By Robert L. Scheier
In the movie Twins, short, dumpy and chaotic Danny DeVito and tall, muscular, disciplined Arnold Schwarzenegger are cast as diametrically opposed twins, flung together by fate in search of the mother who abandoned them at birth.
Customers are increasing claiming they want innovation, not just lower costs, from outsourcing deals. But if the ninth annual MIT Sloan CIO Symposium was any indication, innovation and outsourcing might have as much trouble working together as the DeVito and Schwarzenegger characters.
Innovation, according to speakers at the conference, should be like DeVito: Messy, improvisational, and not afraid to fall on its face in search of the impossible dream. Speakers like Joichi Ito, director of the MIT Media Lab, advised attendees to “fail early and often,” learning from their mistakes and moving on quickly. Several others on the panel said that IT types need to move beyond their focus on sequential, fixed processes to adapt to rapid changes in the business and technology worlds.
All of that didn’t sit too well with one CIO I met at a coffee break. He’s in charge of technology for a pension management firm, and his customers depend on accurate account statements, that are calculated and presented the same way each time. One mistake, he said, could end the client relationship. He has to be all about planning, predictability and following rigid, fixed processes because that’s his business.
The same is true for outsourcing, especially the global delivery of either ITO or BPO services across multiple time zones and cultures. Customers need invoices processed, customer questions answered and servers hardened the same way whether the work is done in Boston, Bangalore or Buenos Aires. The major global services players spend a lot of blood, sweat and tears, and take justifiable pride, in training workers worldwide to provide consistent processes and results to their customers. Customers, in other words, need their outsourcers to also be Schwarzeneggers.
In the movie, of course, the twins learn to work together and even take on some of each other’s best characteristics. DeVito learns to straighten up and fly right, and Schwarzenegger learns to lighten up and go with the flow a bit.
In real life, it isn’t going to be so easy. Maybe it was normal end of the day fatigue, but the contrast was almost palpable between the futuristic, upbeat “go with the flow” message from the academicians in the morning session and the…well, grimmer mood in the fireside chat ending the day with several CIOs. These are folks who need to deliver cost savings AND innovation every day to keep their jobs, and they were frank about being picky about what they demand of their outsourcers.
I’d guess that mixing creativity and control to get innovation in an outsourcing agreement requires “sandboxing” the non-linear, “fail quickly and often” activities within a defined set of activities and metrics. For example:
• Defining very specifically the business problem you want solved and the metrics that will define success, as in: “Reduce by half the time required to securely provision new testing environments,” or “Double the number of conversions of buyers who previously dropped out of our site at the checkout page.”
• Specifying very specifically how much time and money the outsourcer can spend on innovative experimentation, as in: “Contractor will use no more than 100 person-hours in `blue sky’ experimentation to solve these problems, but has complete control within those limits.” That gives the outsourcer the freedom to experiment, within limits, and bring their hopefully unique skills to the table without your micro-management.
• Even if the experiments fail, commit the outsourcer to delivering a report on what they tried and why it didn’t work. This at least keeps you from reinventing their failed wheel in the future.
• Choose an innovation partner with whom you have a good relationship, so you can wrestle out whether the outsourcer can defray their costs by selling the “innovative” tool or process to other customers, including your competitors.
What else have you found works, or doesn’t work, in getting these difficult twins of innovation and process control to work together in an outsourcing engagement?