Last night I was invited to speak at an event Fujitsu were holding for alumni of their graduate programme. Every so often, apparently, they get everyone whose been through their programme together for networking and so forth, whether they are still with the company or not.
So anyway, I’m at this event, and I got asked a question that does, sometimes, come up. Does a big company that outsources lots of its non-core business expect its outsourcing partners to do innovation on its behalf, or do we prefer to do it ourselves and just tell the partner what to do?
Frankly, since there’s usually not enough innovation to go around, we’ll take any that comes our way. That’s capital “I” Innovation, of course, meaning an idea that’s useful to us coupled with some execution behind it to make things happen. Ideas by themselves aren’t that valuable to anyone.
Let’s face it, a lot of the time what we want to outsource is completely commodity. The nature of commodities is that there is usually not all that much that differentiates one provider from another, and price is quite often the key decision factor.
So if one of our outsourcing partners dreams up something that we can use, we’ll likely just jump at it. But unfortunately, this doesn’t often happen. Commodities, with their razor thin margins, don’t leave all that much room for innovation. You usually need some money to invest, you see, to get things happening.
And those same margins don’t leave much room for our partners to be responsive to our innovative requests either. And we get into the habit of thinking the money will be an issue no matter what, so in the end on our side of the fence we’re probably just as much to blame.
So the answer to the question, really, is that we do expect our partners to be innovative, but the dynamics of the outsourcing game don’t often make it possible.
It is unfortunate for both sides.