Nearshore Americas

Innovation: A “Do or Die” Proposition for Outsourcers

Innovation is a coveted magic ingredient which is known, ostensibly, to launch companies into the stratosphere of exceptional performance, leaving the competition in a cloud of dust, coughing blood and struggling to catch up.

Apple has excelled at exactly that, and if emulation is the most sincere form of flattery, I am concerned for it going into the Apple’s head, for the sheer amount of emulation of products, functionality and design. Just as I am writing these words, yet another company has announced its own version of a tablet. Tablets has been a lukewarm (I am being generous) market for the past decade, yet now are all the rage due to iPad success earlier this year.

Lean Foundation

In addition to creating new goods and services, innovation is critical for process improvement. Toyota Production and the derivative Lean methodology are based, among other things, on a concept of continuous improvement of business and manufacturing processes. This is innovation in its pure form, originating from and thriving on the factory (office) floor and not ivory towers – established practices questioned, new approaches tried, successful solutions applied.

Innovation ought to be good for anyone, but why would you bother if you are an outsourcer? After all, you can offer to your clients low prices thanks to a low wage, low tax or weak currency environment.

I am writing this article from a small city in South Western Ontario, Canada. Three quarters of Canadian exports are destined for the USA and for the longest time, Canadian manufacturers did very well because of the weak Canadian dollar.

Roll the time back to the beginning of the century and you will see Canadian dollar trading at 65 US cents.  Selling our goods to the USA was easy because the weak national currency allowed offering attractive prices. Today, the two currencies are at par, which has made it difficult for Canadian manufacturers to compete. Many companies went under, unable to adapt to the changing reality and mounting competition.

If you are in the outsourcing business, innovation is vital to you. You need to create new and unique product and service offerings for your existing and new clients, to strengthen the relationships and make switching to another supplier undesirable.

Are You Continuously Improving?

If you are in the outsourcing business, innovation is vital to you. You need to create new and unique product and service offerings for your existing and new clients, to strengthen the relationships and make switching to another supplier undesirable. The sheer amount of competition necessitates continuous process improvement to ensure profitability and competitiveness. This is simply non-negotiable.

Where is your innovation going to come from?

It may stem from unexpected success, something you or your industry stumble upon and then develop, having discovered its potential, much like the 3M sticky notes or the now ever-present frequent flyers’ cards.

Or, will it come from an unexpected failure, much like Ford Edsel, which was one of the key reasons for the success of the popular Mustang line?

May it be borne out of an unexpected external event, such as a political change, natural disaster or a terrorist act? Change creates opportunities, and dramatic events create dramatic opportunities.

Often, innovation comes about as a result of process weakness. I started my career with a courier firm DHL, which was initially created to deliver, par avion, the ship’s bill of landing to port authorities, so that all paperwork and planning could be done ahead of the ship’s arrival to the port, saving large amounts of money to the ship’s owners.

How about the opportunities created as a result of market or industry structure change. Look at the ongoing and pending changes in the US health care, as an example, and marvel at the opportunities it is bound to generate.

Areas of high growth are always a rich sources of innovation. When PCs became a fixture de riguer for any household, the number of applications (and development opportunities) exploded.

What about converging technologies, such as computers and telephony? Skype and iPhone, IP phones, universal cabling, thousands of patents, tons of opportunities.

Another source of innovation is within the ever-changing structure of the society. Pay attention to demographic changes. Today, products and services for seniors is a rapidly growing area, tomorrow, it may be something else.

Are you spotting any changes in perception? Apple sure did when it introduced the iphone. No longer just a cellular phone but a status symbol, an accessory similar to a nice watch.

Finally, are you staying on top of the new knowledge being developed in your industry? Are you looking for the ways to apply it in your work?

Can you forsake innovation today? Absolutely not! If you choose to be in this line of work, you might as well be a long term success, a force to be reckoned with.

Ilya Bogorad, a regular contributor to Nearshore Americas, is the Principal of Bizvortex Consulting Group Inc. a management consulting company with clients worldwide. Ilya specializes in building exceptional IT organizations, decision making and business cases. He can be reached at ibogorad@bizvortex.com or +1 (905) 278-4753. Ilya’s most popular piece for NSAM is here: Why You Don’t Want Beancounters Making Outsourcing Decisions

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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