Oct 10, 2011
The Innovation Challenge: Using Process Innovation to Help Fund Product Innovation
The recent round of negative economic news has many business leaders wondering if another recession is just around the corner. That could explain why a recent Gallup poll found that 30% of American workers are worried about their jobs – matching the paranoia level of mid-2009.
Wouldn’t it be easier if we could find a way to make budget without costly cutbacks and layoffs?
There is a way. Process innovation can enhance your company’s output, productivity and cash flow. But it’s important to understand the difference between cost-cutting and process innovation.
Cost-cutting is a simple accounting exercise – cut budgets, trim fat, do less – or do it less well. In tough times, cost-cutting can be ruthless and arbitrary; often, it’s done to appease stakeholders and the markets. Too often, companies “cut” their way into bigger problems as they lose marketing traction or reduce customer service and delivery satisfaction.
Process innovation is a thoughtful approach to how you produce and deliver your products and services. It’s strategically looking for ways to do things differently to save time and money. Product innovation includes all the incremental improvements you bring to your products or services to better engage your customers and drive growth.
If you can cut a melon or make a right-hand turn, you can be a breakthrough innovator. Cutting melon is my tongue-in-cheek but very real accolade to the supermarket industry. In the wake of hectic go-go lifestyles that saw an increasing trend to prepared and take-out foods, grocers made a play to own the category. They created a vast, affordable new product selection that ranges from fresh melon slices to fully cooked meals-to-go.
For street-level process innovation, I look to UPS and the right-hand turn. In 2005 UPS adopted a new route-optimization system that eliminated time-sucking and potentially risky left-hand turns. This system enabled drivers to drive fewer miles, decrease delivery times and reduce fuel consumption. More importantly, this internal innovation produced higher revenue per driver and vehicle.
Process innovation also includes the many small opportunities that every company, big or small, can embrace today. Think of the time and money your business could save through the innovative application of business software in such areas as marketing, research, hiring, managing projects, and online video and conference-calling. Think of the time saved and the focused reach that your companies might gain from online recruiting: you can tap social media networks for ‘recommended’ candidates, or post recruiting ads in real time, bringing you and your top candidates together faster than ever. Today’s technology can help you manage so many tasks more efficiently, freeing up precious cash for reinvestment and growth.
My challenge to you is to rethink your processes, and reinvest the free cash you’ll generate into product and service innovation. If you really want to grow the bottom line, drive the top line – using the savings from process innovation to create new market-engaging breakthroughs. Don’t cut your way to the back of the line – demand more, not less.
Branding and innovation strategy expert Ken Tencer is CEO of Spyder Works Inc., and co-author of The 90% Rule: What’s Your Next Big Opportunity?
Category: Innovation
