Make, Buy or Innovate?
“I’m all for innovation, but how does it help me in my day to day operations?”
I recently attended a meeting at a large health system, where the attendees, all part of their IT organization, were discussing the best way to approach innovation. The charter from their top IT management was to “come up with some innovative ideas”, and sa senior manager was assigned to lead the task. The people in the room were a mix of operational IT people from groups like infrastructure, security, etc., and some IT strategy folks — I was invited to represent my employer (GlobalLogic) as a potential innovation partner.
The question above struck me as relevant, but maybe out of place. Here is why:
Innovation has been around for over 5,000 years — from the days of the wheel and fire. More recently, in the nineties, the term “Disruptive Innovation” was coined by Clayton Christensen, which essentially meant “a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.”
(A recent article by Christensen argues that Netflix is more disruptive than Uber based on his definition.)
A more recent concept was that of “Open Innovation”, proposed by Stefan Lindegaard. “Open innovation is about combining internal and external resources and to act on the opportunities this creates. More and more companies prove this to be a strong value proposition and companies cannot afford to lose out on the opportunities created by this combination”.
Some of the thoughts in Lindegaard’s book “The Open Innovation Revolution” came to mind as I listened to the discussion in the room:
- Synergy with the Corporate Strategy: How were the ideas being proposed line up with the IT and Corporate Strategy? Was the intent to provide “me-too” services or a net new product or service? Would these ideas align with the classic Make, Buy or Collaborate models?
- Executive Buy-in: Over the years, people have proposed a “bottoms up” innovation process — but the final acceptance and funding has to come from the very top of the organization. Was that the case here?
- Process: What was the process of handling an innovation project internally? Were they prepared to engage a collaborative external partner?
- People: Were the right people in the room? (The term “Intrapreneurs” comes to mind) Would it more beneficial to have the business leaders collaborating with the IT leaders around innovation, as the success of any new product or service depends on the enthusiasm of the people promoting it. As Lindegaard emphasizes in the book, “knowledge does not reside within processes — it resides within people. Therefore, the first step to becoming an open innovation company is to have the right people with the right skills in the right positions to ensure success”.
The work with the health system (and other similar customers) continues, but as Lindegaard says very aptly, “They need to understand that a stronger focus on external contributions isnot a sign of disapproval of the work being done by the internal resources. It is merely an attempt to increase overall innovation productivity. It is also important that the organization embraces a more holistic approach to innovation in the sense that all business functions should be involved in the innovation process. Innovation is more than just products and technology, and it should not be driven entirely by the R&D function”.
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