“There’s a way to do it better – find it!” Thomas Edison
This process stuff is very interesting.
The definition of a business process is quite simple, namely “a series of actions or steps taken to achieve a particular end”. But really you should think of your business processes as so much more than that.
If innovation culture is your DNA, then processes are your arteries, your veins and the nervous system of your organisation.
It is what all businesses are built on.
You make products. You deliver services. You support your business through business support services such as HR, Finance, ICT and the like. And all these activities are dependent on processes. In fact, some organisations are comprised of 100% process! And processes tend to be operated by human employees, albeit aided and abetted by some form of technology.
So it goes without saying that they are important to your business and processes are probably something that you could improve with Process Innovation.
Process Innovation
Process improvement refers to improving or adapting one or more specific steps in a process, the objective being to make a process more efficient or effective or to generate different results. Reengineering a process using Lean and Six Sigma principles can be described as process improvement.
Process Innovation takes improvement to the next level, such as the creation of an entirely new aspect of a process or an entire overhaul the whole process with, for example, the objective of reaching new or different markets, or to grow and expand a business, or to disrupt the industry you operate in or would like to operate in. An example of this would be the Uber concept of using an app on a mobile phone to book a cab and pre-pay for a journey, instead of hailing a cab and paying in cash.
And how does process improvement become process innovation? By giving the front end of the improvement process a wider, innovative scope. Make sense?
To summarise, and let’s not get hung up on this:
Improvement – make better
Innovate – reimagine
And the two terms work together such as:
when innovation also includes some form of process improvement
when an improvement leads onto an entire reimagining of the whole process.
So the main thing to understand about process innovation is that while a good innovation will most certainly improve a process, a great innovation can move that process into something that is completely different – same ends, different means!
And moving up a gear, it can mean changing an entire industry. For example:
Going back to the Uber example, traditional taxi companies have had to invest heavily in mobile hailing apps and fare payment has shifted from cash to card or even prepayment. Even some London Black Cabs are part of the Uber network.
Through its influence in the market, Airbnb has accelerated advancements in technology use in the hotel industry. To keep up to speed with Airbnb, traditional hotels have had to invest substantially in process and digital transformation which has produced innovations such as digital room keys, mobile check-in services and overall improved guest experiences.
The impact field is huge, so to keep it simple, I’m going to refer to process innovations as those that involve the activities and operations that produce or support the production and sales of a company’s products and services.
Process Innovation is not something you can buy by the dozen at Tesco (even with a Club Card!).
Innovating requires a dramatic change from the “we have always done it this way” business-as-usual activity to dynamic innovating in areas such as streamlining operations, automation and using new and emerging technologies, to produce the required results.
The task of process improvement is a methodical, orderly activity with an investigative or diagnostic approach, whereas Process Innovation has potentially a wider scope requiring both analysis coupled with creativity.
The end goal of an improvement exercise is always quantifiable for example, to increase productivity, decrease wait times, increase the amount of items produced or decrease risk. Therefore the result should be a more efficient or effective process.
Process innovation also has a goal in mind, but it often has less tangible elements. Take, for example, the online delivery service of your local supermarket. Changing the way customers interact with their goods and services offered may increase sales by attracting more customers but this new form of interaction has also substantially changed the food retail industry in ways that are harder to quantify such as buying fresh fruit and vegetables without seeing or feeling (or in the case of my wife, having a sniff! Never could understand this…)
And can we quantify things that we lose like the exercise gained by wandering around the shopping walkways in Tesco, the odds and sods we buy on a whim as we pass them, the social interaction from bumping into people we haven’t seen for ages?
Does this reduce sales by customers fleeing to competitors who do not sell online? Quite simply, that answer is no – you can do both. The innovation was a new, additional way to interact with customers and does not replace the traditional customer experience.
So process innovation has a very wide impact and requires careful evaluation of the current process and critical thinking about how it can be improved.
Asking a business analyst to evaluate a system or process and deliver a better way of doing something is very different to asking an employee who already works the process to use their creative abilities to innovate and revamp a whole concept.
That is why you need to understand the difference between improvement and innovation.
How do we start innovating processes?
To successfully implement process innovations, a business may need to invest in new technology, train staff on different processes and create systems for tracking changes.
For example, rather than using outdated manual systems to process customer needs in a bank (or even “automated” systems that replicate the same outdated manual systems but using robotic process automation), the utopia would be to have a completely automated process: straight-through processing.
Although this is normal use of technology for the new and emerging digital banks, it is a huge challenge for the old established banks which are burdened with legacy systems, legacy processes, and legacy staff.
Processes can form the core competency of an enterprise (for example, take banking or insurance) and the way your company processes something may yield significant advantage, allowing your organisation to steal a march on its competitors for years to come. Maybe your process is actually a special way of doing something that competitors simply can’t replicate immediately, giving you a period of time where market share gains can be made.
However, most will be small, incremental process enhancements or improvements that just simply make the things we do day to day better.
That is Continuous Improvement.
If employees are given the opportunity to find incremental improvements to the processes they perform or the way they work, this can ultimately lead to huge efficiency gains for your company. Combining Process Innovation with continuous improvement takes it to the next level, widening the scope for process enhancement.
As such, developing process innovation capacity and capability within an organisation is central to being able to keep pace with shifting business environments and the ability to use emerging technologies and is often used as a tool for staying ahead of competitors by offering better products/services at lower prices or faster delivery times than before.
It also helps increase customer satisfaction by reducing wait times, errors, and product defects while improving quality standards and can be applied to each point in the customer journey from A to Z.
And it is not the preserve of manufacturing or fulfilment activities. Efficiencies gained in business support activities such as accounting or facilities management reduce overheads and can be passed onto to the customer to give that competitive edge on price.
There are many examples of process innovation in business:
The use of 3D printing technology which has revolutionised some manufacturing processes by allowing companies to rapidly prototype new products without having to create expensive tooling for production runs.
Implementation of robotic process automation in processes associated with process-centric industries like banking or insurance has allowed those companies to streamline their processes and bridge silos while reducing labour costs and eliminating human error.
Using data analytics to gather the information required for ideation in the innovation process or to help make decisions about pricing strategies based on historical sales information as well as predictive models for future trends within their market.
However, sometimes innovative approaches are adopted too early in the development cycle resulting in a detrimental impact on company brand and reputation.
One example of this is the impact on customer engagement and service interactions by using Chatbot technology on websites. Seen as an improvement, the technology allows customers to ask questions to an automated help system via text or voice message instead of waiting on hold for a human customer service representative.
Some Chatbot systems have been well thought out and developed, and their introduction has been very well received. But others haven’t really been through the machine learning cycle enough thus limiting their understanding of customer needs and resulting in poor responses, a failure to resolve a customer query and creating a now frustrated customer who has to go back into a queue and wait for the “next available service agent”.
Although machine learning is ironing out some of the creases in these systems, it is clear that the innovation development processes of some organisations are far superior to others.
Because of the impact on products and services, whether it is the physical product or the process that wraps around them and gets them into the hands of your customers, process and product innovation are often interlinked and developed together in the most successful companies.
“Every success story is a tale of constant adaption, revision, and change”
Richard Branson
I hope you can see how widening the input into process change can yield much better results.
Now, for the next few blogs, I turn to look at the star of your show – your workforce!! These are the ones who will be the idea generation machine if they are allowed to operate innovatively.
So my next few articles will focus on people – the way they work, the way they interact with one another and the whole employee experience. It’s the way in which your workforce adapts to new ways of working that will govern the outcome of your innovation culture.
Until the next time…
I’m sure that after reading these blogs on innovation in the workplace you will have a backpack full of questions regarding the “What and the How” of innovation and maybe feeling a bit stuck.
Never one to leave you in the lurch, I am always happy to try to have a brief chat and address your questions. Just reach out and let’s see if we can bring resolution to what is keeping you awake at night. Email me at gary@rokaboat-emea.com and let’s arrange a virtual coffee or connect with me on LinkedIn - Gary Thompson
And one other thing – I would love to hear your feedback on this article. My father had a shop and from being a child I was taught to listen to the customer, so I welcome your comments. It’s time I practiced what I preach!