In-House or Outsourcing; How to Innovate without looking like a Fool

Growth, new product development, operational efficiency, market expansion, strategic partnerships and good old new category innovation.

These are the topical fodder to keep business leaders on their toes, and getting the balance right between business as usual and future planning is a constant challenge. Despite our best intentions, we mostly default to BAU-type workstreams. It’s what we know - our bread and butter - so dedicating our resources to what we do best is both mandatory and easily defensible.?

Yet the world races by. New technologies pop up that we worry could change the face of our business while we look on in dismay, the market around us shifts and we have to make decisions about what we hitch our wagon to and what we just allow to let happen. The pace of change is amplified by emerging AI, bringing with it the prospect of enticing operational gains and the nightmare of wholesale disruption.?

So, we must innovate. The word itself feels a bit tired and shackled with disappointing outcomes, but it’s not to be given up on. There’s plenty of life left in great innovation practice, but to get to that great practice we need to abandon and run away from the ‘paint by numbers’ mediocre practices that have become commonplace.?

Of course, there are companies where continual in-house innovation cycles are a typical part of the organisational culture and ideology - where it’s a core capability. It’s when the company has been built on a solid foundation of continual innovation, with skilled people and well-honed practices proving time and time again that failures are seen as learning, where ideas are given the spark to live and the fuel to grow that it makes good sense to keep the internal innovation function pumping.??

Sadly, for the most part, we don’t circle in that orbit. Mostly, building a truly great innovation practice within a corporate environment is a daunting challenge. It’s expensive, slow and the rate of failure means business leaders put themselves in the line of fire with their shareholders, Boards and critics who will be quick to shout about the reasons failure should equal the abandonment of future efforts.

Argh! Time and time again, early failures create headwinds that stymie our energy and ambitions. We start to mitigate the risks by introducing governance and stewardship models into the innovation process that limit impact and numb our thinking, bold creativity goes out the window, and our internal innovation projects look more like BAU’s ill-wanted house guest.?

All this means is that there are excellent reasons for outsourcing at least some of your company’s innovation efforts, not just because you don’t happen to have a pile of cash to burn hiring an internal innovation team, but because it makes strategic and economic sense.?

Ultimately, you’re best able to make the right decision yourself, but here are a few things to think about…?

You get to tap into way more brainpower. Think about it - when you work with an innovation partner, you're not just limited to your own team, you're getting fresh ideas from startups, academics, and experts who'd never walk through your door otherwise.??

Partnering can bring critical independence. If you reach out to a startup to talk about collaborating for instance, your brand casts a shadow and sets an expectation. It could be a fear that you might ‘steal’ their IP, or that you will cajole them into building a point solution for your business. The brand halo effect is real, and hard to overcome.??

It's actually cheaper than you might think. For roughly the cost of one full-time employee, you can run a complete innovation program with all the trimmings. Plus, you get to use your partners tools and tech instead of building everything from scratch.?

Things move faster too. When you're trying to test new ideas or build prototypes, having a partner who's already got the process down pat can really speed things up. This is super helpful when you need to keep up with rapid market changes.?

Outsourcing lets you stay focused on what you do best. Instead of getting bogged down trying to figure out new tech or innovation processes, your team can stick to what they're good at while your partners handle the rest.?

And here's a bonus - working with outsiders can help you dodge internal roadblocks. Bringing in an innovation partner creates a new dynamic and insulates people who’s everyday working relationships and hierarchies might interfere with the decision-making process.

Let's face it, sometimes company politics or "we've always done it this way" thinking can kill good ideas before they start. Outside partners don't have that baggage, so they can often get things done faster and with less hassle.?

Whichever way you choose, keep innovating and get comfortable being uncomfortable. It’s a good friction to have.??

Peter Osborne

Chief Executive Officer

Cremorne Digital Hub