Business secretary Sajid Javid believes Britain is ahead of the curve” when it comes to innovation. Though this hasnt prevented him from launching an investigation into the red tape that stifles entrepreneurial practices in the UK.
The UK is dominating the European fintech scene having secured 25 per cent of all funding across the continent in Q1 2016. New technologies are disrupting the market, traditional banking models are being challenged and customer expectations are perpetually changing. Those companies willing to embrace the fintech revolution by innovating in areas of high demand will have the opportunities to excel in this sector. But how do small businesses keep in touch with more established organisations Innovating doesnt come cheap. Nor does it skimp on time and resources. What if this process was outsourced to an entirely separate entity altogether
These are the main reasons why small businesses should consider outsourcing innovation.
Outsource innovation; outsource risk
Risk is a catalyst for success in business. Rarely will you find an entrepreneur who hasnt at some point in their career taken a gamble which has paid off handsomely (or not so handsomely in some cases). The financial services sector is evolving at a rapid rate of knots and, therefore, lends itself perfectly to those with a proclivity for risk-taking. But if your gamble doesnt pay off, then the repercussions for management can be severe. But what if you could embark on this process without the threat of being held culpable in the event everything goes wrong
This is one of the perks of outsourcing innovation. You can innovate under a different guise. Imagine you’re a company commissioned to develop a new digital payment platform but you lack the specialist tools or resources to create a product fit to exceed market expectations. But you proceed anyway by appointing an in-house innovation team to source the product. The team will probably have to endure the inevitable office politics, bureaucratic barriers (just like the corporate red tape Javid has vowed to eradicate) and not to mention multiple rounds of corporate approval. It is likely that the product will not only be completely different to that originally envisioned by the company, but it will probably be out of date as well as is the pace of the financial services sector.
Read more on innovation:
- Creativity is not just for big companies SMEs must innovate like global enterprises
- Small London firms out to boost R&D agenda but lack innovation and STEM skills
- Four tips for businesses to be more disruptive
Small businesses will benefit from outsourcing innovation as it will give undue access to better talent without having to be held wholly responsible if the product ends up being a failure. If the product doesnt meet market specifications, the companys reputation will not be tainted nor will the managers involved lose their jobs.
Though it’s worth bearing in mind that whilst you’re outsourcing innovation, you shouldnt be outsourcing responsibility. Businesses must provide continuous input and keep track of progress in the innovation lab to ensure that, upon release, the product will be fully aligned with the business objectives agreed in the first instance.
It gives you access to more talent
This brings us onto talent. Recruiting and retaining the best talent can be a difficult job for small businesses. They simply dont have the financial pull to lure the brightest developers or engineers away from the large companies with the equally large budgets. Major multi-nationals will invest a lot of time and money into assembling internal innovation teams. Instead of having to actually acquire talent, outsourcing innovation grants businesses direct access to niche pools of skilled workers without having to endure the financial burden attached. This way the company can excel in a specific field rather than perform with mediocrity across a whole host of different projects.
What does the future hold
Outsourcing innovation is an effective method because it gives you the best of both worlds. It enforces creativity by mitigating risk, liberates innovative practices from the shackles of corporate culture and it opens up new routes to talent and alternative forms of financing. The financial services sector is in a state of transition, and keeping up with this revolution not only requires the creation of innovative new products. But it requires the journey to be innovative as well.
Paul Jozefak is managing director of innovation laboratory Liquid Labs.
During times of uncertainty, innovation often occurs more out of necessity, and less as a result of simple experimentation or from a desire to learn and grow. With this instinctive nature built into many leaders, we unveil some tools to ensure your business is ready for the unexpected when it comes to innovation.