Innovation Management

Outsourcing Innovation: Worst Idea of 2010

By Shlomo Maital

(400th blog since April 27 2008)

       Large organizations invariably struggle with innovation, precisely because of their size.  The anonymity and bureaucracy of ‘scale’ are enemies of creativity.  It is hard to find big companies, indeed, that are dynamically creative. Apple may be an exception. But after achieving market capitalization of almost $300 b., some analysts wonder whether Apple is truly big enough (about 37,000 employees)  to generate sustained growth and profitability.   

    One solution companies are adopting is outsourcing.  Find consultants who will come up with the ideas, just as you find Chinese factories who will do your manufacturing.  Such organizations are JUMP,  IDEO, or Kotter International, do such consulting. *  For example, Procter & Gamble, known as an organization that puts huge stress in its strategic planning on innovation, employs JUMP, to help study the “future of water and its water-dependent products, like detergent”.  MARS asked JUMP to help study the current meaning of “indulgence”.  GE retained JUMP for 10 different projects.

     There is an alternative to outsourcing innovation.  It is this:  Take ownership of the innovation process, at the CEO level.  Put together a task force.  Use consultants only when the project, issues, and success criteria, are clearly defined. 

    The objective: Build  a personalized creativity/innovation machine, suited to your organization’s culture, history, personality, competencies and goals. 

    Like a fingerprint, this creativity machine will be, MUST be, unique.  And only you, the organization, can build it. Others may help – but the organization’s leaders must take ownership of the innovation process, building and operating it.  

   For this reason, I like the approach of Prof. Vijay Govindarajan, an innovation expert who will not even call himself a consultant. He is author of The Other Side of Innovation.  “Consultants solve problems,” he says. “What I want is for companies to self-diagnose their problems and self-discover their own solutions through my thought leadership”. 

    I have helped companies work on constructing their innovation processes, and often, find there is an Act Two problem –an initial world-changing innovation, followed by immense difficulty in repeating it, precisely because no well-defined innovation process, aligned with the company’s goals and culture, has been put in place, even while every other imagineable process has been organized and defined in an operations manual. 

     Companies – Build your own personal Creativity Process.  If you succeed, it will create a torrent of powerful innovations.  If you fail, or do not even bother, other organizations who do will eat your lunch. 

* based on:  David Segal, “Paying others to assume burden of thought”, IHT Dec. 18-19, 2010, p. 11