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Integrating Process
Improvement and
Transformational Innovation
              Douglas Brockway
                    April, 2012
“The source of (corporate) wealth is something specifically
human: knowledge. If we apply knowledge to tasks we
already know how to do, we call it „productivity‟; If we apply
knowledge to tasks that are new and different, we call it
‟innovation‟”

                                  The Discipline of Innovation
                                                Peter Drucker




                                                                 1
Common challenges regarding innovation

   Interest in innovation remains quite high
   But, fiscal budgets are tight
   Many companies are “out of shape” regarding Innovation
     ̶   Forward looking investments have been closely managed
     ̶   Individuals and teams introduce new concepts when they can, but
     ̶   Project timelines and budgets are tight as is the overall budget
   Innovation research shows that when flexibility on “when” and “how” a solution
    is derived is removed organizations forfeit creativity
   They are forced to use what is known, what has be tried and used before, to
    NOT innovate




                                                                                  2
Innovations can be very local or very transformational in impact
                                                                    Processes/Capabilities
   Organizations innovate in three main “scopes”
     ̶   Internal Processes/Capabilities
            Constant innovation
            Relatively low value, cost and risk
            Addressed through Six Sigma and similar approaches
            Drucker calls this “productivity”                        Products/Services
     ̶   Products and Services
            Frequent innovation
            Moderate value, cost and risk
            Product marketing and engineering
            A middle form
     ̶   Business Models and Markets                                   Models/Markets
            Least frequent innovation
            Largest value, cost and risk
            Strategic and transformational planning and analysis
            Most commonly desired form of innovation

                                                                                          3
Any given innovation follows a predictable path from concept to broad
use
   There are four main elements
    that influence the spread of a
    new idea:                                                 The Diffusion of Innovations¹
     ̶   the innovation,
     ̶   communication channels,
     ̶   time, and
     ̶   a social system.
   Diffusion is the process by
    which an innovation is
    communicated through
    certain channels over time
    among the members of a
    social system
   In the context of business and
    IT, the innovations can be for
    external markets or internal
    consumption


Source: Everett Rogers’, Diffusion of innovations, appendix
                                                                                              4
Innovative companies must transform themselves to be accepted
by the broader market as reliable vendors or suppliers

   Geoffrey Moore‟s adaption that describes the most challenging hurdle for technology-
    based innovations:




   The majority has a different set of key values in making investments and a different
    sense of risk in a vendor and provider
   Innovators must appear to be the kind of company a main stream market wishes to
    depend on


                                                                                           5
Organizations desiring transformations must learn internal/process
innovation first, “cross” to products, then on to markets
       You must be able to innovate at the Process level in order to see, understand, and
        take advantage of Product and Services opportunities that may arise

             n
                                    =

                                                                 Integrals -
        1                                                          The integral of Process
            Processes and Capabilities = Products and Services     innovation is new Products &
                                                                   Services. The integral of
             n                                                     Products & Services
                                                                   innovations is new Business
                                     =                             Models & Markets


        1
        Products and Services = Business Models and Markets


       Similarly, you must be able to Innovate at the Product and Service level in order to
        take advantage of Game Changing business models and markets



                                                                                             6
What can be done on a tight budget?

   Continue to focus on efforts to improve the Internal Process efficiency and
    capabilities
     ̶   It is required to generate the resource/organizational capacity to do more
         interesting work
     ̶   This will burnish the skills needed to engage in Products and Services
         innovation
   Find Product and Services opportunities, OR, uncover skunk works successes
    running under the radar
     ̶   Protect and support them
   Use low-key, often university or vendor-based, frequently local and no cost
    external speakers to inject new ideas to internal discussions
   Avoid getting sucked into “business transformational” or “business game-
    changing” innovations unless they:
     ̶   Are clearly required
     ̶   Have overt c-level involvement
     ̶   Are properly, but not overly, resourced

                                                                                      7
How to contact the author



   Doug Brockway is a partner with AKA Group, LLC he can be reached at:
     ̶   (617) 834-0067
     ̶   doug.brockway@akaplex.com
     ̶   Twitter = @workingonstep2


     ̶   Find out more about AKA Group at www.akaplex.com




                                                                           8

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Integrating bpi and innovation

  • 1. Integrating Process Improvement and Transformational Innovation Douglas Brockway April, 2012
  • 2. “The source of (corporate) wealth is something specifically human: knowledge. If we apply knowledge to tasks we already know how to do, we call it „productivity‟; If we apply knowledge to tasks that are new and different, we call it ‟innovation‟” The Discipline of Innovation Peter Drucker 1
  • 3. Common challenges regarding innovation  Interest in innovation remains quite high  But, fiscal budgets are tight  Many companies are “out of shape” regarding Innovation ̶ Forward looking investments have been closely managed ̶ Individuals and teams introduce new concepts when they can, but ̶ Project timelines and budgets are tight as is the overall budget  Innovation research shows that when flexibility on “when” and “how” a solution is derived is removed organizations forfeit creativity  They are forced to use what is known, what has be tried and used before, to NOT innovate 2
  • 4. Innovations can be very local or very transformational in impact Processes/Capabilities  Organizations innovate in three main “scopes” ̶ Internal Processes/Capabilities  Constant innovation  Relatively low value, cost and risk  Addressed through Six Sigma and similar approaches  Drucker calls this “productivity” Products/Services ̶ Products and Services  Frequent innovation  Moderate value, cost and risk  Product marketing and engineering  A middle form ̶ Business Models and Markets Models/Markets  Least frequent innovation  Largest value, cost and risk  Strategic and transformational planning and analysis  Most commonly desired form of innovation 3
  • 5. Any given innovation follows a predictable path from concept to broad use  There are four main elements that influence the spread of a new idea: The Diffusion of Innovations¹ ̶ the innovation, ̶ communication channels, ̶ time, and ̶ a social system.  Diffusion is the process by which an innovation is communicated through certain channels over time among the members of a social system  In the context of business and IT, the innovations can be for external markets or internal consumption Source: Everett Rogers’, Diffusion of innovations, appendix 4
  • 6. Innovative companies must transform themselves to be accepted by the broader market as reliable vendors or suppliers  Geoffrey Moore‟s adaption that describes the most challenging hurdle for technology- based innovations:  The majority has a different set of key values in making investments and a different sense of risk in a vendor and provider  Innovators must appear to be the kind of company a main stream market wishes to depend on 5
  • 7. Organizations desiring transformations must learn internal/process innovation first, “cross” to products, then on to markets  You must be able to innovate at the Process level in order to see, understand, and take advantage of Product and Services opportunities that may arise n = Integrals - 1 The integral of Process Processes and Capabilities = Products and Services innovation is new Products & Services. The integral of n Products & Services innovations is new Business = Models & Markets 1 Products and Services = Business Models and Markets  Similarly, you must be able to Innovate at the Product and Service level in order to take advantage of Game Changing business models and markets 6
  • 8. What can be done on a tight budget?  Continue to focus on efforts to improve the Internal Process efficiency and capabilities ̶ It is required to generate the resource/organizational capacity to do more interesting work ̶ This will burnish the skills needed to engage in Products and Services innovation  Find Product and Services opportunities, OR, uncover skunk works successes running under the radar ̶ Protect and support them  Use low-key, often university or vendor-based, frequently local and no cost external speakers to inject new ideas to internal discussions  Avoid getting sucked into “business transformational” or “business game- changing” innovations unless they: ̶ Are clearly required ̶ Have overt c-level involvement ̶ Are properly, but not overly, resourced 7
  • 9. How to contact the author  Doug Brockway is a partner with AKA Group, LLC he can be reached at: ̶ (617) 834-0067 ̶ doug.brockway@akaplex.com ̶ Twitter = @workingonstep2 ̶ Find out more about AKA Group at www.akaplex.com 8