Monday, November 18, 2013

The Five Sources of Innovation Consultants

Recently a newly minted MBA contacted me, expressing interest in work as an innovation consultant.  What I found interesting was that the individual offered up the other firms he'd contacted, and from his note to me it was clear that he didn't understand the differences between firms that offer services in the "innovation space".  What's true about this individual is often true about our prospects and clients.  They view "innovation" as a unified set of tools and procedures, while failing to realize that in reality innovation is being defined by the firms that enter the space, and many of those definitions have very different implications.

Innovators, and innovation firms, spring from a wide array of sources.  Since there is no "standard" for innovation, in the manner of AICPA for accountants, or even a framework like ASQ or others provide for Six Sigma, innovation remains an umbrella term that contains a wide array of very different providers.

The Five Sources of Innovation Consultants

In general, innovation consultants spring from one of five "domains".  Those are:
  1. Strategy.  Firms like Booz, McKinsey and other firms that offer strategy advice have noticed the growing demand for innovation.  Further they have recognized the linkages between strategy and innovation, and they want an increasing role.  That's why Monitor purchased Doblin years ago, and probably why Booz and PwC are in negotiations.  Recognize that most of the innovation advice from these firms focuses on the effects innovation should have on strategy, and vice versa.
  2. Design.  Firms like Continuum, Frog, IDEO, Doblin and a host of others come at innovation from a design perspective.  Their overriding focus is to view innovation from a lens of design.  Increasingly we're seeing a consolidation of these firms.  Many large consultancies of many different stripes are purchasing small design shops.  It will be interesting to see if the integration works, because many of the expectations and business models are different.
  3. Marketing/PR/Marcom.  Many marketing and PR agencies entered innovation because they are in the "Creative" space and have familiarity with innovation tools.  For many, their end goal is to help package, launch and market their new creations.  They are often light on knowledge transfer, as they'd prefer to provide ongoing services rather than teach clients how to innovate.
  4. Creativity and/or Training.  The fourth category are firms that approach innovation from a purely creative space - such as those springing from CPSI or firms that focus on training.  These firms often solve deep issues in innovation but don't often offer a breadth of service necessary to sustain innovation.
  5. Innovation as a process or capability.  OVO and others sit in this category.  We focus on innovation as a defined workflow or process.  Our roots are from process engineering and capability development.  We view innovation as an important but poorly defined and poorly staffed process or capability.
 As you can imagine, different innovation firms have different perspectives and different staffing and capabilities.  When a client (or a potential employee) is interested in innovation, it pays to understand the roots of the firm in question and how they view innovation, and the capabilities and skills they will focus on when serving clients.

In-Source or Out-Source

Another important factor for a company considering innovation is to assess how much of the innovation work it wants to do internally and how much it wants to outsource.  Innovation requires a range of insights and observations, idea generation and product design.  A firm can choose to do all, some or none of that work internally.  Many consultants prefer to offer what we call "outsourced" innovation.  In this model a client hires a consulting firm and describes its markets and potential product needs.  The consultant returns months later with developed prototypes and supporting evidence.  In this model the client receives reasonable solutions with very little investment of its own people or time, but is dependent on third parties for every new innovation.

We at OVO and others like us focus on "insourced" innovation, meaning we define processes and tools and train internal teams to perform a significant portion of this work.  By gaining skills, corporations can do much more of the innovation work internally and become more self-reliant.  That's not to say with the advent of "open" innovation that they'll do all the work, or all the development, but it does give the executives a choice.

Making the best decisions

When a client, potential partner or potential employee is considering innovation consulting firms, it's important to recognize they are not all created equally.  Perspective is a factor.  Understanding what the origin of the firm is, and its current perspective, will communicate how the firm is likely to view your needs.  Understanding the amount and scope of change you desire, and the amount of resource you can commit is important.  Considering the role of innovation:  is innovation an occasional, one-time event or do you want to build a consistent capability?

Understanding these and other factors will help you be more successful in your own innovation pursuits, and will help you select potential partners that can address your needs more capably.

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posted by Jeffrey Phillips at 6:34 AM


Anonymous Anonymous said...

Jeffrey, thanks for mapping out this terrain. I would add that research--especially the type that is attuned to observing the real world--is also a source of innovation. My firm, Ethnographic Insight (Ei) has been in the innovation space for over a decade.

3:03 PM  

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