Being innovative is a quality that businesses strive for. And it is something that we are seeing more of in today’s technology-enabled environment. We have all heard of industries that were completely changed through innovation, but Uber and Netflix are just the tip of the iceberg.
Operational innovation has been happening around us for years! Companies have been able to completely revolutionize their operations by changing the way they think work should be done, and investing heavily in their ability to challenge the status quo. Companies like Toyota and McDonalds are just two of those cases.
Toyota faced extreme economic conditions after World War II dominated by resource scarcity. As a result of this pressure, Toyota had to ensure that its people and processes make the most use of every single nut, bolt and hour of manpower to compete with their international competitors. They innovated how they created value for their customers, empowered their employees and focused on quality.
McDonalds also revolutionized its industry through its innovative operations. McDonalds was born at a time of changing behaviours where greater value was being placed on the speed and consistency of service. To take advantage of this, McDonalds simplified its products and standardized its processes to a level that had been unfathomable at the time. However, due to its various operational innovations, McDonalds became the king of consistency and dominated the food industry for decades. In fact, it still does to this day.
While neither Toyota nor McDonalds reinvented the wheel, they simply understood what customers wanted and found a more affordable, simpler and more practical way to make it.
However, for every innovation success story that we see, there are countless shortcomings as well. So, what are some drivers that separate the successes from failures? First, let’s look at some of the hurdles that can block operational innovation.
Barriers to Introducing Innovation
One of the biggest obstacles to innovation is fear. The thing about innovation is that it is always the result of dramatic change. You are not simply jumping over a small pothole, you are leaping over a cliff… wearing a blindfold… on rollerblades.
With dramatic change comes a high amount of risk since there is limited line of sight into your future state, and there is limited ability to predict how your workforce, customers and suppliers will react to your new way of doing business. If you are in a start-up environment, taking that leap of faith is considerably less risky than if you are in an established business. You have less commitment to the current state, your resources are more fluid and you are going in with a fresh slate.
Think about a new business or start-up as a boat, and an established business as a large container ship. The boat is much smaller and more agile, and it can change its direction much faster and with much less resources that the container ship. And while some of the barriers will exist in both new and old businesses, these forces will be much more powerful in established businesses.
Some of these barriers include:
- organizational culture
- previous experience with change efforts
- complacency towards the status quo (“if it is not broken, why should we fix it?”)
- office politics or corporate structures that stop cross-functional communication and collaboration
- uncertainties in market conditions
- lack of data and awareness…
As you can see, there are lots of barriers that can stop operational innovation before it even begins, but don’t lose hope just yet.
Making the Case for Innovation
While there are various forces that can hinder the progress of introducing innovation in your business, I would like to help point out some of the benefits that come with successfully innovating the way you work.
Companies that have successfully innovated their businesses have improved their ability to deliver better services and products to their customers using more effective and efficient processes. Some of the ways that they’ve been able to benefit have been to reduce operating costs, improve quality and service delivery, and increase sales by reaching new markets or segments. But innovation is not simply about dollars and cents.
Innovation also drives a company’s ability to attract the best talent, drive employee engagement and loyalty, and develop new partnerships with its customers and suppliers. Innovation becomes an extension of your brand, positively impacting every part of your organization.
The Path to Operational Innovation
Given the vast benefits that operational innovation offers, it is clear why so many companies and leaders are investing heavily in creating an innovative climate. But innovation is not like a switch that you can turn on. It requires a solid foundation, management support, time, patience and a new way of thinking. Innovation must become a part of your company’s culture, driving changes in how we behave and how we view problems. To help you tackle innovation in your organization, I have put together some advice.
Start with the Culture
As I mentioned, successful operational innovation requires new norms and a new way of behaviour and thinking. It requires a cultural shift towards embracing the uncertainties that come with the unknown.
If I can pinpoint the key driver that makes a culture innovative, it would be collaboration and the sharing of ideas among employees. In my experience as a Business Process Improvement consultant, I can easily say that most great improvements come from those that are on the front-line. The front-line is in direct contact with processes and work everyday, and they are fully aware of the various shortcomings that exist in their day-to-day activities. However, they do not always have the ability to voice their thoughts and concerns.
Therefore, the first move is to facilitate the ability of employees, regardless of their position on the organizational chart, to feel empowered to share their ideas. If people are a part of developing a solution and change, they will be more likely to embrace it, advocate for it, and ensure that it is successful. If your employees feel that they work in a welcoming and collaborative environment, they will be driving force innovating your workplace.
Don’t Forget About Change Management
One piece of advice that I would like to share is that you should always consider incorporating effective change management strategies, regardless of how small the potential a change is. In essence, you are going to be changing the way that people have been doing things. If your employees are kept in the dark and do not understand the nature of the change, why it is necessary and how it will affect them personally, your change efforts will be more susceptible to resistance. With effective change management strategies, you can give your employees the confidence and help they require to adapt to and embrace changes.
An idea that has recently been receiving much fanfare, especially in the tech start-up scene, is agile thinking. Agile is a method of project management that breaks down a project into very short phases and milestones, incorporating frequent reassessment and adaptation of plans. So how is agile thinking related to change management, and how does it support operational innovation?
Due to the rapid iterations that it introduces, agile thinking can be very effective in reducing the fear that comes with change. It provides more guidance and allows us to quickly prototype and test a change, providing opportunities to gather data and ensure that we are going in the right direction. Couple agile thinking with clear Key Performance Indicators (KPIs) and identify targets for success to help support your innovation journey.
Measure Everything, But Don’t Go Overboard
As I mentioned above, agile thinking requires constant measurement. Companies are gathering data throughout their operations to focus their thoughts and guide their decision-making in a proactive manner. So it’s great that we live in a world that technology enables us to track everything and anything, right? Well, not necessarily.
A problem that has come with this increased capacity to gather data is that you now risk going through “paralysis through analysis” – when a company becomes so obsessed with the metrics and data that it is gathering and analyzing that it is no longer able to make decisions quickly. Too much data can result in your company losing sight of the big picture. So instead of going overboard on the metrics, think about what you actually need to measure and what you hope to gain from that data.
Click here to find out about the metrics that you need to measure your performance.
By setting up effective metrics to manage your operations, you will have better line of sight into the impact of the changes that you are introducing. The data you collect can help you understand how effective your change efforts have been and how successful the initiative is so that you can introduce iterations, maintain your course, or stop your change initiative.
Going back to true operational innovations, one of the primary obstacles that companies face is that they do not have access to useful data. However, a starting point is to gather data on the problem. If you are receiving complaints about on-time deliveries, start tracking it. You can then develop KPIs to monitor the impact of your innovation in addressing the primary problem you are hoping to resolve.
To Sum Up
In today’s fast-paced business environment, innovation is not just a nice-to have, it’s a must. We are constantly seeing companies and industries shift how they deliver value to their customers, and companies that do not embrace change are not able to compete. Yes, there are lots of hurdles and obstacles that make innovation seem like an impossible task, but I assure you, it is not. By incorporating the right thinking and the right approach, you can help lay the foundations for innovation in your organization. Pay special attention to change management and consider how agile methods can be used to execute on your ideas. Most importantly, pay attention to your culture. Innovations start with ideas, and a collaborative culture will enable everyone to participate in finding the right solution.
If you wanted to discuss the topic of innovation, please don’t hesitate to reach out. I would love to hear your take and learn from some of your experiences in introducing innovations in your organization.