Today it seems almost as much energy is spent talking about innovation, as there is on actually doing it.
Despite all this ‘thought leadership’, many organisations struggle to make the leap from generating new ideas to then refining and industrialising them out in the market.
Some of our recent co-creation work (with a particularly innovative customer) focused on this challenge. It proposes an approach that could transform the way organisations incubate innovation, and make the transition from pilot projects to Business as Usual significantly smoother.
It also shows how the less ‘exciting’ business support processes like Finance and HR, for example, are actually critical factors that affect the success rate of innovation today.
The outcome is that our client – a multinational business – has been able to launch new pilot business ventures to market in a fraction of the time that it would previously have taken.
The Innovation Debate
Inevitably, a lot of the focus is on culture and collaboration; how to replicate an entrepreneurial spirit in a big organisation. Many propose creating a different structure and organisation for innovators, giving people the freedom to experiment (and fail) in satellites, away from the big corporate environment.
These points are important, but it can feel like the debate is reduced to a false choice between the free and easy innovators, and the bureaucratic, repressive parent company:
Of course, the reality is somewhere in the middle.
There are plenty of extremely good reasons for standardisation and central control in big business. Efficiency and profitability are one side of the coin, but the risk and compliance burden is critical too. Not to mention the fact that any successfully incubated programme will eventually have to be scaled up and absorbed back into the business.
So the innovators may need to behave like an agile start-up, but they still need to follow a lot of house rules.
Why Business Support Functions Can Break Innovation
The need to work with or through the support functions of the parent company can suffocate a pilot business unit.
Take the example of a fundamental area like accounting. Asking the finance and IT teams of a multinational organisation to develop a new service to support a startup (or to extend the existing process and ERP system) could take months. It could also create a process that fails to meet the needs of the startup business.
Start-ups need a different, more ‘entrepreneurial’ approach to analytics. They need to focus on how the new product is performing in the market, tracking specific costs and unknowns and responding quickly. However, the classic accounting analysis in a big organisation may be more inclined to a higher level view, minimising overall running costs and contributing to big picture strategy.
If working with the parent company’s support functions can be stifling, the alternative for the people running the pilot could be to assemble their own dedicated support team. This is hardly a quick, easy or scalable option – and takes time and effort that should be spent on the core business.
Our alternative vision is to provide a complete outsourced service – everything from the people and process through to the supporting technology. It is all pre-packaged and ready-to-go when the new business unit needs it.
This then solves the challenge for the business leader trying to turn innovation into action: providing the right kind of support and maintaining the right levels of control, while allowing the team to think like a start-up and concentrate on what matters most:
A Virtual Company Operating Model
The answer we developed is to provide a ‘virtual company’. This is a cloud-based service running on a pre-configured ERP system with standard processes and controls. Flexible pricing models make it easy to get started and scale up.
Effectively this gives the pilot team a highly scalable ‘one-stop shop’ for those critical support functions, while minimising the potential for bureaucratic gridlock.
The ‘virtual company’ is also designed to integrate with the parent group’s processes, organisation and technology, and manage this relationship.
The early signs from this approach are that it allows organisations to run, track and understand new product rollouts much better. Furthermore, its flexibility and scalability should make it possible to run several pilots with the same time and effort that was previously required for just one:
This approach could be used in a range of scenarios:
- Taking a new product to market.
- Taking an existing product to a new market.
- Running a recent acquisition or a soon-to-be divested business area as a separate going concern.
- Growing from small to large – making the transition to more complex processes without losing the start-up focus and mindset.
A Final Thought: BPO’s Evolving Role
I think this is an excellent example of how the capabilities and profile of BPO are evolving. Our collective process expertise and business understanding puts us in a position to solve some of the most pressing challenges in business today.
It is our role in the delivery of business strategy on the ground that gives us a different perspective and means we develop practical and clearly focused responses.
In this case, a BPO provider is acting as a key facilitator for innovation. Simply stripping out cost is not the issue here. Rather, it is an understanding of what really affects the performance and culture of an organisation, and the ability to offer a way to change it for the better.