Jugaad and Your Global Innovation Strategy

A recent post on BusinessWeek explored an “emerging” concept in Western-style innovation management -- one that has deep roots in India - called Jugaad.  The article mentions a meeting led by my former colleague (and still friend) Navi Radjou, and notes that jugaad is “an improvisational style of innovation that’s driven by scarce resources and attention to a customer’s immediate needs.”

Explore the term “jugaad” and you will find a range of enthusiasts and detractors.  Many - particularly those more intimately familiar with the terminology -- argue that jugaad is not, by its very definition, a robust innovation solution to complex business problems.  Rather, its just another way of saying “get it done whatever it takes” – meaning that innovation is done in an inexpensive manner, “on the fly”.   In this context, it seems like a tough way for a multi-billion dollar company to build an innovation practice.

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IT Service Customers Need More Effective Ways To Contract For Innovation

Take a look at Forrester’s recent Enterprise IT Services Survey and you will find a data point that highlights an interesting challenge in the IT services marketplace.  When we asked North American and European IT services clients about their biggest challenges with existing IT services and outsourcing relationships, 52% said that “cost savings are lower than expected and 40% said “inconsistent or poor quality service”.   No real surprises here:  given the large number of companies that partner with service providers in an explicit effort to lower costs, many IT professionals simply underestimate the time and resources it takes to define and manage these relationships. 

But look at the #3 and #4 responses, and the data gets more interesting.   33% of respondents said that their biggest challenges were “lack of innovation and or/continuous service-level improvements” and 35% cited “inability of vendor/contract to respond rapidly to changing business needs”.   Don’t the first two responses, in some ways, conflict with the latter two?

These data point to a complaint Forrester hears all the time from professionals within the technology industry:  they know that their clients want a proactive business partner – one who can help the client drive innovation and business results – but they don’t know how to charge for innovation in a way that clients will be willing to pay for it.  Clients say they want greater level of business innovation from their IT service providers, but prioritize cost-reductions – which are more easily measured and which justify the investment in the IT services relationship.

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In 2010, your clients will care about more than just cutting costs

Ask any business professional whether, as they look to 2010, they care more about cutting internal costs or whether they care more about driving new business-focused innovations, and you’re likely to get the response “yes…to both”.  In the wake of the 2009 recession, companies are struggling with these sometimes conflicting objectives – on one hand they know that cost cutting and operating efficiently is a mandate.  On the other, they must develop new technology –enabled product, service, and business model innovations or they risk falling behind. 

For vendors in the B2B technology marketplace, this means balancing the need to communicate the cost-effectiveness of your product or service with messages that stress the business value you provide.   I believe that far too many vendors think that only the lowest-cost provider can succeed right now, when proving strategic business value is still a critical priority for all professionals - particularly IT professionals.

For a company that gets it, look to GlobalLogic, the offshore product development firm.  Their Vice President Milind Patwardhan recently told me “cutting costs for clients is the ‘table stakes’ right now.  The best technology companies focus on reducing costs, but also seek to partner with clients to enable business results.”  While many vendors talk this talk, one of their client references confirmed the value: He told me that GlobalLogic worked with business executives on strategic planning, was willing to take on risks in order to strengthen the relationship, and proactively looked for ways to create innovation. 

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