The black box of innovation in outsourcing: let’s make it work!

Innovation is an aspect of outsourcing that stubbornly remains a ‘black box’ for customers and suppliers alike. Worse, it’s a black box that doesn’t work. Few seem to know what’s inside, and even fewer seem to know how to make it work.

Platform Outsourcing Nederland (PON), the Dutch knowledge and networking platform in the area of outsourcing, held an “Innovation” seminar this week. Three of us (Harm Spoor, Jacco Schonewille and myself) presented three aspects of the problem. Harm discussed a study he’s just completed organized by PON and Hoogeschool Utrecht on aligning IT with business and the effect that alignment has on innovation. Jacco, who’s just stepped down as CIO at a European transport company, addressed how innovation occurred through an outsourcing that his company had recently done. And I talked about how parties to an outsourcing could draft a contract to ensure that their mutual expectations about innovation could be realized.

What became clear in the course of the seminar was how desperately the outsourcing industry needs to pay attention to this – as yet – woefully undeveloped area. As proof of the pudding, I’ve seen contracts in major outsourcing deals containing “standard innovation provisions” that have been proven time and again not to work. No one seems to know what the terms actually mean, what is being expected of the parties and how on earth anyone can tell when and whether the obligations in that regard have been fulfilled.

The problem seems to be in the fact that few people know what innovation is. A US Supreme Court justice once wrote in a case concerning pornography that he couldn’t define the term, but he knew it when he saw it. That’s more or less where we are today with innovation. Everybody talks about it; it’s in practically every outsourcing contract, but no one knows exactly what it means.

Let this be a call to arms: PON (and the rest of the outsourcing world), it’s time to open this black box, see what’s inside, and finally begin to make it work.

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