Routine business processes like Innovation Outsourcing could be expected to run smoothly and close to the peak of operational performance but real-life leaves much to be desired. Four rather simple steps will increase outsourcing performance.

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Innovation Outsourcing – Part 2
Four Action Fields

2. Executive Summary
Disappointment with Innovation Outsourcing
up 30% of Clients
equalling billions of $US of wasted resources
Consistent challenges
inhomogeneous Outsourcing motivations
neglected Outsourcing characteristics
deficiencies in Outsourcing management
neglected relevance of individual relationships
Four fields for action to improve in Innovation Outsourcing.
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3. smooth
efficient
effective
Four Activity Fields
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Motivation
Characteristics
Management
Relationship
Innovation
Outsourcing
Success

4. Outsourcing Paradox
• Innovation Outsourcing is a routine business process
• should work reliably
• should operate at peak performance
• Reality
• impressive failure rates
• mismatch between services and requirements
• disappointment with quality
• Innovation Outsourcing should run smoothly but frequently
fails to do so.
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5. Outsourcing Motivation
• Innovation Outsourcing is motivated by
• fixed cost reduction
• total cost reduction
• access to technology or expertise
• quality compliance
• flexibility of scale
• focus on core competence
• ...
• Organisations need to agree on motivation. Inhomogeneity
within one organisation leads to inefficient Outsourcing.
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6. Built-In Characteristics
• Innovation Outsourcing comes with built-in characteristics
• increasing dependency on 3rd parties
• no control over process team, management or incentives
• increasing challenge to transfer generated know how
• “intellectual innovation ownership”
• innovation specific complexity, uncertainty and risk
• innovation specific lack of specifications
• Innovation specific lack of expectation values
• Built-in characteristics require proactive management.
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7. Permanent Challenge
• Outsourcing Management
• pressing issue for decades
• permanently on top of listed challenges in
management surveys
• main cause for failure and waste
• requires high calibre people
• Outsourcing Management and Outsourcing Managers are
key contributors to Innovation Outsourcing success.
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8. Individuals Matter
• Relationship performance is key to success
• Relationship performance not driven by organisations
• identical organisations observed to perform both perfect or
poorly when paired together
• different individuals made the difference
• Overall relationship performance depends on personal
relationship performance on both sides
• Individuals matter
• Individuals and personal relationships drive performance.
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Outsourcing has a tremendous leverage on Innovation Success. Why? This will be topic of one of the next issues.