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In banking, as well as any industry, the decision between outsourcing and insourcing innovation is a delicate balance between a company’s internal knowledge, resources, and expertise in innovation vs the incremental cost for acquiring outside knowledge.
The main benefit of outsourcing innovation to a consultancy is that it allows an organization to get a high level of expertise, framework and methodology with proven results. A consulting firm brings with it an established track record of successful innovation best practices as well as a group of professionals who can help coach, motivate and train teams within an organization to champion the innovation processes they are trying to adopt.
Insourcing innovation, on the other hand, can provide a long term benefit to the organization by building the skill sets internally to improve the existing competency of innovation. Hiring someone into the organization who can leverage the already present internal expertise in innovation and implement it can be just as effective – if not more – in developing innovation as a cornerstone for growth.
In fact, often times the best alternative is a combination of these two practices. Companies will outsource first, by contracting a consultancy to provide the frameworks and methodologies to inculcate a culture and process of innovation within the company, and then once they are established, insource or hire a champion of innovation to lead the march toward leveraging it as a foundational principle within the company. No matter how a company decides to source its innovation, once it is fully integrated into the organizational structure, it can provide a model for measurable, sustainable growth for years to come.
Tom Kuczmarski, president and founder of internationally recognized innovation consultancy, Kuczmarski Innovation, is an adjunct professor of product and service innovation at Northwestern’s Kellogg School of Management, has authored six books and counting on innovation and leadership, and is a co-founder of the Chicago Innovation Awards which recognizes the most innovative new products and services brought to market each year in the Chicago region.