07 May 2009

The knowledge challenge (for outsourcing companies)

[Below is an article I wrote in Nov 07 for a now defunct Indian website. I stand by it even more today].

For Indian outsourcing providers, their business is evolving towards securing partnerships for innovation with their customers. It is therefore no longer only about cost-savings and taking on non-core activities. Now here is a challenge for them: How to go about obtaining enough specific internal knowledge from their customers in order to produce relevant value-adding innovation?

The reason why this is a challenge is that most organizations today still fail - or don’t even attempt - to build a knowledge based culture where knowledge sharing between all their employees is the norm. If a customer’s key representatives only share knowledge and experience with their colleagues when they have to, why would they share more freely with external consultants?

In my experience, consultants usually obtain more information on a specific issue than internal managers, but that is usually due to their – justified or not - “impartial” and “more objective” status. It is also because employees are told to assist the consultant in any way they can because… hem… they are not cheap. But this actually only reinforce my point: For a true value-adding cooperation between an outsourcing firm and a customer organization, you cannot rely on people sharing knowledge only because they are told to do so, you need much more willing and systematic involvements.

To truly understand the issue, one must realise that the type of partnership that we are talking about here is of a new breed. It is not the classic consulting time-bound project with consultants walking in, gathering information, analysing it, developing then submitting a solution, and finally walking out. What is suggested here is a long-term relationship requiring systematic access to relevant information and sharing of knowledge and experience between the customer and the service provider.

Innovation does not happen in a vacuum but is very context-dependant. Furthermore, innovation is nearly always the product of collaboration between individuals/teams/companies.

Ok, so what is my point then? I do not claim to know all the consequences of this problem (I count on you all reading this to help out). I would only suggest this: Outsourcing firms should steam ahead offering new collaborative services to their most “knowledge focused” customers. With them, there should be no problem in co-generating innovation and value.
However, with the other customers still stuck in, pre-Knowledge economy, pre-Web 2.0 era with Industrial Age management methods, my advice is either stay clear of making too many promises, or alternatively first offer to assist them in transforming their organizational culture and foster knowledge-sharing.

To support the second option, I will quote a report on the recent KM India 2007 Summit :
Comparing the current Knowledge Management (KM) movement with the Quality movement of [the] 80s, noted IT entrepreneur and Chairman & Managing Director of Mindtree Consulting Mr Ashok Soota said,
"Knowledge movement is the next important movement. It is like the Quality movement of past. CII and industry will promote this like we did with quality movement." The Summit is being held in New Delhi from Nov 14-16. Highlighting the importance of KM in today's corporate world, quoting management guru Peter Drucker, Mr Soota said, "Today there are no poor countries, only ignorant countries! The same is true of companies."


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