Consider the Source

Waiting for the Innovation Fairy

By Max Staines

If you expect something, you should have some way of knowing whether or not you get it.

A sizable portion of IT executives seem to be missing that point.  According to a recent survey cited in CIO magazine, “67 percent of IT leaders say they rely on outsourcers to turn ideas into new and improved processes, but just a third actually measure the impact of innovation delivered by their service providers.”

Sounds like a recipe for disappointment.

The survey, conducted by the United Kingdom’s Warwick Business School and sponsored by offshore outsourcing provider Cognizant, also found that most CIOs would welcome some sort of framework for innovation, and half would be willing to pay more for such a framework.

From Compass’ perspective, a process for measuring innovation has to address some basic questions, including:  

• What’s my current state?
• What’s the potential benefit of the proposed innovation or improvement?
• What’s the investment, risk, and change involved to implement the initiative?
• What are the alternatives to the proposed change?
• What will we need to manage the future state?

A broader consideration is to make a distinction between productivity improvements on the one hand, and true innovation on the other.  Client organizations and service providers will admit they often make unrealistic demands for (and promises of) both. Yet true game-changing innovation requires specific mutual incentives that allow both parties to envision the art of the possible and work towards a transformative future state.

That’s a very different proposition from optimizing the efficiency of the existing environment. 

Bill Huber, a TPI Partner and Director of CPO Services, suggests building a certain number of consulting hours into service provider contracts that are devoted to identifying and exploring truly innovative ideas. Gainsharing incentives can also be effective, as can governance frameworks that include a specific focus on tracking the introduction, acceptance, and lifecycle of innovation initiatives.  (A recent column in Global Services magazine discusses TPI insights into innovation, specifically in the BPO space.)

To put the improvement vs. innovation distinction into perspective, consider the business world of 100-some years ago.  When efficiency-minded organizations were equipping messengers with bicycles to increase productivity, a few saw an opportunity to make a step change with this new telephone thing.

What were the telephone people doing differently?

Tips for Using Transformational Sourcing to Capture Lost Value

By Greg Blount, Partner ― CIO Services, TPI

When you developed your sourcing strategy it probably had several key elements articulated in order to  achieve the resultant business case. In the end, were you able to execute against the entire plan, or did you achieve objectives only in specific areas?

The days of the lift and shift of assets and people are long gone. If there was not a fundamental transformation occurring, we were simply moving from high cost to low cost and showing significant savings. These solutions in most cases still had fragmented governance, non-integrated organization models, limited to no change management, and transitions that in some cases took twice as long due to lack of methodology and organization commitment.

Today we have to be smarter about sourcing and how to capture lost value. Today’s “transformational sourcing” framework is designed to ensure that our clients can enable long-term value and sustainability. With this higher order of sourcing, investing in sourcing management, change management and re-tooling resources — in addition to transferring risk to service providers, designing optimized organization models, and defining enhanced IT governance processes — are all imperative for achieving greater value and sustainability.

Here are the TPI Top 5 tips for IT executives looking to determine how to capture lost value or maximize value through transformational sourcing:

1. Implement a clearly defined organization structure that has minimal overlap of roles between the client and service provider.
2. Invest in the organization, tools and processes to implement a centralized sourcing governance model that has clear separation of duties between the operational groups.
3. Ensure that the leadership team is highly experienced and can manage to the outcomes along with having a clear vision of success — not a vision of the past. Change management is key to driving the new model’s culture and behavior.
4. Implement a well-defined set of IT governance processes that establish solid demand management, forecasting and decisioning processes.
5. Conduct a comprehensive roles and skills analysis to ensure you can move the best talent into key roles, and establish a training program to evolve personnel into new roles.

TPI’s seasoned transformational sourcing experts can help your company define the right strategy through our experience, objective advice, industry knowledge and depth in all aspects of information technology and business process services.  To learn more about evolving to transformational sourcing, e-mail
Greg Blount, Partner - CIO Services, TPI, or phone him at +1 214 616 0204.

Risk and Organizational Change at the PMI Global Congress – Part 2

By Cynthia Batty, Global Competency Lead, Service Management, TPI

 

 

At last month’s Project Management Institute’s Global Congress there were many sessions on risk management. PMI has long considered risk to be a critical factor in project management. We were treated to a number of very sophisticated risk workshops, by very thoughtful educators and consultants. I had some very useful takeaways from these sessions; this is one.

 

Outsourcing has risk that needs identification as well – both from the project perspective and from the ongoing service and relationship management perspective. In my practice, I generally see interest in risk management up front, but the interest in maintaining a risk management and mitigation plan wanes after the outsourcing project is completed and services begin. In our view, this is the time when risk management is most important.

 

I’ve wondered for some time why managers are so reluctant to engage on risk, and I’ve come to believe that it’s because risk is boring – unless you’ve got a “live one” in front of you. So when I signed up for the session “Deadliest Catch: Risk Identification in the Vast Bering Sea,” I was hoping for something different – and I got it.

 

The instructor, from The Persimmon Group divided up the room into groups of about 15, and asked us to watch some film clips from the Deadliest Catch program and identify all the risks we could see in 10 minutes after the films. We had about two minutes to organize ourselves (the groups were complete strangers to each other) and were told that the group that identified the largest number of risks would win a prize.

 

Then he rolled the tapes of the dangerous, wet, cold, frightening footage of men catching crabs off the Alaska coast. We made notes and collated our risks afterwards in an atmosphere of fun and excitement. Granted crabbing is a bit more immediate and obvious than managing outsourced services risk, but the very short process focused everyone’s minds wonderfully! Our team identified over 100 risks – but we still lost to a group who did a better job of creating their categories.

 

It was an eye-opening way to push a team to quickly take stock, which forced immediate identification of key categories, and an excited atmosphere to literally call out the risks large and small without rationalizing. When I told the instructor I planned to use the technique with my teams from now on, the room exploded in applause. It was a smart, interesting way to drive people to think fast (and in a relatively fun way) about risk. I’ve used this already with a client, just focusing on their own risk, and giving them a head start by identifying categories such as Reputational Risk and Geopolitical Risk to help them. It worked like a charm; they identified nearly 200 risks in eight categories in two ten-minute sessions, which has lead to subsequent risk workshops to follow up.

 

This is a real keeper of an idea, and now part of our overall Risk Management methodology in our Service Management & Governance practice.

Next time: Innovation and Organizational Change Management

Organizational Change and Risk at the 2009 PMI Global Congress

By Cynthia Batty, Global Competency Lead, Service Management, TPI


I attended the Project Management Institute’s Global Congress this month, in Orlando, Florida. I am particularly interested in Organizational Change Management and Risk Management, so I selected sessions primarily focused on these things. Many of the sessions focused on what I call “voodoo” change management – communications, feelings, and so forth – but not an operational expression of change. Though there was one outstanding and remarkable presentation by an interesting team from the State of Oregon and George Fox University. I think their work provides some very practical and operational insight on how change management should be integrated into both project and outsourcing management.

What the State of Oregon Department of Human Services Process Center of Excellence has done is take a look at all the thinking in organizational change management, codify and examine it, and create a methodology that shines the cold light of operations on the problem of providing concrete actions to bring about effective change – especially when the change is not one that stakeholders will ever like or embrace. Outsourcing presents such a challenge.

I’ve been bothered for years by the lack of completion in most change management methodologies. While it’s clear that changes have to be communicated and winning hearts and minds is important, the hard fact of organizational change is that sometimes it’s hard to like the change regardless of how it’s packaged. So there has to be a more operational expression of change.  A way to ride herd on the outcomes, often over several years, is to ensure that the change really “took.” This takes an organizational bent of mind, a will to see it through, and a strong methodology that supports this kind of institutionalization of change – something that corporations sometimes lack. It’s refreshing for an American to think that a state government would support and nurture such an obvious and valuable approach.

Like so many major advances in project management, this United States Government contribution to the ongoing discussion of project management is published. Go take a look at their review of change management methodologies for an instant primer on change in management thinking, and what is missing: States Of Change: An Inquiry Into The Nature Of Organizational Change.

There’s a lot to mine on this subject. I realized (paradoxically, I suppose)  that innovation could only thrive in an organization where change management was actively practiced – I’ll write about that in the future. I felt that our Service Management & Governance operating model methodology was validated. Outsourcing is the kind of change that challenges organizations; it’s good for the corporate entity, but hard for people. Walking that tightrope has implications for both the human capital of a company, and its bottom line.

Next time: Risk and The Deadliest Catch!