The Ethical Dilemma of Service Provider Innovation

I must confess I look askance at how some services customers think. They want to keep their cake and eat it too. But it’s batty and preposterous to think you can have something both ways if the two ways conflict.

We’re seeing schizophrenia in the marketplace. Customers look to the provider community for insight and innovation to deliver services and functionalities that will change their business. Typically they say, “Bring us ideas about how we can change our business. But don’t just bring us ideas — show us that you’ve used these ideas in other clients of similar size and scale to us. Show us that these ideas have generated substantial business impact. And bring us people that have implemented and successfully delivered these services to our peer companies. BUT DON’T TAKE ANYTHING OF OURS TO THE MARKETPLACE.”

They demand complete protection about not taking to the market any of their intellectual property (IP) or any ideas generated while the provider works with them, yet they refuse to do business with any provider that hasn’t done this for other companies.

At a minimum, such a customer is intellectually dishonest.

This schizophrenic behavior underlines a fundamental dilemma of using third parties on innovation and creating competitive advantage. It ensures that if, in fact, vendors or providers stay true to these demands, they can only re-use insights and actions that are not compelling and don’t drive competitive advantage.

But customers insist that they only want to buy things that drive insight and competitive advantage, which forces providers either to be dishonest and, in some way, skirt around these commitments or to be uncompelling. The customer’s preposterous demand puts the provider in a dilemma with no possible good outcome.

As a customer, when you select a provider that brings you compelling ideas that they implemented elsewhere and that provide tremendous competitive advantage, then you must expect that they may well be violating commitments to other customers and they will take ideas generated with you elsewhere too. So you’re effectively dealing with a dishonest organization.

If they’re honest, they can only provide things that don’t create competitive advantage. And if they’re dishonest, then why are you buying from them?

So what’s the answer to this dilemma? Please post your comment on your experiences in this area.