Innovation and outsourcing – are they opposites?

22. August 2016

During my Summer vacation, I usually have extra time to read the news. On an August morning while having my first cup of coffee, I took notice to the news in the Danish newspaper “Berlingske” with the headline “EU gives Denmark high scores in innovation”. The article explained that the report “European Innovation Scoreboard”, which compares the countries’ innovation ability and level of innovation, rated Denmark with the second highest score in Europe, only beaten by Sweden.

The report crossed my mind again the other day, in my car on my way back from a meeting with a potential new outsourcing client. One of his worries by outsourcing part of the IT development was that it would be at the expense of innovation. Or as he put it: How can we continue to get good ideas and develop our business, if half of my developers are located in Denmark, and the other half is sitting 2.000 km away?

I have heard this concern before, and I understand why it comes to mind. Something happens to us mentally, when we think of distances, especially if the distance is across national borders. We view the challenge differently. Without really noticing it, we just conclude that it is not possible to be innovative from a distance, and therefore, innovation and outsourcing are opposites.

And that is really a shame, as it is the starting point that is wrong. The ability to be innovative is not about outsourcing or not outsourcing. On the contrary, it is about how you create an innovative company culture. Not only across national borders, but also between a company’s divisions in the same country – in short – in each division, in each department, in each project group – within each specialists.

I believe that innovation comes from the individual, when people cooperate and when they have the desire to improve, challenge the existing – and challenge yourself and your competences. The individual has to have a spark within, which turns into fire when the corporate culture pour a bit a gas to the spark.

I write “corporate culture” deliberately. Not the “company’s strategy”. Do not think of innovation the same way (too) many people think of strategy development. Many strategies are based on bad conscience, lying ready in the drawer as a checklist for the quarterly board meeting.

Make the innovation live in the company, so it is something we do. Build trust and create a culture, where no stupid questions exist. Where it is okay to challenge and wonder about things. Make sure to hire or allocate the right profiles for the tasks, where “out-of-the-box” thinking are required. Integrate new consultants in the team and in the company. Ensure to have processes for knowledge sharing. Build up R&D teams, use prototyping and peer programming. The possibilities are endless and each company has to find its own way for creating the best culture.

However, there is one thing, which needs extra focus. Make sure to build social capital between co-workers, as that is fundamental. Whether we are sitting on each side of the Alps, on each side of the Great Belt (a strait in Denmark) or on each side of the hallway – we have to meet physically on a regular basis to light and retain the innovation spark. As soon as the innovation spark is lit and we know each other as real people and we are not just a Skype ID, an email address or “the girl with the long hair, sitting in room 2.10 by the window”, we can be innovative – not just across the hallway or the Great Belt, but also across the Alps.

I have yet to see outsourcing blow out the innovation spark. However, I have seen many companies do it. If innovation is not created within the outsourced IT development projects, it is my experience that it is the lack of gas within the corporate culture, which kills the innovation spark – and not the decision to outsource.