The Case for Innovation in Managed Services

I wanted to share a brilliant article from one of our friends, Chris Payne of CSS Consultancy. He works in the Facilities Management (FM) space, but I think this could apply to any service business that engages with their customer on a time limited contract.

He suggests that while these companies are happy to talk about innovation, in reality, when you map the impact of innovation (the green line from left to right) in most cases the service provider / outsourcer brings with them some innovations (which were possibly the reason why they won the business in the first place) but in reality, the impact of those innovations drop off sharply when they move into the steady state mode.

Innovation Effort (the blue line which goes bottom left to top right),is then restarted when the contractor starts to focus their efforts from steady state / business as usual to the contract renewal. In many cases this might be too little too late. Frankly, if they can deliver loads of ideas in the final few months of a contract, why on earth couldn’t they have sustained that throughout the life of the contract?

The point of the article it to show that applying the processes and disciplines to sustain innovation and make it Business as Usual pays dividends in terms of embedding the provider deeper into the customer’s organisation, providing greater opportunities for contract extension, sharing and exploiting learning and best practice from one location or contract can be captured and extended to other locations and contracts;

  • Individuals become more committed to problem solving and generating new ways of operating that drive value
  • Morale is improved
  • Profit is enhanced
  • Competitive differentiation in the marketplace is established

The steady state (to-be) picture should look like this

I highly recommend you take a look at the whole article here.