In Search of a Living LSO Deal


Buyers and sellers should both plan for innovation over the life of a contract.
By John Higgins
This month we launch into an examination of learning innovation in LSO deals. As I speak with LSO buyers and providers, embedding innovation in contractual arrangements is a frequent topic of interest. On one hand, you have the buyers who want to ensure they are leveraging the expertise and thought leadership of the LSO providers to optimize the benefits derived from the LSO arrangement. On the other hand, you have the providers who desire leveraging innovation to improve customer satisfaction and distinguish themselves from their competitors.
Several years ago, the provider I worked for had asked me to support the mission for learning innovation and strategy. We created a dedicated team that focused on developing solutions that were at least market-pacing, and in an ideal setting, were market-leading.  Our mission was to stay in touch with emerging learning innovations, assess their viability and relevancy to our contracts, and develop and deploy those innovations deemed likely to have a positive impact for our clients. We frequently participated in briefings with prospective clients to describe our approach to learning innovation, and we worked with current clients to integrate the latest in learning innovation in our contractual arrangements. We held annual innovation days to showcase the latest innovations in learning and to create formal roadmaps for the coming year to bring those innovations to our clients.
I fondly recall participating in a site visit meeting with a prospective client to discuss how innovation would be integrated in his contract. During the session, he made statements and asked questions that concisely capture the importance of innovation in LSO arrangements. This prospect said, “I understand why we are considering you today . . .  we are aligning your capabilities with our need to increase learning efficiency and effectiveness . . . five years is a long time . . . tell me how you will ensure your services will remain fresh and relevant over the life of our arrangement with you.” He then asked, “How will you bring us the latest in learning innovation, and how will you integrate innovation in our contract terms?” At that moment I thought, “Innovation is more than important, it is critical to ensuring an outsourcing arrangement is continually refreshed and updated over the life of the contract.”
Reflecting upon a number of LSO arrangements I’ve supported, I define three distinct phases that are manifested over the life of the arrangement.
Phase 1: Transition—typically spans year one of the arrangement. The focus in this phase is the transfer of assets and personnel, the deployment of service infrastructure, and change management to support the transition.
Phase 2: Operational Stability—depending on the scope of the arrangement, the complexity of services, and the state of buyer readiness, this phase is entered at the end of year one, and may continue through years two and three.
Phase 3: Innovation—by this phase, the contracted services are stable and are yielding the benefits and results established in the LSO business case. It is in this phase that buyers want to know that the bar for business impact and results is stretched as far as possible. They also want to know their provider is leveraging the latest in learning innovation.
Before leaving my role as a provider, I saw buyer interest in formal innovation terms in LSO arrangements increase. As buyers of LSO services, you should consider asking your provider about their approach to innovation and how they will innovate over the life of your contract. As LSO suppliers, you can distinguish yourself in the industry by having a formal approach for innovating over the life of your clients’ contracts. It is indeed possible to include innovation terms in an LSO arrangement. In fact, I would submit they are necessary terms in any long-term LSO arrangement.
During the next several months, we will spend time examining the current topics and trends in learning innovations. Our focus will include: social networking for learning, mobility and messaging, learning measurement for business effectiveness, user-generated content, virtual worlds and simulation.  If you have interest in a particular area of innovation that you’d like to see included in this column, please drop me a line, and I’ll do my best to cover that topic in a future column.
So, to specifically answer the question: “Can you place innovation in an LSO agreement as a formal term for service?” The answer is without a doubt—“Yes!” 
John Higgins is founder of Higgins Learning Group and was previously global senior director for Accenture HR & Learning BPO Services. He can be reached at


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