Should You Outsource Your Platform Development?

Should You Outsource Your Platform?

Outsourcing is cheaper, results in higher quality work, and simplifies your organization, allowing you to focus on what matters most – your core business.

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A question all companies, small or big, ask themselves is – should we outsource our platform? 

Let’s take a bank wanting to develop a platform for its customers as an example. The bank could spend millions of dollars building its own software development team to develop and maintain the platform or it could outsource it to a partner.

What makes most business sense? 

In this case, the bank should focus on its core business and leave the coding to the software developers.

Let’s explore why the bank should outsource platform development and maintenance.

Advantage 1: It’s Cheaper

It’s much cheaper to outsource the platform to a company that specializes in it. Yes, they will charge you for their services, but you will also save yourself a lot of money.

Here is why it’s the right move: 

  • Reduces labor costs: only hire help when you need it
  • Reduces overhead costs: no training, office space, HR, maintenance, or administrative costs associated with the platform
  • Outsource overseas: if appropriate, further reduce costs by having partners abroad

Advantage 2: Get a Better End Result

A company that specializes in banking platforms will do a faster and better job than the bank. This is no secret. As its core business, the software company will have the know-how and experience to develop and maintain the platform.

In contrast, to achieve the same result, the bank would have to spend a lot of time and resources.

Here is why it’s the right move: 

  • Gain on efficiency: Your partner’s expertise will lead to quick delivery and quality work
  • Bigger and more-skilled teams: Your partner’s teams are bigger and better prepared to respond to issues
  • Access to the latest technology: Your partner will be the most prepared to incorporate the latest technology
  • Reduces risk: End result is guaranteed

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Advantage 3: Simplifies Your Organization

Outsourcing means fewer people to manage. People management is time-consuming and difficult, leave this work to your partner. By simplifying its organization, the bank becomes leaner, more focused on its core business, and more agile. 

Here is why it’s the right move:

  • Focus on core business: Managers have more time for project management and strategic planning
  • Less administrative work: Fewer employees means less HR, payroll, and other ad-hoc tasks  
  • Employee retention: Your company have more time to focus on employees

What Not to Outsource

Some activities should not be outsourced, even if they are not part of your core business. Most things related to strategy, company identity, and employees should be kept in-house.

Here are activities you should never outsource:

  • Business development and strategy
  • Top management 
  • Employee development
  • Internationalization
  • Building a company culture and identity

Regardless, this doesn’t mean you can’t hire consultants to share best practices and insights. However, you should make sure you understand the reasoning behind the decisions made.

Outsourcing Lets You Focus on the Things That Matter

Outsourcing non-core business activities means you can focus on the things that really matter. To minimize outsourcing risk, choose the right partner. Be picky and take your time. 

Be cautious especially when you are thinking of outsourcing work your company doesn’t really understand. This can lead to you choosing the wrong partner or not having the capabilities of judging if your partner delivers quality work.


If You Don’t, You Will Fail: Why You Must Implement Open Innovation

If You Don’t, You Will Fail: Why You Must Implement Open Innovation

Between rapid technological change, new tech giants, and ever more demanding consumers, companies are facing a steep battle. Alone they will fail, together they will conquer.

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The rapid change in technology in past decades is well known, as well as, the rise of new innovators from unlikely places. New tech powerhouses like China (think of Shenzhen) and solo inventors are intensifying competition in all industries.

Not only is the innovation landscape more competitive, but consumers are more demanding. With a war brewing on multiple fronts, companies are relying more on innovation from outside their company to stay competitive.

Corporations have been forced to implement different aspects of open innovation. 

Get All the Help You Can Get

It’s no coincidence, companies of all sizes are developing new strategies to increase innovation. Most of – if not all – new innovation strategies rely on an open approach. 

Two recent surveys found that 78% of large companies were implementing at least some elements of open innovation. In reality, open innovation makes a lot of sense. 

Think about it this way. Would you prefer having one team, or perhaps having thousands of teams working to solve your problem? This is what open innovation promises. Appealing, right? 

The business world has realized this phenomenon and is ready to work together. You should take full advantage of it.

Open innovation is not restricted to product or service innovation. Thanks to your innovation ecosystem, you can find innovations in manufacturing, supply chain management, marketing, and much more.

It’s important to tap into the expertise of members in your ecosystem and see what they have to offer.

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If Not, You Will Fail

If your company isn’t co-creating with others, you’re falling behind. It’s like playing a one-on-one tennis match, with two players on the opposite side. Not fair, right?  

Companies with more innovation teams will result in more (and better) innovation. To combat this, your company should do the same. Create partnerships with outside collaborators. 

You will not only gain valuable new innovations, but you lower financial risk while speeding up the innovation process

A real win-win all around.

It Starts With the Right Mindset

Open Innovation is all about the right mindset. Your corporation must embrace the exchange of knowledge, be comfortable with using technology from outside your four walls, and with letting shelved innovations be used by others.

The most successful examples of open innovation fully embrace the process and culture.


4 Reasons Why Your Open Innovation Strategy Is Failing

4 Reasons Why Your Open Innovation Strategy Is Failing

If you don’t adapt open innovation, you risk failing. When adapting your innovation strategy, pay close attention to, how you will process new knowledge and how you will capitalize on new innovations. 

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Like with any process, open innovation needs to be modified to fit your corporation’s organizational structure and culture. Your workflow and innovation process will have to change. Your new process, should include an additional step. A step for collecting knowledge from outside your company. As well as, a set procedure on how to treat and implement new innovations. 

If you don’t adapt open innovation, you risk affecting its performance. Think of your new innovation strategy in a holistic way. 

Here are the four most common reasons why open innovation fails:

1. You Are Not Spreading Knowledge to the Right People or to the Right Places

Knowledge can get stuck with certain people, departments or locations. You must make it as easy as possible for knowledge to travel in your organization. One way is by making labor mobility as painless as possible. 

Encourage people to transfer to different departments or business units. This will enhance knowledge transfer and sharing. Don’t allow a lack of communication to create a Valley of Death – where innovations go to die.

2. You Are Outsourcing Innovators

To make full use of the knowledge you acquire through open innovation, you must have the qualified people in your corporation to manage the information. They are key in taking innovation and turning it into real business. 

It’s a mistake to think of open innovation as a substitute for internal R&D. You must keep internal R&D teams in place. These teams will be essential for when you have external innovations that must be adapted to meet your organization’s requirements. 

Even if the innovation is coming from another department in your organization, it will still need to be adapted. This is where having innovation teams in different business units becomes useful.

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3. You are Losing New Business Opportunities Because You Won’t Allow Innovation to Leave Your Company

Some collaborators might feel threatened to allow shelved innovation (e.i. technology that’s been developed, but isn’t being used) to leave your organization. These collaborators prefer keeping the innovation in your organization – even though it’s not creating value – in fear of not being the ones to find its purpose.

In other words, your collaborators want to be the ones to find the right market opportunity for the shelved innovation. This practice, results in your company not exploiting your technology to the fullest.

4. You Don’t Have the Right Process in Place to Sort Outside Knowledge

One important aspect, that is often overlooked is how you will process outside knowledge. If you don’t plan for this you will have a bottleneck situation in your hands. 

More knowledge means more work. Planning accordingly is crucial. Plan on how you will filter through all the additional information, as well as, plan on how you will implement additional innovation projects.

Get the Right People, Funding, and Senior Management Support

To avoid the mentioned four potential pitfalls, you should align the right people, funding, and senior management in your company. This includes people in innovation, purchasing, and management roles. Without their full support, you risk affecting the potential performance of open innovation.

The information in this article came from Open Innovation Results: Going Beyond the Hype and Getting Down to Business by Henry Chesbrough.


5 Principles of Open Innovation

5 Principles of Open Innovation

Follow these principles and you will find success.

Feel free to download and share with your teams.


Overcoming Internal Resistance to Open Innovation

Overcoming Internal Resistance to Open Innovation

Understanding why employees feel resistant to open innovation will help you create an effective strategy for overcoming internal pushback. 

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Due to its complexity, you might find some pushback from collaborators when it comes to introducing open innovation in your corporation. There will be collaborators, who are uncomfortable with the notion of opening up your organization’s process. 

Understanding why employees feel resistant to open innovation will help you create an effective strategy for overcoming internal pushback. Preparing for this internal resistance to open innovation will be key to the success of your new strategy.

The Non-Open-Innovators: Afraid, Threatened, and Skeptical of Open Innovation

Not everyone in your corporation will catch the open innovation bug. Many employees are afraid of the unknown. Anxiety towards change can lead them to resist open innovation. 

Other employees will be threatened by the change in method and procedure. Perhaps, they feel they might be left out if a new innovation process is implemented. 

This is especially true for R&D and innovation teams, these teams are the ones most sensitive to changes in the innovation process (e.i. innovation is their sole job function, having more employes involved could make them feel threatened).

Others will be skeptical of the open innovation process itself. In most cases, skeptical collaborators aren’t comfortable with sharing their ideas, testing them outside their teams, or are concerned with privacy.

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Internal Communication: If You Communicate About Open Innovation Enough, it Will Become the Norm

A powerful tool for overcoming internal resistance to open innovation is your internal communication channels. Regardless if it’s your intranet, employee newsletter, or bulletin board, you should use all your channels to communicate your message. 

The reason why you want to implement open innovation needs to be disseminated throughout your corporation. Only when employees understand why your corporation have decided to implement a new process, will they be more willing to follow you.

The key is to continuously communicate about open innovation. Frequent communication will result in it becoming the norm. Your employees will slowly start becoming more at ease with the idea of open innovation.

Inspire Open Innovation: Use Open Innovation Events and Workshops to Excite

Companies should host Open Innovation Days to showcase their progress in innovation, demonstrate that it works, and inspire teams. Focus on highlighting innovation projects from cross-functional teams, as well as, from external partnerships. 

Workshops have similar results, they encourage creativity, reduce uncertainty, and most importantly, workshops improve the skills of collaborators. Use workshops to build confidence. If you prepare and give your teams the right training and tools, your chances of inciting open innovation increases.

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Break Down Organizational Resistance: Innovation is the Responsibility of All

In large corporations, roles are well defined and teams usually tend to stick to their own expertise and functions. This leads to innovation being the responsibility of just R&D or innovation teams. 

However, for open innovation to be truly successful, you must break down organizational resistance. The myth that innovation is only the responsibility of certain departments needs to be upended. The more diverse your innovation teams are the better results you will achieve.

Focus on relaying the message that innovation is the responsibility of all departments. This will help you break down barriers between departments.

Influence Open Innovation: Use Ambassadors to Encourage Open Innovation

Your collaborators are influenced by their peers. Identify ambassadors in your organization and use them to encourage skeptical collaborators. A few key ambassadors in each department will help motivate and spread the message of why open innovation is key to your company’s success. 

These ambassadors can set an important example, and will encourage others to be more willing to adopt new ways of innovating. Help your ambassadors by providing adequate training and education so you maximize their efforts.

Institutionalize Open Innovation: Make It Part of Your Corporate DNA

By making open innovation a central focus in your overall strategy and organizational structure, you not only send out a clear message to your employes that open innovation is important, but you also make it easier for them to participate. 

Facilitating the creation of cross-functional teams, as well as, making it easy for your corporation to work with external partners are two easy ways to begin institutionalizing innovation.

Help Non-Innovators Reduce Their Uneasiness to New Forms of Innovation

By tackling the areas in which your employees feel less at ease, you increase the chances of collaborators who are skeptical in joining the open innovation process. First, start by identifying the main factors for resistance and then plan a strategy to tackle each one.

Implementing a multi-faceted approach will lead to better and faster results. 

Just like in any transition phase, you might have to assure your employees that open innovation is the right innovation strategy for your corporation.


5 partners for your innovation ecosystem. Who Should be Part of Your Innovation Ecosystem?

Who Should be Part of Your Innovation Ecosystem?

Five must have partners for any large corporation.

Who should be Part of your innovation ecosystem? 5 partners for your innovation ecosystem

Feel free to download and share with your teams.


How To Build Long-Lasting And Successful Collaborations With Startups

How to Build Long-Lasting and Successful Collaborations With Startups

As the rate of technological change accelerates, corporations have had little choice but to build long-lasting and successful collaborations with startups.

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As the rate of technological change accelerates, corporations have had little choice but to build long-lasting and successful collaborations with startups. Due to their tech-savviness, startups have been a natural partner for corporations in this age of technology.

As we’ve previously discussed on this blog, startups bring many benefits to corporations. However, due to their inherent differences, startups pose a set of particular challenges to corporations

Not only does organization structure pose a challenge, but so does differences in culture. When starting a collaboration with a startup, corporations must keep these two points in mind. 

We believe there are five key aspects of the corporate-startup partnership that both corporations and startups should pay close attention to.

Effective and Frequent Communication: Setting Yourself Up for Lasting Success

A good predictor of a long-lasting and successful partnership is how strong communication is between partners. Undoubtedly, there will come a time when the partnership faces challenges, and having effective communication will ensure partners will be able to work through the challenges effectively.

It’s imperative the partnership takes the time to build an effective communication channel because communication is the backbone of your collaboration. 

This shouldn’t be left to chance, establish and agree on a specific procedure for communication (e.i. weekly meetings). 

Effective and frequent communication will also facilitate other aspects of a long-lasting and successful collaboration.

Be Transparent: Build Trust Between Partners With Transparency

One sure way to break-up a partnership is by losing trust. Many startups see corporations with a cautious eye. According to KPMG, startups fear: losing their culture, technology, and autonomy. All these fears are well-founded. 

Time after time, we’ve seen corporations eat the little guy up. To ease a startup’s fear, large firms should establish a policy of full transparency from the beginning.  

This policy of transparency will affect all aspects of the partnership: intentions, goals, timelines, contracts, and working procedures. 

Both corporations and startups should be transparent on their strengths and weaknesses to build long-lasting trust.

Only when there is complete trust, will the collaboration reach full working potential.

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Share Information: The Good, the Bad, and the Ugly

Hand-in-hand with transparency is the notion of having an effortless mechanism for the exchange of information. For the collaboration to reach value creation, partners should share both the good and the bad. 

By sharing information, the collaboration opens the opportunity to find the coveted innovation gap, and allows them to exploit this gap for meaningful innovation.

The exchange of information should not stop at the minimum required information. Sharing information regarding thoughts, experiences, and industry insights will greatly increase the innovation potential of the collaboration. 

The more you share, the more fruitful your collaboration will be. This will also strengthen your relationship with your partner.

Understanding Their Methods and Processes: Don’t Embark on Your Journey Blind

Frustration can arise when not understanding the methods and processes of your partner. Since corporations and startups behave very differently, this can lead to many complications. 

To avoid this, the corporation and startup should take time, at the beginning of their partnership, to learn about each other’s methods and processes. 

After, the collaborators should agree on and establish a common approach. This will ensure they work in the smartest way possible. 

Corporations should be careful to not impose too many of their own methods and processes on the startup. Remember, a key advantage of working with startups is learning how and why they do things

Don’t miss out on this learning opportunity.

Set Clear and Achievable Goals: Laying Out the Journey Ahead

A strong foundation needs to be set before the partnership can be fruitful. This should be done by setting clear and achievable goals. Corporations should be aware of the strained resources most startups operate with.

Many startups don’t have the capabilities to mount large and expensive projects. 

Keeping this in mind will result in establishing realistic goals. This also relates back to establishing full transparency. Both partners will need to be frank with what is possible and what is not.

The goals set should be mutually beneficial. Yes, the corporation will have set needs, but the startup should also be benefiting from this partnership (other than in monetary ways).

The Corporate-Startup Paradox: Don’t Be a Control Freak

One of many paradoxes in the business world is the desire of corporations to work with startups and incorporate their culture, while simultaneously encouraging (or sometimes forcing) startups to assimilate and fit better with the corporation. 

This paradox can lead to many problems with the corporate-startup partnership. It can strain your relationship, if you force or coerce a startup into working the way your corporation does.

As your partnership progresses don’t lose track of the benefit of learning from and adopting certain structural and cultural aspects of the innovative startup. 

Don’t be the controlling parent that most startups fear corporations are.


Open vs. Closed Innovation

Open vs. Closed Innovation

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If you still need some clarification on the differences between open vs. closed innovation, here’s a comparison between both.

Open vs. Closed Innovation

Feel free to download and share with your teams.


What is an Innovation Ecosystem?

What is an Innovation Ecosystem?

This article dives into innovation ecosystems, exploring the different players, why they are crucial for innovation, and why it’s important to build and efficiently manage your innovation ecosystem.

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The term “ecosystem” was originally coined by British ecologist Arthur Tansley in 1935 to describe the transfer of materials between organisms and their environment. Ecosystem has since been refined to “a community of living organisms and nonliving components interacting together as a system”. The different organisms in the ecosystem are linked together and rely on each other for survival. 

Just as we find ecosystems in the natural world, we also find them in the business world. These two ecosystems interact in similar ways, relying on its members for survival. This article dives into innovation ecosystems, exploring the different players, why they are crucial for innovation, and why it’s important to build and efficiently manage your innovation ecosystem.

Innovation Ecosystem: A Complex Web of Players, Stakeholders, and Community Members

To better illustrate innovation ecosystems, we’ll use the practical example of the hotel industry. Who would be part of a hotel’s innovation ecosystem? The complex web of players can include: corporations, startups, suppliers, VCs, entrepreneurs, universities, governments, etc. A member can be any entity that you interact with, especially regarding innovation.

Each partner adds valuable information, technology, and expertise to the hotel’s ecosystem. The diverse background of each member is fundamental to the ecosystem.

For instance, a university partner could provide hotel companies with important information on customer expectations and insights. The academic approach universities employ can uncover new business opportunities for the hotel industry.

Innovation vs Product-Centric: Searching for Opportunities

An innovation ecosystem is member-centric, relying on members to create value. These types of ecosystems ask themselves: What can the ecosystem accomplish? What can this group bring to the hotel industry that other groups can’t? This is where the innovation ecosystem finds new business opportunities. 

Innovation ecosystems are opportunistic, always looking for the next big thing.

On the flip side, there are product-centric ecosystems. These ecosystems are concerned with the product they sell. Where does the raw material for the product come from? Where does the product get assembled?

The Weary Tale of the Hotel Giants: When You Don’t Engage With Your Innovation Ecosystem

The hotel industry has been hit by disruptive innovators over the past two decades. First, by the introduction of online booking, and then by menacing substitutes like Airbnb. To fend off ever-growing competition, hotel giants (Hilton Hotels, Accor Hotels, Marriott International, etc.) needed to continuously innovate their offering. However, most lagged far behind. 

The industry saw little change before the dot.com boom, becoming complacent. In this context, the booking.coms of the internet era capitalized on the opportunity. On one side, by lowering hotel room prices (thanks to democratizing reservation prices) and on the other, by cutting into a hotel’s profits by charging a commission fee for each booking. 

Instead of opening up their innovation process, and asking its members what could be done, the hotel giants did little and brushed off the tech startups as insignificant competitors. Today, Airbnb has more rooms listed on its website than the top 5 hotel companies combined, along with an estimated value of $31 billion.

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How Could This Have Been Avoided? 

By simply engaging with their innovation ecosystem the hotel companies would have uncovered the shift in the market – one now centered around ease of booking and use of virtual travel agents. While engaging with their ecosystem, hotels would have been introduced to members with new technologies. An opportunity for collaboration would have unfolded allowing the ecosystem to develop new innovations to meet the ever-higher demands of hotel guests.  

Another missed business opportunity was the chance to invest in the booking.coms and Airbnbs early on.

If You Can’t Beat Them Join Them: Collaboration is Essential in Today’s World

This narrative of missed business opportunities is not isolated to the hotel industry. Unfortunately, due to exponential change in technology, it’s more prominent than ever. 

Companies of all sizes must engage with their innovation ecosystems to avoid the same end. The first step for companies is to establish an internal process for their innovation ecosystem. Followed by a strategy to tap into the potential these ecosystems create. 

This strategy should include a structure to build its innovation ecosystem, and a systematic and repeatable process for tapping into the ecosystems potential.


5 reasons why you should implement open innovation

5 reasons why you should implement open innovation

Stop missing out on new business opportunities.

Opening up your innovation process is the way of the future. Corporations can no longer rely on their own internal innovation teams to create innovation in this age of technology.