INNOVATION - THE "ILLUSIVE" GOAL IN OUTSOURCING AND SHARED SERVICES

By Bill Frech, Co-Founder, CandidAdvisors

When you ask an executive to describe what they would consider innovation, you’ll get answers that are all over the map; from standardization of support service processes, implementing best in class processes, to implementing leading edge processes that differentiate them with customers.

Given this range of answers how does one not only define innovation but also realize when they have achieved it?

A number of outsourcing contracts I’ve worked on have defined innovation as:

 “XX% savings in contract cost every year after “steady state” is reached.”

But is that really innovation or just cost reduction?

The bottom line is innovation means different things to each person and is heavily dependent upon your starting point. 

Ideally, contracts should be structured to assure both parties consider innovation and discuss and adjust on a regular basis.

Your view of innovation will change and evolve over time as you implement improvement.  Therefore it is essential that innovation be clearly defined as part of a contract such as adding gain sharing to incent both parties to develop and implement innovative solutions.