May 8, 2013
Originally published as a special to The Globe and Mail, May 8, 2013.
I was recently standing on a corner in Washington DC and my Blackberry started to buzz. In came a text that read, “Cab 118 is on the way and is less than one mile away. Text WHERE to see where cab is.” How appropriate. How timely.
I had just delivered a keynote on innovation at the America Means Business conference to a roomful of new and aspiring entrepreneurs. And one of my key messages was “it’s not just the products and services that you sell, but how you deliver them that can be steeped in innovation and bring delight to your customers…and no, great customer-centric ideas don’t have to cost a lot of money!”
A seemingly mundane industry like cab service and Red Top Cab of Arlington, Virginia adopts a simple piece of technology that answers the age old question before it was even asked: “where’s my cab?” Simple, effective and certainly not cost prohibitive.
My point is that too many people think that innovation is limited to breakthrough products or services. It isn’t. In fact, process innovation – finding faster, cheaper and better ways to deliver your products and services to customers – can bring you a significant competitive advantage and substantial savings all while building brand equity, because there’s no better way to delight your customers than faster delivery of a better quality product.
Just look at Disney. They build delight into every process. When a child drops their ice cream on the ground at one of their theme parks, they turn that meltdown moment into one that delivers a happy memory. They replace the dropped treat with an upside down cone in a cup dressed up to look like a smiley face. Bad moment turned good.
Another example of innovative thinking closer to home happened when my 16-year-old son, Tommy, was still a toddler. We were shopping for groceries at Longo’s and he was having a fit in the fruit section trying to get at the grapes. One of the Longo’s staff saw me struggling and decided to cut some grapes up for him and put them into a little cup. Tommy was delighted and I was able to peacefully finish my shopping. Thank goodness Longo’s processes empower its people to go above and beyond. I never forgot it.
And the best news is that there are enormous hidden costs buried in status quo processes. Innovative thinking can be the key to uncovering and removing them. Done right, process innovation can even serve as a new source of financing.
It’s important to understand the difference between process innovation and the good old “slash and burn” method of boosting cash flow. In every organization, processes have a significant impact on costs: purchasing, inventories, reworking, downtime, lead-time, material travel time, delivery time, wasted time, and so on. All these processes add costs, which means they provide a wealth of opportunities for hefty savings. When you come up with new ways of improving throughput or order processing, or reducing wait-times and delivery times, it’s found money.
Let me be clear: I’m not suggesting that you should stop thoughtful, rigorous cost-cutting. But in tough times, urgent reactive cost-cutting is too often shortsighted and arbitrary, done to appease stakeholders, shareholders and short-term quarterly reports. Unfortunately the long-term consequences aren’t usually factored into the equation. It’s an accounting exercise – cut budgets, trim fat, do less or do it less well. Doing more with less is possible, but it usually comes from a strategic approach to process, not quick-fix cutbacks. Too often, companies cut their way into bigger problems as they deliver less service, reduce customer satisfaction, undermine brand value, lose market share, and sacrifice growth for the appearance of efficiency. These steps can lead in the wrong direction, and hurt the company. Of course, costs must be cut, but the real goal should be to lower costs while building customer loyalty, not disenfranchising them.
A classic example of short-sighted cost-cutting is the automated help lines many companies have adopted. Not only do they frustrate customers who would rather speak to a live person, but many companies plough their savings into outbound marketing call centres that become necessary to replace the infuriated customers they could have kept in the first place. Funny how a number of companies are back to advertising ‘live’ attendants as a competitive advantage.
The innovation challenge
It’s been well documented how American Airlines Fuel Smart program – “the employee-led effort to safely reduce fuel consumption by implementing viable suggestions from employees throughout the airline” – has saved the airline millions of dollars through such initiatives such as the single-engine taxi and use of tow tractors to move planes between terminals and maintenance hangars.
My challenge to you is to review your processes and uncover cost-saving opportunities that are hiding in broad daylight, waiting for a new approach. Realize the savings and then reinvest your newfound cash to create market-engaging breakthroughs in product and service innovations.
It’s a positive, growth-centric focus and is a far cry from myopically trying to cut your way to a better bottom-line. Process innovation can be, without a doubt, one of the easiest, least expensive and most productive ways of investing in your business’s future. Process innovation can also be easy and quick because it includes countless small opportunities seen every day that every company, big or small, can do right away.
Challenge your people to look at how your products and services are made, supported and brought to market. Empower them to share their intimate knowledge of the processes they use every day. After all, no one knows them better – their strengths, their weaknesses, their potential to transform.
Think very simple (for now). It worked for Red Top Cab and Disney and it can work for you, if you’re up for the challenge.