IT outsourcing can be a powerful way to access external talent, expertise, and innovation. But how do you ensure that your internal and external innovators are aligned with your strategic goals and incentives? In this article, we will explore some of the key challenges and best practices for managing innovation outsourcing effectively.
Before you outsource any innovation project, you need to have a clear vision of what you want to achieve, how you will measure success, and what are the expected deliverables and timelines. This will help you communicate your expectations and requirements to the external innovators, as well as avoid scope creep and cost overruns. You should also define the roles and responsibilities of both parties, and establish a governance structure and escalation process for resolving any issues or conflicts.
Outsourcing for a skill is absolutely a good way to get good talent and complete a job. However Outsourcing revision or the intellectual capital of the work can be costly. As most leaders lose the details of what's critical to the company stream or future if they lose the knowledge and intrinsic value of the creation
Not all external innovators are created equal. You need to find a partner that has the relevant skills, experience, and culture to match your innovation needs and objectives. You should also consider the level of collaboration and integration that you want to have with the external innovators, and how they will fit into your existing processes and systems. You can use various criteria and methods to evaluate and select potential partners, such as references, portfolios, case studies, pilots, or competitions.
The outsourcing partner needs to share similar values and ethos as the outsourcer.I mention this since this is a factor that gets ignored quite often. A lot of issues come up later due to this soft misfit. Look at this as an extension of your internal teams.
One of the biggest challenges of outsourcing innovation is to align the incentives and rewards of the internal and external innovators. You want to create a win-win situation where both parties are motivated to deliver high-quality and innovative solutions, and share the risks and benefits of the project. You can use different types of contracts and payment models to achieve this, such as fixed-price, time-and-materials, performance-based, or equity-based. You should also consider the intellectual property rights and ownership of the innovation outputs, and how they will be protected and exploited.
Another key challenge of outsourcing innovation is to foster communication and trust between the internal and external innovators. You want to create a culture of openness, transparency, and feedback, where both parties can share their ideas, insights, and challenges, and learn from each other. You should also establish regular and effective communication channels and tools, such as meetings, reports, dashboards, or platforms, to monitor the progress and performance of the project, and address any issues or concerns promptly.
Finally, you need to manage the integration and transition of the innovation outputs from the external innovators to your internal teams or stakeholders. You want to ensure that the innovation outputs are compatible and consistent with your existing systems, processes, and standards, and that they can be deployed and scaled smoothly and efficiently. You should also plan for the knowledge transfer and training of your internal teams or stakeholders, and provide them with the necessary support and resources to adopt and use the innovation outputs.