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Create Disruption or Become Obsolete

By: Hélène Pielmeier (Common Sense Advisory)

27 February 2014

Are language service providers as innovative as we think? Which past innovations have revolutionized the industry and where will we go from here? Hélène Pielmeier discusses the meaning of true innovation in the industry and gives advice on how to create the next great ‘disruption.’ 

Innovation is about offering useful services that clients are willing to pay for – and true innovators dream up new ideas and products that buyers didn’t know they needed (think about Apple’s iTunes or Uber’s new mode of transportation). With the vast array of tools and capabilities within easy reach of a large number of language service providers, many translation agencies may have reached their pinnacle. They make incremental improvements but have run out of ideas to get even better. As a result, the role of the LSP as we know it is bound to change. Agencies will become obsolete if they don’t respond more aggressively to market challenges and changing client needs.

While you may feel that LSPs have significantly transformed themselves over the last decade into professional outsourcers, they haven't succeeded in changing the age-old model of translation. The technology they use has changed,  but the core value proposition and service packages haven’t. No one has really disrupted the market, although some providers claim to be “game-changers.” Why do we dismiss some of these presumptive disruptors?

  • LSPs frequently mistake tweaks to a production model for innovation... To better meet clients’ needs regarding price, turnaround times, and quality, providers introduce new capabilities or modify their process to improve efficiency. These so-called innovations are rarely a radical rethinking of activities, players, or value proposition. Research and development for language suppliers tends to be all about improving technology, not about changing the business models themselves.
  • …While they ignore client pain points. LSPs see themselves as the keepers of a proven method to produce translations and often push back on what they see as unreasonable customer requests. They strive for stability and predictability instead of providing solutions that will rock the client’s world. Their customers want to outsource their global communications to a trusted partner that has their interests at heart. They don’t want to hear about difficulties; they want to hear about solutions that will allow them to beat their own competition.
  • Most newcomers to the sector simply imitate competitors. In the language industry, many owner/operators and founders are linguists who enter the business with the same value proposition as their competitors – or a minor variation thereof. This phenomenon fails to push the industry to transform itself. Too many “me-too” suppliers make the overall market seem uninspired and undifferentiated.

Of course, there has been some change over the last 10 years, much of it driven by the broader use of technology. However, translation management systems, client portals, content connectors, quality assurance tools, and machine translation have already lost their competitive edge, as many language service providers can support those needs. Similarly, on the interpreting front, many vendors now offer over-the-phone and video remote interpreting as classic staples. We did see two platform innovations that are still playing out in the market: the crowd and the cloud.

Those companies that did not keep up with innovations are constantly playing catch-up and aren’t looking to the future. They are too busy fixing the present.

Mindset Shifts Are Required to Transform the Industry

In 2014, innovators must look beyond just tweaking internal processes. Common Sense Advisory sees aggressive LSPs questioning basic concepts such as who to serve, whether to let buyers self-serve, and what quality levels to offer. Some creative companies are pursuing new concepts:

  • The crowd emerged as a participant in translation. Information consumers became communities creating and translating content. Some enterprises successfully leveraged crowdsourcing to go global. A variety of LSPs and new-age marketplaces captured some of the known translation market, but much more importantly, they are looking for untapped markets.
  • The cloud introduced new workforce models. Once real-time access to client and project information could be easily supported across locations, LSPs were able to more easily open new offices and hire remote staff. As a result, clients benefit from more service during their business hours or increased opportunities to meet in person.

Want to Transform the Industry? Disrupt It!

Only a handful of providers out of the more than 28,000 LSPs in Common Sense Advisory’s global database of suppliers show true innovation in their business models. We expect that radical change will not come from within, but from outside the sector. Startups and providers with top managers from outside the language service industry have the best chance to outwit their peers. They are more likely to customize business models to address customer pain points and to think of bold new ideas to meet a need that no one has thought of fulfilling yet.

Of course, the odds of failing increase when you take a radical approach to innovation. However, incremental changes can take suppliers only so far. But brace yourself. Once you find a brilliant take on an old problem or a new idea altogether, competitors will hear of your success. The copycats will pounce, and before you know it, your innovation will become mainstream. As in the case of Apple and Uber, innovative LSPs will have to keep innovating so that rivals will compete with yesterday’s offering rather than today’s – and tomorrow’s.

  • Find buyers with unmet needs. Most LSPs obsess about targeting the same clusters of clients. Innovators sidestep these heavily contested clients as they look for underserved niches. They focus on smaller buyers, individuals, and bigger corporate functions such as customer care and human resources. These people aren’t language specialists; they usually just need information quickly and are looking for a solution to a language gap. They go online in search of translation and often buy outside the usual localization departments and established procurement schemes.
  • Remove the salesperson from the equation. Buyers can purchase services through a website without ever having to talk to a salesperson, an ideal situation for a market segment that prefers to buy in a no-pressure environment or for the many millions of people who grew up buying online. This is driven by the way every other retail and service industry on the planet works today – we’ve trained people to buy with a single click, through configuration menus, or simple lists of options. Rather than ask a sales rep for references, they read online product reviews. For the LSP, it means a shift in growth strategy where marketing – and getting found − takes center stage.
  • Turn project managers into tech support. In this model, buyers can pick pre-certified vendors right from the LSP’s database just like in a marketplace. When they encounter problems, they open a support ticket and a project manager swoops in to save the day. The concept is innovative, but still suffers from its inability to aggregate enough demand to match the supply that it has created.
  • Give clients choices in deliverables. Many LSPs are willing to remove a step in their process as an exception to their absolute quality philosophy. However, here we are talking about agencies that build a multi-level service offering from the ground up so that the client can choose quality and service levels based on application needs and budget models. This means dramatically different production models with machine translation at one end and humans at the other. It’s not that new, but it’s not mainstream practice yet.
  • Eliminate travel time for interpreters. Technological advances in simultaneous video remote interpretation (VRI) enable immediate access to interpreters, increase the pool of available providers, and in turn reduce the high cost of travel that prevents access to languages. The size of domestic multilingual populations and growing international tourism means that more people will need language services in health, judicial, public safety, and travel venues.

Hélène Pielmeier is a senior analyst with Common Sense Advisory. She writes about translation company operations, sales strategy, technology, project management, and account management.