sbquo;&not;&Aring;&ldquo;that&Atilde;&cent;&acirc;&sbquo;&not;? question. When we as humans more or less &Atilde;&cent;&acirc;&sbquo;&not;&Aring;&ldquo;get it&Atilde;&cent;&acirc;&sbquo;&not;?, we&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;re much more apt to ask questions about the finer details. Thus, as marketers we have created the beginnings of a conversation with our prospects. And what better goal to have as marketers?</p> <p><br />
    My company also learned the conversation, when extended into an open discussion around our company&Atilde;&cent;&acirc;&sbquo;&not;&acirc;&bdquo;&cent;s thoughts on future innovation, is extremely valuable to both company and customer. Instead of it causing the customer to think about performing our service themselves, it has quite the opposite effect&Atilde;&cent;&acirc;&sbquo;&not;&Acirc;&brvbar;they are actually more loyal customers because they now have a personal stake in the game.</p>

  • http://fromthemarketingtrenches.typepad.com/fromthemarketingtrenches/ Jonathan Dampier

    I am a marketing executive on the client side. I’ve just read some brilliant excerpts about innovation from Douglas Rushkoff’s upcoming business book, Get Back in the Box. He speaks of customers involvement in the innovation process:

    â€?…the people we used to call ‘customers’ are now in the lead, and should be welcomed into the process of innovation as equals…Those who are confident in their own core competency have nothing to fear from employees or customers with good ideas.â€?

    Amen Mr. Rushkoff! I think it’s common wisdom you can’t innovate in a vacuum. However, it’s not common thinking you can’t innovate without customers’ input. I like to put it this way: Innovation is a team sport and your customers are on your team. My company learned this lesson earlier this year when we began inviting our customers to contribute in our innovation process (development of our product road map and strategic conversations about future areas of growth opportunities).

    However, not everyone in our company was supportive, much less enthusiastic, about this approach. These detractors said things such as “customers don’t really know what they want� and “they don’t understand the true complexity of what we do�.

    I think this last statement veils a fear of open source collaboration. If our customers find out what is in the black box they won’t need to pay us to provide our hocus-pocus. As one who has worked as a marketing executive in both large and small companies, I have experienced this attitude among marketing types to be prevalent.

    As marketers, we often feel it is our duty to keep the curtain closed around our particular brand of Oz’s wizard. To make what is being done behind the scenes seem so utterly complicated that a prospect would never consider finding out how to do it themselves and come to the conclusion they must buy it from us.

    The simple fact, though, is people buy what they understand. Nobody wants to feel inadequate or looked upon as the village idiot for asking “that� question. When we as humans more or less “get it�, we’re much more apt to ask questions about the finer details. Thus, as marketers we have created the beginnings of a conversation with our prospects. And what better goal to have as marketers?

    My company also learned the conversation, when extended into an open discussion around our company’s thoughts on future innovation, is extremely valuable to both company and customer. Instead of it causing the customer to think about performing our service themselves, it has quite the opposite effect…they are actually more loyal customers because they now have a personal stake in the game.

  • Sean

    <p>Interesting thoughts on innovation. I often find that the best innovative ideas and creativity come from a blank canvas.</p>

  • http://www.interactivecleveland.com Sean

    Interesting thoughts on innovation. I often find that the best innovative ideas and creativity come from a blank canvas.