How Corporate Innovation Programmes Can Be Improved Massively By Outsourcing It In Your Business

Learning Centre > How Corporate Innovation Programmes Can Be Improved Massively By Outsourcing It In Your Business

The majority of companies would acknowledge the need for staying innovative, and most would also admit the challenge of being so whilst also remaining competitive.

The majority of companies would acknowledge the need for staying innovative, and most would also admit the challenge of being so whilst also remaining competitive. The majority of companies would acknowledge the need for staying innovative, and most would also admit the challenge of being so whilst also remaining competitive.

The majority of companies would acknowledge the need to stay innovative. Most would also admit the challenge of being so whilst also remaining competitive. Often, being forced to reduce costs, companies will outsource their market research or web design, for example. Apart from these cost-reduction measures, organisations will also outsource skills to access more excellent expertise and knowledge than they may have in-house, increasing the speed and flexibility to explore new areas whilst the company focuses on its core competencies.

Many companies would recognise the potential risks with quality control, strategic alignment and company loyalty. They would need to weigh the potential costs against the benefits of outsourced procurement. At Innovolo, we also are aware of these risks. As a result, we have developed the Innovolation Framework with its modular approach to ensure that the new product development we undertake on behalf of our clients is true to our motto: Leading Systematic Creativity.

An interesting study was performed over a couple of years by The Irish Community Innovation Survey, which measures innovation activity among companies in Ireland. Over these two years, they included an extra section asking the 3,245 companies whether they employed individuals in-house with the unique skills to carry out innovation or whether they obtained these skills by outsourcing. In addition, four doctors from the Cork University Business School undertook a study using the results to examine which skills the Irish companies chose to outsource during this period and how outsourcing functions would complement innovation.

The researchers found a considerable variation in which companies procured skills externally. Over 40% of companies procured an out-of-house web designer, for example. In contrast, most companies (90%) would carry out data management and statistic skilled work internally.

These results were to be expected. They considered that easily replicated functions outsourced are beneficial to most organisations; those that require some specialist knowledge from within the organisation would be best carried out internally.

More than a third of the participating companies outsource graphic design, advertising and software development functions. Surprisingly some functions such as product design and engineering are still being developed in house by a majority; this will change as companies recognise the benefits of using an experienced out-of-house innovation team using, for example, the Innovolation Framework, where each project would be broken down into small segments with scope for review and change of direction where necessary. The potential to take product design way beyond what was maybe first envisaged is enormous. At Innovolo, we also recognise the importance of staying realistic every step of the way and helping to ensure that the project stays within the scope and budget.

Overall, results showed that many companies outsource specific skills; this is beneficial to large and small companies alike as the wealth of knowledge, experience, and database of manufacturers, suppliers, and engineers can only be found in an organisation skilled in innovation. However, it is assumed that all companies which outsource functions weigh up the potential costs and benefits of procuring such services from external providers. At Innovolo, the skilled engineers work together with the in-house innovation team to capture the internal creative activities unique to each company; this produces very successful innovation every time.

The experts conducting this study concluded that external souring of expertise in graphic design and advertising would positively affect all types of innovation – product, process, organisational and marketing – within a business. However, if developed and sourced in-house, it will be effective only at stimulating marketing innovation, with no significant impact on the other forms of innovation. Furthermore, outsourcing web-design services externally also positively impacts the development of new products, with minimal benefit to product innovation if sourced internally.

Procuring outsourced skills can always lead to superior results. However, the research reveals that there can also be a positive relationship between a particular skill set and successful innovation found internally; this is where Innovolo will capture this bonus and combine it with our technicians' experience and knowledge.

For instance, software development skills benefit both process and organisational innovation whether developed in-house or sourced externally. However, the in-house talent combined with the experience and benefits of the strong bonds that Innovolo has formed has proven significantly beneficial for our clients and, ultimately, the end-users.

The importance of marketing research across a range of innovative measures is a mutual factor among all companies. However, it is questionable whether all companies have the skill to identify and understand the relevant data and understand the future better than their competitors. Therefore, outsourcing this function is significant.

We conclude that outsourcing skills are of greater importance with organisational innovation than developing the necessary skillsets in-house; this may be due to organisational rigidities relating to change. For example, suppose organisation innovation involves changing the organisation's structure. In that case, the organisation could restrict the effectiveness of internal skills due to resistance to change.

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