<img height="1" width="1" src="https://www.facebook.com/tr?id=1921296544821732&amp;ev=PageView &amp;noscript=1">

Expert Exchange

Get the latest updates from our blog:

Should you outsource innovation to a third-party consultancy?

by Marty Jaynes on 10 Dec 2018
shutterstock_338238437.jpg

With technological advancements bringing a rapid pace of change, businesses need to innovate to drive revenue. But with an almost endless amount of choice, it can be difficult for business leaders to decide what to do. Should their focus be on leveraging artificial intelligence to drive cost out? Or should they concentrate on using IoT to increase organisational efficiency?

But as much as establishing what to do can be challenging, often it’s the how that commands more attention.

Many organisations launching a new change initiative underestimate the scale of the task. They nominate people internally to lead on initiatives while still managing the business as usual. But without dedicated time and resource, the drive for innovation is at risk of becoming stagnated.

Others, however, may overcook the scale of the task and outsource the entire project to a third-party consultancy. It’s a case of: ‘Nobody ever got fired for buying IBM’.

Twenty years ago, a third-party consultancy approach was the only real way to make change happen. However, with the growth of the gig economy over the last ten years, there are a far greater number of people working as independent consultants in an interim capacity. And this has brought new opportunities for organisations looking for support with new innovative initiatives.

Here, we take a look at the pros and cons of hiring a third-party consultancy for innovation projects. Plus we explore how a three-pillar approach that combines the efforts of a third-party consultancy, experienced interims, and a selection of individuals from within the organisation may offer the most effective solution.

The pros

When appointed correctly and managed effectively, a consulting firm can do a great job. If an organisation is looking to innovate by using artificial intelligence to improve the customer experience, for example, a consulting firm can provide valuable subject matter expertise. They tend to invest heavily in these areas and are well-equipped with knowledge that may not be held within the organisation.

As an independent party, they are able to offer a fresh perspective on the way the organisation works. A perspective removed from the internal politics of the organisation which could stand to get in the way of affecting the change that needs to happen.

The cons

Consulting firms often come with a ‘one-size-fits-all’ approach - they build a methodology and apply it to the organisation. While handing the job over to ‘experts’ may seem the best solution, it can leave the organisation with little control over the approach, or costs.

In many cases, consulting firms will deploy recent graduates with little practical experience, into delivery roles. So, while an organisation may be paying for the expertise of the brand, they may not get the level of experience they are so renowned for.

And though consulting firms can bring specific subject matter expertise, knowledge enters and leaves with them. It doesn’t become embedded within the organisation. So once the contract ends, there is no one to judge whether innovative ways of working have been embedded correctly, or to ensure it is sustained.

A three-pillar approach

In this scenario, the consulting firm, interims and a selection of individuals within the organisation work together to drive innovation programmes. 

This approach provides an organisation with much greater control. The interim acts as a bridge between the organisation and the consulting firm. They can manage and govern the process, giving control back to the organisation, and the option to scale up or scale down the team involved as necessary. The organisation will also retain a much closer eye on costs. And interims come equipped with more experience, at half the cost.

But perhaps the biggest advantage is that unlike third-party consultancies, interims can embed more innovative ways of working in the organisation’s internal capabilities - leaving a legacy long after the contract ends.

The right approach will often depend on how important the project is. Can a new technology be phased in over a number of years? In this instance, the cost and strain on the business is light. However, a bigger and bolder drive for innovation requires a higher investment. And it’s in these instances that it’s even more imperative to get the right blend of capability.

Yet the biggest challenge will be winning the hearts and minds of employees and embedding new ways of working. Leaning on a third-party consultancy may not be enough to achieve these goals.

A consultancy will have expertise in niche and specialist systems and the economy of scale that independent consultants won’t have. But where the independent consultants can add value is by maintaining control and working with the organisation to build internal talent.

Curious to find out how innovate your organisation's culture is? Click below to access our quick 15 question innovation self-assessment to help you establish how innovative your organisation currently is.

Innovation healthcheck

Topics: Innovation

Marty Jaynes

Written by Marty Jaynes