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Innovation and Contracts

October 11, 2009

INSEAD, one of the top European business schools, has released its ‘Top Ten Articles’ for the third quarter. Heading the list is ‘A Practical Guide To Innovation’.

Author Professor Robert Goldsmith starts his commentary with: “What does innovation mean? It used to relate mainly to products, and that’s still important. But over the last decade or so, businesses have been putting more and more emphasis on innovating new services and business models as well. In light of this, it’s time companies take another look at how they manage innovation.”

His comments echo several articles on this blog, highlighting the implications of the shift from a product-based world to one where solutions and services dominate. When Goldsmith calls for new ways of managing innovation, he confirms the opportunity for those who are engaged in contracting. If you study his examples, many depend on forming the right alliances or negotiating rights from third parties.

His observations include: “Most of the information about managing innovation available today is siloed, addressing specific issues such as technology or finance. But as the boundaries of innovation expand, more managers will need practical knowledge and tools that transcend these functional silos.”

Once again, the experience of the contracts community in taking cross-functional perspectives and reconciling their differences provides the potential for a key role in the innovation process. But this demands a readiness to move beyond the transactional and to become far more embedded in product development and product lifecycle management. 

A few of the most admired contracts groups have made this transition – som eby design, others by accident. But whereas a transactional focus slows the business and makes contracts appear negative, a product lifecycle focus ensures that offerings are brought to market with the right value-add capabilities.

It is true that in theory this efficiency would require less contracts staff. But the reality is that the groups providing value are the groups that find themselves growing. Innovation should be a keyword for anyone in contracts if they want a career.

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