How do you foster innovation and continuous improvement in your managed services partnership?

Define how the innovation will be paid for. Who will be doing what. Don't simply establish a "COE" without considering the impact of it on the rest of the business. Also don't ask billable resources to work on innovation without adjusting their metrics. You have to align your incentives with the actual work you want them doing. So if they are working on innovation that will reduce their utilization targets (as one example). Most importantly set timelines and success criteria. At some point you have to decide: "Move forward or stop."

In my experience: To foster innovation and continuous improvement in a managed services partnership, it’s essential to create a culture of collaboration and open communication, encouraging both teams to share ideas and insights. Regularly evaluating performance metrics and leveraging data-driven insights can help identify areas for optimization. Additionally, investing in upskilling and adopting emerging technologies ensures that the partnership stays agile and ahead of industry trends.

In addition to the above info , here is my view . To establish regular feedback and communication for fostering innovation, implement structured touchpoints such as weekly or monthly meetings to review progress, share insights, and brainstorm new ideas. Use collaborative tools and platforms to allow continuous, real-time feedback, enabling transparency and quick adjustments. Encourage a culture of open communication by recognizing and rewarding contributions that lead to innovative improvements, ensuring that all team members feel valued and heard.

Communication is critical. If you have someone from innovation praising how great <insert new thing> is, yet they have not talked with the delivery side of the house this is bad. Regardless of how great something new is, there has to be a place for it to fit into the business. There has to be a plan for making money from it eventually. This requires continual communication between R&D and Delivery and alignment with those setting strategy for the company.

Collaboration and co-creation are essential. They enable: 1)Enhanced Control and Visibility: Businesses benefit from the MSP's expertise and align IT with strategic goals and innovation. 2)Tailored Solutions: Custom strategies and solutions can lead to more effective and innovative services. 3)Knowledge Transfer and Skill Enhancement: Collaboration with MSPs enhance the internal team's skills- leading to continuous improvement. 4)Rapid Innovation Cycles: Co-creation accelerates innovation. These partnerships create a dynamic environment where expertise from both parties contribute to a continuous evolution of services, ensuring they meet the business's changing needs.

Added to the 3rd step in fostering innovation and continuous improvement. To encourage collaboration and co-creation, establish cross-functional teams that bring diverse skill sets and perspectives together to solve challenges. Create a shared vision and common goals to ensure alignment and foster a sense of ownership among all stakeholders. Promote an open environment by providing tools for collaborative work, hosting workshops or brainstorming sessions, and celebrating successes that arise from joint efforts.

I'd focus on creating a true partnership with the MSP. They’re not just there to execute tasks, they’re part of the strategy. I invest the time to understand how I want the service to work, aligning expectations and ensuring clarity. I bring the MSP into planning sessions and decision-making, making their expertise and insights part of the solution. Collaboration isn’t just a buzzword, it’s about creating space for both sides to challenge each other, share ideas, and co-create solutions. When you treat your MSP as an extension of your team, you unlock innovation that benefits everyone involved.

Establishing some kind of innovation or R&D team is a strong play. Have a few people who are looking at the emerging space and understand the business so they can bring new idea to service deliver is a good way to "keep things interesting."

Added my view to the 5th step: Investing in learning and development is crucial because it equips teams with the skills and knowledge to stay competitive, adapt to emerging technologies, and drive innovation. To do this effectively, create personalized development plans, enable access to training programs, and provide 360 degree opportunities for hands-on experience. By encouraging continuous learning fosters employee engagement, improves retention, and enhances the organization’s ability to meet evolving market demands.

Partnerships between services and product require very careful planning and setting of expectations. Some companies will have very extraneous requirement to become a partner while others will partner with everyone and provide no value. You need to define what you will actually do for each other, what are the expected outcomes, timeline, budget etc... Product teams need to understand reselling a tool is not interesting for a service org, so you need to work with them to develop services that drive your product. And vice versa, product sales need to provide opportunities for service wrappers. This is the way you partner and work together.