Runtime - The Software Outsourcing Newsletter
for Executives and Investors
from Accelerance and Steve MezakIn this issue: Geoffrey Moore defines several types of innovation in his new book "Dealing with Darwin". Discover which kind of innovation you should use as your company evolves to remain successful. Outsourcing can be tactic to enable your innovation.
Innovation + Outsourcing = Evolution
Innovation is a word that is overused. Innovation is good. Innovation is valuable. Innovation keeps America strong! Even when a great deal of work is performed offshore, innovation gives us the edge.
In my opinion, marketing and innovation are at the core of each company. They are the things you cannot outsource. But it is possible to use outsourcing to implement your innovation strategy. More on that later.
What is innovation? Are YOU innovating in your company? What is the nature of your innovation?
Geoffrey Moore’s new book “Dealing with Darwin” shows how companies can use innovation to evolve to survive and thrive. Innovation as Moore defines it is closely tied to the market where your product or service is sold. He shows how to use innovation to spark new company growth. Moore groups 14 different types of innovation into 4 major “zones”. Fourteen types – that’s a lot of innovation! No wonder “innovation” seems like a nebulous and overused word.
Here are his 4 zones with up to 4 innovation types in each, with example companies or products in parentheses. The innovation strategies marked with an asterisk are candidates for outsourcing. (Sorry for so much condensed detail. Check out Moore ’s book to learn more.)
Product Leadership Zone – applied in growth markets
1. *Disruptive – a new technology and new market (eBay, carbon nanotubes)
2. *Application – existing product in a new market (Post-It Notes, Blackberry)
3. *Product – new product in an existing market (Google, Applied Materials)
4. Platform – evolve existing product/market to be a platform (Windows, Oracle)Customer Intimacy Zone – applied in mature markets
5. *Line-Extension – modify product for new niches (People Magazine, Lexus)
6. *Enhancement – earn more from existing market (Barbie accessories, Boeing 7X7 series)
7. Marketing – product stays constant (Apple iPod, McKinsey consulting)
8. Experiential – interaction with customer is key (Disneyland, Progressive Insurance)Operational Excellence Zone – also applied in mature markets
9. *Value-Engineering – simplify and drive out cost (BIC pens, Southwest Airlines, Infosys)
10. *Integration – deliver complete solutions (Yahoo, SAP)
11. *Process – deep process differences from competition (Dell, Salesforce.com)
12. *Value-Migration – switching focus to a related product (Kodak, Sabre)Category Renewal Zone – applied in declining markets
13. Organic – move to a new category (Western Union, Corning)
14. Acquisition – buy or sell yourself (BEA/Weblogic, Lotus/IBM)Noticeably missing from the list is outsourcing. Outsourcing is no longer an innovation in itself. Companies have been doing it for years.
The large Indian outsourcing company, Infosys, is mentioned by Moore as an example of Value-Engineering innovation. This basically means they were one of the first companies to provide cheap programming resources.
Now inexpensive offshore engineers are widely available. They are available for you to implement your innovation strategy.
Outsourcing makes sense for the Product Leadership innovations, to make modifications to your software for a new market, or to create a new product for your existing market. Of course, outsourcing enables creation of your initial product too, whether it is disruptive or not, and at a much lower investment than hiring a room full of programmer employees.
Similarly, in the Customer Intimacy zone, you can use outsourcing to modify your existing software and extend your product line into niche markets. Or you can outsource to add enhancements to your existing software and keep it fresh in your current market.
Finally, the Operational Excellence zone seems made for outsourcing. Outsourcing is perfect for driving out cost, integrating pieces of software technology and improving your software development processes.
If you are developing software in your IT department you might wonder if IT is enabling the innovation strategy at your company. Is IT a new force at your company or is it old? Are you introducing new and disruptive IT that enables your company to innovate in the marketplace? Or are you driving out cost from your company’s IT operations?
It is pretty clear that the right innovation at the right time is a good thing. The question is what innovation strategy are you using at your company?
If outsourcing your software development is a key to implementing your innovation strategy, then Accelerance services are a perfect way to get started quickly and safely. See http://www.accelerance.com/services.htm for more details.
Watch for an email this week about the release of my new Software without Borders book.
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The Runtime Bottom Line: Innovation is important to company growth and survival in some cases. Moore’s new book gives you a framework to consider the many types of innovation at your disposal. Offshore outsourcing is a tactic you can use to implement your innovation strategy.
Until next time,
Steve Mezak
Accelerance, Inc.
Risk-Free Outsourcing
213 Garcia Avenue
Half Moon Bay, CA 94019
1-650-712-8990(c) 2006 Accelerance, Inc. All rights reserved. You are free to use material from the "Runtime" eZine in whole or in part, as long as you include complete attribution, including live web site link. Please also notify me where the material will appear.
The attribution should read:
"By Steve Mezak, CEO of Accelerance, Inc. Please visit the Accelerance web site at http://www.Accelerance.com for more information and resources on outsourcing and creating great software."
