A common concern of customers is that their
sourcing partner has failed to deliver innovation over the life of the
contract. When I go into a presentation with a prospect, I am often asked – how
will you be different from our current supplier in driving innovation into the engagement.
There could be one of several answers why this is the case -
· Current partners lack the
capability or are culturally inept in bringing
innovation to their clients
· The customer has squeezed the
partners so hard that they only commenced making money in Year 3 or Year 4 of a
5 year contract. Profitability or lack of it is the issue
· Customer organization /
stakeholder interest prevented an innovation culture
· Complexity in sourcing makes
idea generation difficult because of the lack of complete visibility of the
business value chains
While all these are valid justifications to
the conundrum, there may be a completely different perspective of the source of
the issue. Let me explore the root cause by explaining the potential dimensions
around innovation value zones -
The
perception of innovation influenced and delivered decreases as we move from
Zone 1 through 4. There are three reasons why technology sourcing
partnerships fail to deliver innovation.
Firstly, more often than not, I have seen cases where the customer
intrinsically expects the technology sourcing arrangement to deliver the
Category 3 or Category 4 innovation given the competitive pressures or evolving business
models contracting or threatening their market share. For them the innovation
value zone is them and their consumers, while most technology sourcing partners
understand their influence to be in a different value zone – between them and
the customers division they influence or the overall customer process chain. The
partners positioning of their innovation attempts lie predominantly in Category
1 or at best Category 2 innovation. Though these may have an indirect influence
towards Category 3 or 4 innovation themes, most customers fail to appreciate
their partner’s contribution and are dissatisfied with their performance on
this dimension during the lifetime of the contract. This may stem from either a
lack of understanding of the impact or more so a fundamental dichotomy in
expectations between that parties involved. The further a technology partner’s
offering is to a Category 4 value zone, the greater is the probability of
disconnect on innovation delivered or influenced due to expectation mismatch.
Secondly, technology partners have a limited understanding of how to deliver
parameters of success to help their customers excel in their innovation zones
across the four categories. Most providers are unable to understand the impact
of their services across various innovation zones coupled with a limited capability
in how to engineer value creation for their customers.
Third, customers do not have scorecard metrics in place to measure engagements
to periodically monitor alignment to the innovation zones. It’s important to define the impacted value zone clearly for the right outcome. This creates
ambiguity between the customer and the partner in the quantum of innovation
influenced and delivered.
