Building a Culture of Innovation in BestSourcing Companies
Musteen and Ahsan (2013) suggest that quality and dynamism of intellectual capital will influence the degree to which offshoring will lead to innovation. They suggest that innovation is derived from leveraging intellectual capital, which consists of three interdependent components: human, social, and organizational. Human refers to individual skills and competences, social refers to the ability to employ those skills through relationship building and/or networking, and organizational refers to a firm’s embedded routines, structures, and culture. Inarguably, while best-sourcing is important, innovation will lag unless the dynamics of human, social, and organizational capital are nurtured to foster innovation. Consequently, a firm’s ability to not only source the best talent, but its ability to institutionalize a culture of innovation becomes critical (Musteen & Ahsan, 2013).
MacCormack, Forbath, Brooks, and Kalaher (2007) conclude that innovation should not be an assumed outcome of global sourcing, but a competitive advantage that results through collaboration. Such collaboration capabilities require the active engagement of people, processes, platforms, and programs and a mind set in which global offshore firms are understood to be collaborative partners and not cost-reduction cen?ters (MacCormack et al., 2007). In alignment with Musteen and Ahsan (2013), MacCormack et al. (2007) suggest that a key strategy in developing collaborative capabilities that results in innovation is the development of not only people, but of their relational capabilities, meaning a significant investment in social capital. Moreover, absorptive capabilities by all partnering firms must be viewed as open, two-way channels and not as centrally controlled R & D moving in one direction. In this regard, Quatrro Global Services is a top-ranked business process-outsourcing and knowledge process-outsourcing supplier with over 21 years of experience. It has developed a set of proprietary tools and platforms to ensure value through innovation to clients. It provides advice on how to build a culture of innovation and how to develop successful HRM practices and policies. Consequently, best-sourcing partners in the two industries considered in this chapter have created a culture of innovation. This is driven primarily by a need to differentiate from their competitors and push from their clients, the pharmaceutical companies/publishers.
The workforce in best-sourcing companies, especially in emerging economies such as China, India, and Philippines, is very young and innovation needs to be institutionalized. Most companies have put a formal structure in place and it spans the entire lifecycle of an employee from hiring to ongoing management. Companies have also linked this to performance management and growth.
A typical innovation and quality framework is depicted in Fig. 7.6. Six Sigma and Lean are the basis for structural improvements while Kaizen is used for smaller but continuous improvements. The structure also spans all aspects of service delivery including people management, process and technology. Training on quality methodologies is provided to all employees and used as a motivator for retention. Best-sourcing companies are also aggressively getting external validation of their structure by getting themselves certified by global agencies like International Organization for Standardization (ISO) and Customer Experience Management (COPC).
The culture of innovation is also supported by comprehensive people practices as noted in Fig. 7.7.
These practices span recruitment and attracting the best talent, onboarding of new employees, retention through compensation, rewards linked to performance, ongoing training and education and growth
Fig. 7.6 Practices from global standards (COPC, DPA, PCMM, ISO, SSAE16)
Fig. 7.7 People practices to build a culture of excellence within an organization. Best-sourcing companies are continuously innovating and finding newer ways to keep employees motivated so they in turn can add value to their clients.