Process Innovation5th June 2020
A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software.
Process innovation is the application or introduction of a new technology or method for doing something that helps an organization remain competitive and meet customer demands.
Process innovation happens when an organization solves an existing problem or performs an existing business process in a radically different way that generates something highly beneficial to those who perform the process, those who rely on the process or both. For example, the introduction of a completely new sequence to an existing production process that speeds production by 100%, thereby saving the organization money and time, could be considered a process innovation. Organizations today often bring in new information technology systems or find ways to use older in new ways at the forefront of their process innovation efforts.
Process innovation is different from incremental innovation in both scope and size. Whereas incremental or continuous improvements generate limited value, innovation generates improvements that increase value by upward of 50%, 100% or even more. Some describe process innovation as creating radical or game-changing shifts. In addition to the introduction of a radically new approach or technology, process innovation generally requires a longer planning time and support from high-level management. It’s also riskier than incremental improvements and requires a higher level of cultural and structural change. Process innovation also typically impacts a broader portion of an organization than do incremental improvements.
Process innovation can generate value to either internal customers, including employees or the actual organization itself, or it can create value to external customers, including business partners, end users or actual consumers. Values stemming from process innovation include reducing the time it takes to produce a product or perform a service; increasing the number of products produced or services provided within a time frame; and reducing the costs per product produced or service provided. Additionally, process innovation can generate significant gains in product quality and service levels. Overall, an individual organization needs to see a significant increase in some of its key performance indicators (KPIs) to be a true process innovation.
Process innovation is probably the least sexy form of innovation. Process is the combination of facilities, skills, and technologies used to produce, deliver, and support a product or provide a service. Within these broad categories, there are countless ways process can improve.
Process innovation can include changes in the equipment and technology used in manufacturing (including the software used in product design and development), improvement in the tools, techniques, and software solutions used to help in supply chain and delivery system, changes in the tools used to sell and maintain your good, as well as methods used for accounting and customer service.
While product innovation is often visible to your customers, a change in process is typically only seen and valued internally. Speaking generally, changes in process reduce costs of production more often than they drive an increase in revenue. Of the three types of innovation, process is typically the lowest-risk.
- One of the most famous and groundbreaking examples of process innovation is Henry Ford’s invention of the world’s first moving assembly line. This process change not only simplified vehicle assembly but shortened the time necessary to produce a single vehicle from 12 hours to 90 minutes.
- Recently, Differential built a mobile sales dashboard for Grupo Bimbo. The baking company has 65 manufacturing plants and 2.5 million sales centers located in 22 countries, across 3 continents. As a result, the executive team members travel a lot, meeting with their direct reports around the world. Having a mobile sales dashboard gives the team quick access to the sales information and other KPI’s for each country, channel, and brand, cutting out guesswork in sales decisions, and reducing meeting time.
Process Innovation Stages
One of the most cited examples of process innovation stages goes back to the beginning of the auto industry. The period when Henry Ford created the production line.
Another well-known example is Dell, in which computers are assembled according to customer specifications, practically tailored to meet their needs.
But how do you come up with this type of idea capable of innovating processes so radically and successfully?
Some methodologies define certain steps for process innovation, but, in essence, are not very different from the steps used in other types of innovation, such as: the identification of opportunities; understanding opportunities; the exchange of ideas; innovation; selecting the best ideas and the development of innovation.
This sequence of process innovation stages sounds bureaucratic and stifled.
Therefore, for the effective use and implementation of process innovation stages, we suggest the use of approaches such as design thinking and disruptive methodologies, which we will summarize below.
Using Design Thinking in process innovation
Basically innovation based on the methodology of Design Thinking has 4 stages:
- Inventing the future
This consists of analyzing the situation and finding something that people need, but which they don’t yet have.
Thus, in cases of process innovation, the focus can be on both a benefit for internal and external customers.
For example, if in a law office lawyers dream of getting feedback from fellow experts in areas that don’t currently operate quickly, even a simple solution like adopting Slack in the company can be an innovation in the process of internal communication.
- Develop a prototype
In our example, a group of lawyers could be chosen and some channels created in Slack by area of activity.
With everything formatted as discussed above, there must be a testing period. This allows you to collect feedback from users and adapt the solution to their real needs.
After defining the new process’s attributes, you can replicate it in the entire enterprise with much more security and assertiveness.