Three Reasons Why Failing to Adapt Your IT Sourcing Will Cannibalize Your Company

August 14, 2014 Ben Kerschberg

Bodiam_Castle_fromthe_south

Gartner recently published a report the premise of which is that enterprises must change how they source IT in order to succeed in a digital world. They refer to this as adaptive sourcing. As set forth in our white paper, How Adaptive Sourcing Helps CIOs Revolutionize Innovative IT Sourcing, Gartner contends that enterprises must build to adapt rather than build to last. That may seem like risky advice. Doesn’t everyone want to build to last? Yet the digital business world forces adaptation as a condition precedent to lasting. Why does this world present such choppy waters? Because few companies are ready for the myriad technology and business options that will define the next generation of market leaders. And the speed at which one must shuffle with trends is faster than ever.

Gartner asserts that adaptive sourcing helps organizations move away from traditional, static, layered sourcing strategies to a more nimble position that can respond to market forces. The transition is not easy. Gartner found that the number of CEOs and CIOs who see business growth as their top concern is far outpaced by the number who believe that they will not be able to harness digital business. At the same time, CIOs, as members of the senior management team, are held accountable for business (not just IT) imperatives such as innovation, strategy, and growth.

So adapting is difficult. What’s new? Here’s the difference: Business cycles now change so quickly that failure to adapt will render you irrelevant. Any technology cycle longer than five years is rare. Forrester asserts that six months is often on par. At the same time, tools such as open innovation platforms based on global expertise (i.e. crowdsourcing) have never been so available and instrumental to solving difficult and often paradigm-shifting challenges. In other words: no excuses.

Failure to build to adapt has at least three consequences:

1. Get ready for an exodus of your knowledge workers. Workers often know far before management that their employer has become stale. Opportunities to be part of innovation dry up. The chance to learn from expert peers and formalized training becomes scarce as resources are diverted to short-term corporate survival. Those workers who can afford to enter a supply-driven market such as high technology (e.g., talent wars between Silicon Valley titans that resulted in allegations that numerous companies colluded to keep salaries artificially low). For their own development, these workers are right to leave. The natural corollary is that your reputation now precedes you, so count on hiring lower quality talent with swift employee turnover cycles. Winning organizations are those that understand the power of their people to solve complex problems. Losing your talent is disastrous.

2. You’ll be wearing blinkers. Horses wear blinkers in order to block out the the rest of the track, thereby allowing them to concentrate only on the race ahead. For horses, that’s just fine — even the legendary Secretariat wore blinkers throughout his Triple Crown march. For companies, it’s a different story. Companies that wear blinkers cannot build to adapt because they cannot see the world around them. Imagine a corporation losing its peripheral vision, not to mention the ability to see competitive threats or industry shifts from behind? In such instances, blinkers become blinders that cause enterprises to lose their way. In an era when adaptive sourcing models such as crowdsourcing eliminate corporate boundaries, a blind enterprise will have nowhere to look despite an endless horizon (see infra (collapse of four walls)). Forget about finding your moved cheese — you won’t even see that it’s gone. Muybridge_race_horse_animated

3. The distance between you and your competition will increase in non-linear fashion. According to MIT Professor and co-founder of the MIT Initiative on the Digital Economy Andrew McAfee, crowdsourcing is the quintessential example of adaptive sourcing on the road to innovation. He states that crowdsourcing “identifies and taps into sparks of genius in a way that we have never been able to before.” Companies that build to adapt via crowdsourcing will gain a competitive advantage by leveraging world-class expertise while reducing development costs and implementation efforts. Moreover, innovation is not a one-stop rodeo, so don’t expect to become “merely” an incremental laggard. Innovation is a process whereby novel courses of action are discovered over time and the enterprise constantly gathers knowledge therefrom in order to develop innovation courses of action that make the company built to adapt. Each innovation allows for additional innovation in the next cycle. Similarly, the next cycle buries the non-innovative enterprise even further.

Traditional innovation took place inside corporate walls. However, that approach no longer suffices for a company to compete on equal footing with adaptive competitors around the globe. Why? Because those four walls have been torn down by adaptive sourcing techniques such as crowdsourcing. This presents extraordinary opportunities for forward-thinking enterprises, and concomitant dangers for those who remain flat afoot.

Let us know if you stay behind your now altogether self-imposed walls, which will be higher than ever. Enjoy the view.

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