Collaborative Innovation

Tony Morgan

• Publisher: Business Expert Press
• Year: 2017
• Print ISBN: 9781631576317
• eBook ISBN: 9781631576324
• Topic: Betriebswirtschaft
• Subtopic: Dienstleistungsbranche

Innovation can be a challenging subject. At its worst, it is a meaningless buzzword. At its best, it is a means of driving differentiating value for an organization. But how can innovation be consistently achieved in the context of a client–service provider relationship? This publication provides a practical framework, with clear supporting recommendations, for clients and service providers to work together to overcome challenges and successfully manage, develop, and deliver innovation as a key part of their ongoing service relationship. Real-world experience, guidance, and examples are provided to assist and enable organizations to gain additional value with their service partners through delivery of innovation by design rather than by accident. Although targeted at service relationships between clients and external service providers, the content and recommendations are equally applicable and relevant for enterprises driving innovation internally or as part of a wider ecosystem.

CHAPTER 1

Introduction

Introducing Collaborative Innovation by Design

The contents of this publication are focused on understanding and overcoming challenges, which both client and service providers face, when attempting to manage, develop, and deliver innovation collaboratively as part of an ongoing service relationship.

The primary argument made is that when clients and service providers truly collaborate to drive innovation and do this by design rather than by accident, they can and do create higher value outcomes for both parties on a repeatable and sustainable basis, throughout the life cycle of their service agreement and relationship.

Real-world experience, advice, guidance, and examples are provided for clients and service providers, assisting each to gain additional value from successful joint innovation with their service partners.

The objective is to provide a practical framework, with clear supporting recommendations, for achieving successful outcomes through joint innovation by design.

Although targeted at service relationships between clients and external service providers, the majority of the content and recommendations are equally applicable for use in internal service arrangements, where the client is a business unit, function, or team within an organization and the service provider is a different business unit, function, or team within the same organization. The challenges faced in such a situation are often the same as in an internal client and external service provider scenario.

A Little on Terminology

I thought it useful to include at the very beginning a brief explanation and introduction to some of the key terminology used in the context of the publication’s content. Many people will be very familiar with some or all of the terminology used, while others may not be. From experience, different words and phrases are often used when describing the same thing in the areas covered. A common understanding of terminology is important, between the author and reader and, more importantly, between clients and service providers.

It is almost business as usual for one organization to use a word or phrase to describe something while another uses an alternative, and this frequently leads to confusion, misunderstanding, and sometimes even mistrust. In a service relationship, it’s frequently a good idea for a “client” and “service provider” to agree written definitions for key terminology and if and when needed refer back to these, not just in terms of a contract but, equally importantly, to support the practical day-to-day working of people on the ground using, delivering, and supporting services.

Innovation—a thorny one to start with; as outlined in the following chapters, innovation can mean many different things in different contexts to different people and organizations, but for general purposes in the context of this publication, innovation refers to the use of new ideas, or existing ideas in a new context, to drive change that delivers value.

Types of innovation—there are many ways to define and describe innovation:

• One traditional view of the types of innovation is as follows:
  • New product and service development innovation—creation of new or improvement of existing products or services
  • Operational innovation—improvement of existing business processes
  • Business model innovation—changes to organizational and business models
• A second, more recent, view of innovation includes the following:
  • Core innovation—improvements in existing business products and services, operations, and business models for existing customers and markets
  • Adjacent innovation—expansion into new business products and services and/or markets, in areas linked to existing core business
  • Transformational innovation—expansion into totally new business products and services and/or markets, in totally new areas not linked to the existing core business
• A third view looks at the level of innovation, which can span all the way from:
  • Incremental innovation—minor or marginal changes and improvement to existing products and services, operations, and/or business models
  • Disruptive innovation—creation of new-to-the-world products, services, and business models that create new markets and industries and/or disrupt existing ones

Open innovation—in simplistic terms in the context of this publication is when organizations reach out and make use of external ideas, capabilities, and routes to market, in addition to internal ones.

Client—customer organization/end user organization/organization that uses the services of a supplier or service provider.

Service provider—organization that supplies specific (usually contracted) services to one or more client organizations (i.e., in the context of this book, the same as supplier below).

Supplier—organization that supplies specific (usually contracted) services to one or more client organizations (i.e., in the context of this book, the same as service provider above).

Service (or Service offering)—a means by which a service provider delivers value to a client organization by facilitating outcomes the client wishes to achieve, as part of a joint agreement.

Service improvement—improvements to increase the efficiency, maximize effectiveness, and optimize the cost of services and underlying service management processes. Don’t worry, we’ll return to this subject and ask the sometimes thorny question: “Is service improvement innovation?”

Engagement phase—process through which a client organization defines its requirements for one or more services and selects and contracts with a service provider to provide them.

Transformation phase—change program (typically in early stages of a services contract) where the service provider works with the client organization to deliver changes to enable enhanced ongoing run of service(s).

Run phase—sometimes known as business as usual—ongoing delivery and management of service(s) provided by the service provider to the client organization.

What Is the Problem We Are Looking to Address?

The core of the issue that led to this publication is that innovation is difficult to achieve and maintain, particularly in the context of an ongoing client–service provider relationship. In many ways, achieving successful innovation between a client and a service provider, as part of a service relationship, should be little different to the situation where any two organizations make a conscious decision to pool capabilities and do something new or different that will drive value for both parties.

Much research and practical implementation has been done to extend Henry Chesbrough’s original work and analysis on inside-out and outside-in aspects of “open innovation.” The focus of this publication is really on one specific aspect or angle of open innovation, that is, innovation between two organizations that already have a service-based relationship but often, wider inputs and elements of open innovation will be involved. It’s a fascinating area and one that virtually all forward-thinking organizations are considering to some extent.

We know from experience there can be challenges. With elements of open innovation, there always are, but these are now widely understood and can be managed effectively to enable success. Things are never quite this simple, though, are they? Innovation can be a much-bandied buzzword, put around by service providers, with little substance to back it up. Frequently, clients may ask for innovation from their service providers, without really understanding what it is or what they want. Little surprise, then, innovation is a word and an area where mistrust and misunderstandings often exist between clients and service providers. In many cases, it is the category where clients rate their service providers lowest in terms of formal client satisfaction and value derived from the overall relationship with the service provider. In addition, it is an area where service providers can be exasperated by their clients.

There is no doubt that dissatisfied clients and frustrated service providers exist, each with their own war stories to tell. However, innovation between clients and service providers definitely does happen. There are great examples of this across many industries, but in the past, this has often occurred as much by accident as by design. This, in itself, can cause very good results, but accidental innovation is unlikely to be consistent or sustainable.

The reality is innovation between clients and service providers is difficult to achieve and equally challenging to sustain, but there is a positive side. In this publication, we make the case that when clients and suppliers do truly collaborate to drive innovation and do this by design rather than by accident, they can and do create higher value outcomes for both parties on a repeatable and ongoing basis, throughout the life cycle of their service agreement and relationship.

The book includes a number of recommendations, approaches, and techniques for achieving this. The author readily admits that the content is not based on rocket science but all too often some or many of the challenges described in the following chapters exist, with no concerted plan to address them. If this is not the case in your organization, I’m very pleased and would love to know if you’ve already adopted some of the approaches recommended in this publication and/or have made use of equally effective alternative approaches. One of my experiences of working on joint innovation between clients and service providers is there is always something new to learn.

Much of what I’ve looked to build into this publication is derived from my own direct real-world experience of managing, developing, and delivering innovation between clients and service providers in the IT services industry. The rest comes from extensive discussion and collaboration with others, including chairing and facilitating cross-industry groups, workshops, and debates on the topic. I firmly believe the challenges outlined exist generically in many industries, and so hope the content will be useful for a wide range of organizations as they look to create new relationships between client and service provider organizations or build upon and improve existing ones.

Lastly, this book is about innovation, and so it can’t just be about looking back and taking lessons learned from experiences, good and bad. Thankfully, there will always be new things to learn, different ways to do things, and improvements to make. The book also highlights some of the newer areas that are making a real difference in the effectiveness of collaborative client–supplier innovation. Of course, there will be others, and next year there will be different ones again, and so on. The author would love to engage with the readers on their thoughts, lessons learned, and new approaches, on an ongoing basis, so please do get in touch.

The Author’s Experience

My career in IT and technology services began in 1987 after leaving university, when I worked in the internal IT business unit of a number of client organizations. Since joining IBM in 1998, one of the major reasons I’ve enjoyed myself and been able to keep myself motivated has been the ability to find new and interesting roles every few years. Having been Chief Architect for IBM on multiple large client engagements and ongoing service contracts a number of years ago, I made a slightly sideways move into Service Innovation–related roles.

My interest started when I attended an IBM technical leaders conference. One of the speakers gave a fascinating talk on the work he was carrying out as IBM Innovation Leader for a very large IT services and sourcing contract with a major global financial services client. In this role, he was working alongside an opposite number in the client in something called a Value Creation Centre, which was a joint team managing a portfolio of innovation-related activities, rather than a physical place.

In effect, this was a joint investment between the financial services company, as the client, and IBM, as the service provider, focused on areas where the client organization could use technology to do something new or different to drive business value. The concept included developing opportunities for innovation by focusing on the client’s business challenges and opportunities; utilizing the client’s business knowledge and capabilities, and IBM and partner industry and technology capabilities; developing these and ultimately delivering them; and also measuring the value derived.

As I listened avidly to this presentation, I thought this was exactly what IBM and other service providers should be doing with their clients but often were not. I was delighted when the speaker said he was looking to expand his team, and connected with him afterward. Before long, I applied for and got the role of Innovation Architect, working in the Value Creation Centre team. What I didn’t quite realize at the time was I was part of the Innovation Leader’s “exit plan” from the account, that is, he’d been looking to recruit somebody who could quickly take on his Innovation leadership role. So before long I was the Innovation Leader of this large Value Creation Centre. In parallel, the previous Innovation Leader became a long-term colleague, friend and mentor and has had a hugely positive and supportive influence on my career ever since.

This was a job I loved. I learned many positive and valuable lessons, a number of which were vital for my subsequent roles and have been incorporated into the chapters of this book. Both organizations were committed to the success of the innovation partnership, there was strong and engaged sponsorship, there were great connections between business and technology, and strong teams on both sides committed to working together to drive innovation and real business value for the client organization and benefits for IBM too (more on that later).

After this role, my next move within IBM was to join a small team developing a new innovation program for a cross-industry portfolio of IT service and sourcing clients in the United Kingdom and Ireland. Again, I quickly became the leader of this team, and for the next four years I worked with clients and IBM teams in my own business unit and across the depth and breadth of IBM to partner with our clients on a huge range of innovation-related activities, from one-off innovation workshops to specific innovation-related projects to ongoing joint innovation programs.

In this role, my job title was IBM Global Technology Services (my business unit) Client Chief Innovation Officer. The “Client” word is important. My role was not to work on internal IBM facing innovations, which were obviously also hugely important, but to drive joint innovation between IBM service account teams and our clients.

Leading a small central innovation team, my role was really split into two parts.

1. Working directly with clients: I worked with a number of specifically targeted clients to manage, develop, and deliver joint innovation—running innovation workshops, developing and delivering a range of innovation projects, and supporting the establishment and governance of joint innovation programs.
2. Enabling IBM teams: Working with IBM engagement, account, and service teams to skill them in managing, developing, and delivering joint innovation proactively with their own clients; developing repeatable innovation-related assets; enabling enhanced access to wider IBM innovation programs and resources; creating positive communications of success stories; and creating a buzz around innovation within IBM and our clients.

The first part of the role was very important for me personally, as working with clients is where I get a ...

Table of contents

• Cover
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Acknowledgments
• Preface
• Chapter 1 Introduction
• Chapter 2 Client Challenges
• Chapter 3 Service Provider Challenges
• Chapter 4 Service Relationship Considerations
• Chapter 5 Innovation by Design
• Chapter 6 Proof Points
• Chapter 7 Innovation Evolution
• Chapter 8 Recommendations
• Chapter 9 Final Conclusions
• Index