Outsourcing Your Future – part 2

There are a number of company-hosted competitions, events, hackathons all with the aim of introducing innovation to the host company. I questioned the rationale behind these initiatives in the first part of Outsourcing Your Future.

The P&G Signal Accelerator Innovation Brief for Daycare Subscription is a good example of how these can be presented to the public, encouraging submissions from other companies. It opens the door for innovation with the potential reward of access its brands for the external company.

Whereas I questioned the motivation behind the initiative in the previous post, I want to look at other aspects in this post.

Maturity of the host

When I talk about maturity, I’m usually thinking of the difference between experience and wisdom. Someone can have a great number of experiences, but they may not be wise from what they’ve experienced. Similarly, an organisation that is mature in age is not necessarily mature in its capabilities.

By hosting innovation events, older companies are trying to introduce the capability of innovation into their organisation. It’s a parallel move to that which we saw in call-centres, then contact centres and also in shared services solutions. The company focusses on its core and outsources some standardised capabilities of its business.

In principle, that seems fair, since innovating is just one of many capabilities (we could give it a better name, but it’s still innovation). The bigger issue is that the target of these innovation events is often the core business; something which very few chief executives would ever dream of outsourcing. However in hosting innovation events, that’s what they’re doing; they’re outsourcing the company’s future.

Direction

Having read through a number of calls-for-applications and similar invites, plus being familiar with a larger number of events, I see two directions forming.

  1. Rather than the innovation happening on the inside and pushing it’s way out, the innovation is nurtured on the outside and is adopted internally. Or more often, it meets the resistance of the host organisation and fizzles.
  2. Innovation happens on the outside and is then partnered, e.g. you keep the external startup as an external and then purchase services from it (which may be viewed as allowing it access to your procurement team, but it’s still money transferring for services). That partnership arrangement keeps the innovation skills on the outside, but allows you the benefit of the innovation for a cost.

Managing risk

Considering the age of many companies hosting these events, they will have rigid governance procedures. Startups, on the other hand, do not. They are more flexible, more able to change direction and quicker to deliver. By allowing other companies into your problem space, you take advantage of their ability to take shortcuts that wouldn’t be allowed in your organisation. Those short-cuts may not be short-cuts in reality, it could well be that your organisation has created obstacles that do not need to be there. However, the result is that the external startup can deliver more quickly than your internal teams. That speed of delivery has value in terms of being able to conduct business experiments and learn from the experiments more quickly.

But as well as being able to make short-cuts, startups can take riskier approaches, which is easy to see when one of the guiding mantras of the startup ecosystem is “Do things that don’t scale” originally from Paul Graham.

By hosting innovation events, you’re outsourcing some of your risk management. You allow yourself to focus on the product, not how the product was developed. That doesn’t free you from all responsibility, but it does allow a shift in responsibility at significant points in the development process.

Debt

There’s been a growing trend of recognising the concept of technical debt. In the same way that shortcuts or short-term decisions for technology have to be paid back later, there are other forms of debt. I’ve discussed process debt before.

Innovation events, especially sprints have an element of creating debt. It’s not necessarily bad debt, since the act of bringing people together to progress a common goal has significant value, but the team involved may decide to do something quickly because of the time available. Even if the decision is “I’ll do it in this tool to get it ready by Thursday evening and, if the concept is accepted, then we’ll do it properly next week.” – that’s still debt. And we’ll see those decisions across process, technology, management structure, job descriptions, skills, stakeholder management, customer engagement, etc.

At the point that you want to bring the innovation in-house, you will have to pay that debt, so where have you found yourself? Did hosting the innovation event outweigh the debt incurred? Sometimes yes, sometimes no.

Value

And that brings me to my last point. I’m struggling to think of – actually, I can’t think of – a single company that has ran an innovation event and then openly discussed those innovations a year later. There are companies that regularly host innovation events and there are those that are starting out in 2018 for the first time. Of those that have hosted previously, none publish what’s happened since. Some do not refer to previous events. A few publish what happened soon after the event, but do not follow-up with current news, reflecting on the value realised through hosting the event.

I can think of one company that has benefited from an innovation event from a cultural perspective; being able to expose its wider workforce to innovation through immersing them in a week-long festival. Even in that case, one which they openly refer to previous innovations, I do not know which of the innovations are currently active one year later.

For instance, I’d be interested to see previous entrants to the event, how they were engaged following the event and what progress has been made up to now.

I can think of one brand-led accelerator, Collider, that does publish details about previous cohorts.

Overall, it looks like the pickings are slim when trying to evaluate the performance and value of outsourcing innovation through hosting an innovation event.

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