Design Thinking Visualizing your innovation roadmap through IT outsourcing in 4D
Building innovation into our business operations and processes as a concept has been a top priority for organizations throughout the world for decades. Lean and dynamic management and organizational models have emerged to become key enablers in the pursuit of innovation, monumental growth and overall business success. As our experience with these management styles grows, so does the applicability of the methodologies for Outcome Based Design Thinking in order to create organisational structures that catalyse innovation, both from the standpoint of business strategy as well as product design and service delivery. From this perspective, it is becoming clear that the emergence of Design Thinking as a core competence has been poorly conceptualized and scarcely utilized in organizational settings and especially in accordance to its potential role as an enabler for innovation in outsourcing engagements. Challenging and still in its infancy, the notion of integrating Design Thinking and embedding innovation through strategic Design into our outsourcing projects, poses as a promising way to achieve sustainable innovation and better business outcomes.
Mobile, Big Data, The Internet of Things, to name a few recent IT innovations, are developing at a rapid pace. Seemingly, the major limitation for businesses wishing to take full advantage of the opportunities presented by these new market places, is the ability to define strong overall business strategy and understanding of what and how to procure IT, which is relevant to the capabilities emerging from an ever deepening specialisation of skills. In response, IT outsourcing continues to grow, with major organizations becoming completely dependent on the effective and predictable service delivery of third party partners and vendors, not to mention the ever growing selection of “as a service” delivery. The need for transformation is now, if anything, greater than ever before. In such a dynamic industry, from the humancentric requirements of high bandwidth, bilateral and multilateral communication channels, to the technical and legal hazards of Big Data and unstandardized mobile platforms, no matter where we look, we see problems that can be solved only through innovation and the willingness to adapt to change.
As outsourcing matures and technology gives birth to continually evolving specialized capabilities the reality of one size fits all or indeed one vendor fits all is out of the question. The need for managing agile, multisourced environments will bring further complexity to organizational structure, as well as a growing emphasis on how to develop more innovative ways of creating value. With Gartner and Forrester all duly noting that 70% plus of IT outsourcing projects still fail, being humancentered and having a wider and more forwardlooking approach to solving problems through Design can be a huge advantage.
In discussions of design and innovation, design is typically used in a wider sense than a focus on shape and style common in discussions of product design. As a leadership skill and a management concept that builds on the idea that firms can learn from designers’ practice, without necessarily involving designers. See it more a as a way of putting yourself in the hoes of the user and understanding their needs, then designing an outcome based on that viewpoint. This is commonly adopted by product specialists, but relatively unheard of in terms of organizational or strategic outsourcing models
What we will look at is a design enabled strategy based on the concept of visualizing innovation through and within outsourcing called 4D.
The concept of 4D
(4D film?or 4D film?is a marketing term for an entertainment presentation system combining a 3D film with physical effects that occur in the theatre in synchronization with the film. (Note that 4D films are not actually fourdimensional in the geometric sense of the word.)
What stands out within the very essence of 4D as a metaphor for the outsourcing industry, is not only the visual aspect of viewing something in 3 dimensions but also the concept of a new way of thinking and experiencing: in effect incorporating the concept of holism, but also an added element to provoke greater engagement. When applying this to the leadership and governance frameworks necessary for driving innovation through outsourcing, deeper engagement between stakeholders is essential as is the systemic approach needed to truly understand how innovation as a core business outcome can be achieved. That said, innovation does not have to be radical, successful models and outcomes can and should be developed iteratively and incrementally across all facets of a business, including process, organizational, cultural, strategic and tactical points of view.
The 4D Model “ Define | Devise | Design | Deliver
Define: Innovation is most certainly a complex concept, having multiple meanings and drawing on theories from multifarious disciplines. That said, defining a strategy for innovation is somewhat unique to us all. Taking the time to truly understand what innovation within your business really means, whether that’s delivering better price points through commoditization or by offering advanced solutions through specialization or differentiation, each objective has an underlying common pursuit, they are all developed with a customer and human centered approach. So when defining your innovation, the starting point is to engage and truly view it from the standpoint of your customer, the key here is “empathy”. Once the strategic direction has been defined, ultimately, innovation needs to be understood systemically and aligned with all the involved stakeholders, including that of your outsourcing vendor. As an example, here are a few starting points. Take a company within the technology industry, their core objective is to deliver better technological solutions to their customers, therefore the main innovation and financial expenditure would be to enhance usability or capability of their technology, take a communication company such as skype, they have to innovate to stay ahead of the game, in terms of delivering a better experience to their customers, greater quality, faster connections, easier usability and access etc etc. Whereas a retail business, may not need to pend so much on technological advancement or innovation, their main goal is to innovate within the field of operational efficiency, delivering quality produce at a lower cost to stay competitive. A BPO firm will need to spend more time on innovating customer service, as opposed to technological innovation, although with these remarks, we have to realize that most processes and objectives are technology enabled! Have you ever tried to get through to a real human being at skype?, or spotify for that matter, its not easy as their main offering and expenditure is angled toward advancement in their technology, not so much customer service in terms of actually speaking to someone on the telephone, so they are maximizing efficiency to spend in the area that really counts, their technology. The innovation for companies such as skype or spotify has been to invest into automated response, or online support, not voice contact centers for first line support. All in all, the important revelation to consider when we discuss innovation, is to clearly define exactly what aspects of the business are worth to spend time, resources and money on. Whether it is financing product innovation or innovating operations to enable resource reallocation.
Devise: When devising an innovation roadmap or setting out on an endeavour to realize innovation as an outcome or core business objective through outsourcing, most organizations tend to only view it in terms of output, such as how many new patents filed that period or simply seeing it as being synonymous with creativity and “coming up” with new ideas. Time and time again in an attempt to become more innovative, organizations turn to solutions such as new ideation methods involving their outsourcing partners in ideation or lately “crowdsourcing”. These methods are all great, very useful and indeed integral to achieving innovation, however cluttering our pipeline with lots of new ideas, doesn’t help, what’s the value in lots of new ideas or new patents if they aren’t useful or valuable ones? Do we want more ideas or do we want better ideas?. The answer is obvious, focusing merely on evaluating your vendors or internal innovation on idea and concept generation is not the answer. What is needed is an emphasis on innovation implementation. Essentially we’re talking about the ability to measure innovativeness or to look at it another way the ability to take advantage of a good idea, and how quickly we can integrate the necessary change. In order to implement, develop and exploit an idea, we move from a simple linear process to human centered practices and techniques focused on creative problem solving, or in other words, we shift from a transaction based approach to a relational approach, of which needs to be measured accordingly. The second important point to consider when devising the innovation strategy is to ensure deep alignment between internal stakeholders, getting the support of the right business units, will ensure your voice is heard. If your finding it difficult to do this, make sure you speak the language of the executive you’re engaging with, ie CFO, your proposition should be economic, the COO, should be about streamlining and productivity and your pledge to the CEO should be about overall competitive advantage and business growth, you get the point. Speak the same language!
Design: Designing and specifying longterm, technologybased outsourcing agreements can be both complex and most certainly uncertain. Let us start with designing the right sourcing model, as stated numerous times, large bundled outsourcing projects, with such a specialized environment as IT, it’s difficult to comprehend, “the one vendor fits all” concept. In response, a multi sourcing model seems like the only way forward, as it offers new levels of precision ensuring not only the right vendors for the tasks at hand are selected, but the dedication and specialization of competences support the desired business outcomes.From there we have to take note of the “rightshoring” model, as outsourcing for cost reduction, is not the right direction to go, in all cases we must as stated before make decisions based on the customer and not our shareholders. Then we must draw attention to designing the contractual agreement, we start to see more risk and reward clauses and incentive based agreements being introduced into contracts. Simply stating we want innovation in the contract “innovation is covered right”? This is simply not the case, the contract must seek to define the client’s obligations but more importantly, what is needed in the contract is a flexibility clause, achieving innovation from an IT outsourcing perspective, we need cater for not only rapid future changes in technology but also potential changes in organizational environments. That said, as leaders we must ensure that when designing our vendor governance model, it is embedded into the contractual agreement itself. This alignment with our governance is absolutely key, a suggestion would be to appoint and define the role of an innovation ambassador both on the client and provider’s side. The way we measure both performance and progress then becomes essential. In addition, trust and compatibility with your vendor become fundamental to achieving valuable and successful innovation. The simple buyer supplier arrangement needs to be changed into a strategic partnership, with rewards on both sides. If there is no trust to share ideas, then valuable innovation will be difficult to achieve. We must realize that adding the right incentives are paramount in order to ensure the supplier focuses on delivering innovation and continuous improvement, with an emphasis on “what is in it for we”, which is elegantly explained by the Vested Model. We must also lead the innovation, without leadership intervention innovation is unlikely to occur. A starting point would be to make innovation meetup’s a periodical agenda point and ensure regular meetings are held governed by an innovation steering group made up of senior executives, again on both sides, to discuss, plan, assess, and develop new innovation initiatives.
Deliver: This really takes off from designing the right governance model, however further emphasis needs to be made on value realization, creation and performance improvements, which leads us into “metrics”, you can’t improve what you can’t measure! Defining the right metrics for your business can be tricky and there’s generally no one right nswer and agreeing on what to measure can feel more like art than science. Indeed a valid statement, because we turn once again to design thinking. Using this concept, the way to measure innovation and improvements, is to measure the impact on the customer, “think end to end”. Santander is a good case study, as they have recently re shored their customer contact center, after evaluating the importance of customer care from customers and the poor reviews of their offshored customer service center. Periodically the customer should be given the opportunity to provide feedback, which should form the basis of your metrics, and once again these metrics must be relative and indeed developed holistically, as metrics can not only be important levers of evaluating the results of specific initiatives, but also for driving behavior. We also have to consider how to properly utilize the intelligence gathered from these metrics. With this in mind, the first step is to ensure a common business language is used throughout the organization, once that is achieved and agreed upon we need to create a “family of metrics”. This requires a strategic and multi disciplined approach, with wide stakeholder adoption starting with the business growth strategy and cascading systematically throughout each business unit, process and component (enterprise architecture). By establishing a “family of metrics” that support the collective innovation imperatives, the customer and the desired objectives of the business, leaders can then drive return on investment, organizational capability and leadership behavior at multiple levels of the organization. All in all, this does require a totally new way of thinking, which is important, although we may formulate new metrics, if we continue to think in the same way, there’s nothing new. Indeed this is the problem with today’s metrics, they have been formulated with an old way of thinking, and have little in relation to the customer. While some of these metrics are valuable for driving investment in innovation and evaluating results, they provide a limited view. In today’s environment in which “open innovation” (sourcing ideas and technology from outside the company) can create differentiation and competitive advantage, for example, some of these metrics actually inhibit strategic innovation. And in an environment in which disruptive innovation and cannibalization must be wholeheartedly embraced as a core strategy, fundamentally new types of behaviors are required, and subsequently new structures and related metrics to drive these behaviors.