Innovate Your Processes before Innovating Your Products
In order for businesses to remain profitable and continue growing in the face of stiff competition, they always have to be on top of their game. Being complacent is not acceptable. They always have to keep coming up with new and fresh ideas to stay steps ahead of the competition. This is easier said than done, though, because ideas do not grow on trees. Sure, people come up with all sorts of ideas all the time. However, in business, there are ideas that work, and there are ideas that don’t.
In this article, you’ll learn about (1) the basics of innovation, (2) the importance of innovation, (3) innovating products versus processes, and (4) how to innovate your processes.
Innovation is a word that often comes to mind when businesses are faced with the daunting task of coming up with something new and fresh. It is often said to be synonymous to a new method, idea, or product.
From a business standpoint, innovation has a broader and more complex definition. It is defined as the “act or process of introducing new ideas, devices or methods”. It is also said to be the “process of translating an idea or invention into a good or service that creates value, which customers will pay for”.
Perhaps one of the more understandable definitions of innovation is that which describes it as the act of “changing or creating more effective processes, products and ideas that will likely enhances the efficiency of work processes and eventually improve overall productivity and performance of the business”.
From the above definitions, it is clear that innovation can come in several shapes and sizes, so to speak. It could be in the form of implementing new ideas, creation and development of new and dynamic products and services, or improvement of existing process, products and services. Even the act of changing or applying some tweaks in the business model is considered an innovation.
Some examples of process innovations in business include:
- Introducing new production methods and technologies that leads to better product quality and improved efficiency
- Integrating similar production methods and eliminating redundant methods in order to improve efficiency, reduce costs and production time
- Introducing new complementary product and service improvements that will increase customer satisfaction
IMPORTANCE OF INNOVATION
Why is innovation important in business? The main reason why innovation is incorporated in business is so they can save time, money and other business resources, while giving them the competitive advantage that they need in order to grow and put the business in a more solid footing in the marketplace.
Plus, let us not forget that the current business landscape – whether domestic or global – is becoming increasingly competitive. Technology’s fast advancement is not helping any, either. Innovation is becoming more and more important as technology keeps advancing by leaps and bounds. Competition is also increasing by the day, and businesses now see that not only do they have to keep up, they have to stay ahead of the pack.
Process innovations can bring about the following benefits:
- Increase profitability of the company. Reduced costs means higher net income for the company. The innovation of processes can also result in higher production rates, which translates to more revenues for the company.
- Reduce costs. For example, if the company successfully shortened the production cycle of one product, this means they can allocate their manpower and other resources for the production of another product in the product line, or even in a potential new product that is currently being studied for development. Even the costs of utilities and other variable costs and factory overhead may also be potentially reduced.
- Improve efficiency and productivity. The innovated processes could lead to shortened cycle times, allowing the production team to manufacture more units in a specific period of time. Manufacturing companies may also take on additional jobs if this is the case.
- Increase job satisfaction among employees of the company. Workers and employees tend to have their morale boosted when they see their productivity increasing. They will also look forward to going to work when they know that they are being productive.
- Enhance value of the product or service for the customers. The sum of all the above benefits will also translate to a better and more improved customer experience. The business will be able to meet the demand of customers, both in number of products and the quality of these products.
INNOVATING PROCESSES VS. INNOVATING PRODUCTS
Often, when businesses are faced with the decision to incorporate innovation into its operations, they choose one of two things: innovate their business processes, or innovate their products or services.
More often than not, they choose the latter.
These businesses decide to innovate their existing products and services. They have brilliant ideas on how to do so. However, along the way, they end up stuck. Why? Because they failed to take into account the product development process and their current capabilities in manufacturing their products or delivering their services.
And so we have come to a very important question: what is the difference between innovating processes and innovating products? Which is better? And which is more important?
Innovating products pertains to developing a new product or a new service to be launched or introduced to the market. Basically, it is the introduction of new products or services. When we say innovating processes, it refers to the internal processes, such as the company’s product development processes, including the manufacturing process. It could mean reprioritization of projects, training and acquiring new talents and skills for members of the product development teams
To answer the second and third question, which asks which of the two is better and more important, there is no answer favoring one over the other. Both are of equal importance. It is in the timing and implementation where it counts the most.
Success is greater when innovation starts from the internal processes before proceeding towards innovating the products and services. Not only does it make sense in terms of simplicity of application, it is also the more efficient and practical route.
Consider this scenario: suppose a company skips the process innovation and directly works on innovating its products. After they were able to come up with the new product, they cannot immediately launch it and hope the customers like it. There is still another lengthy process of testing the product, gathering feedback from customers and working to integrate it with the other products in the company’s product line. A corresponding marketing campaign will also have to be developed for that product. It is a very long process, not to mention costly, requiring a lot of investment from the company.
But let us say that the company decided to work on innovating its processes first. Once they are done with it, they move on to the products. Early on, they will be able to identify risk areas and they will also be able to categorically figure out if a product should get priority over another. It certainly saves the company time and other resources. They will also be able to determine their staffing needs, so they can get the talent and skill they require before they can move on to the product development stage.
Innovation involves a certain amount of investment on the part of the company, and by starting with the processes, they will be able to save more money, time and other resources, compared to when they immediately go directly to innovating the offerings of the business.
HOW TO INNOVATE PROCESSES
Businesses respond in several ways to the idea of innovating processes. Here are three of the most common responses:
- The business revisits its existing internal product or service development processes. This is to identify and put emphasis on what parts and resources in these processes are available for allocation to new products or services, after considering the allocations for existing ones. Say, for example, that the issue faced by the company is getting their products or services to the customers in the shortest possible time, their innovations would focus on that. This would likely result in the company choosing to shorten the time devoted to decision-making or making the cycle times in various stages of the product development process to be shorter.
- Companies that are having issues with staffing (either they are short-staffed, or they do not have the talent or skills for the new products or ideas they have in mind), they are likely to outsource new product design and development. By outsourcing, they can still have their current in-house product development team focus on their existing products, while the staff they hired can focus on the innovation side of things. Clearly, the advantage of this is to reduce confusion among the product development team members. They can stick to their priorities and not have to worry about developing new design or product ideas.
- The companies could do both: put their internal resources and talents at work and acquire external partners and collaborators, and use them both in their innovation projects. For many, this solution seems like getting the best of both worlds. They tap into their best minds and reinforce it with outside contribution. When done right, this can certainly be the best option for a company.
It is to be noted that process innovation is not something that can be done in only one or two levels of the organization. It has an effect on the entire organization, so it makes sense that the innovation should take place at various levels. When some people hear the phrase “process innovation”, they immediately think of the production process. It can also apply to other process, such as the process of distribution, customer service delivery, document management, and workflow management, to name a few.
THE FIRST STEPS TO PROCESS INNOVATION
We touched on this earlier: before you can successfully innovate your products and services, you have to pay attention to your processes. Look at your own processes first, so you will know what you have and what you can use. Your brilliant efforts at product innovation will be wasted if you have processes that are fixed or inflexible, sometimes even arcane and not really up-to-date. Therefore, there is a need for the company to take a step back and reevaluate its existing processes.
This can be done in two ways:
- Update of Several Business Processes: A look at some areas of the business may reveal that some of their processes are out of date. Thus, the business would have to look into updating these processes in their respective areas or departments, all while considering how the changes will impact the other departments.
- Business Process Re-engineering: This involves a radical change in the design of the core processes of the business, affecting areas such as cycle times, productivity and overall product quality. This is quite a radical action, because it mostly involves the business process being worked through from the ground up.
A good example of a business process innovation is Amazon Prime. This is Amazon’s paid membership program, which gives frequent shoppers at Amazon several advantages. It is most certainly a perk for frequent Amazon shoppers, since they get more free shipping benefits, as well as unlimited steaming of movies, TV show episodes, music, photo storage and more. Members will also have first dibs on Lightning Deals, discounts, and other Amazon product exclusives. In this case, Amazon looked at what it had, which is a growing customer base, and they asked how to make the customer experience better for the end users, and more profitable for the company. What they came up with is Amazon Prime.
We are given several great ideas on how to innovate, and we will discuss some of them here. Granted, businesses have “ideal” strategies or ways to innovate, mostly depending on the industry they belong to and the markets they serve. However, we will try to discuss them in more general terms, which will apply in all business scenarios.
- Creation of tailor-made processes: It is easier to innovate processes if they are tailor-made or customized according to your business’ operations and needs. What larger, innovative companies do is to team up or collaborate with companies that create or design technological processes so they can create platforms, technologies or applications that are customized for them.
- Use of technology: Companies should consider themselves lucky that, today, technology serves as a useful tool in innovation. Access to real-time and geographical information is now easier, so businesses can have an easier time getting the information they require to evaluate their processes and effect change, if and when necessary.
- Maintenance or nurturing of synergistic relationships: Identify the key partners in your existing internal processes, and we are not just talking about the key personnel involved within the organization. You also have to look at your external partners and see how you can forge more solid working relationships. This will ensure smooth workflows and transitions, even if there is a need to create and implement changes in those processes. For example, many businesses now make it a point to pool their resources with their suppliers, distributors and other business partners. This has proved to be a good way to cut down on costs. Networking is now seen as one of the very useful business tools.
- Observation and analysis of the marketplace: Never underestimate the power of observation. Innovation, in a way, also often involves copying the ideas of others. However, in order to sustain it and make it successful, make the idea that you copied your own by improving it. A classic example cited by many resources is Henry Ford, the founder of Ford Motors. By copying the production process applied in a meat packing plant to the production line of his automobile manufacturing company, he was able to cut down costs and shorten the assembly time.
Observation is not limited to looking at other businesses’ processes – whether they are competitors in the same industry or not. You should also observe your market, specifically your customers. They are your best sources of information on how to improve your product and service since they are the end users; they are the people that you wish to satisfy with your offerings. This is especially true when it comes to processes that are developed around customer wishes, such as car service and repair companies.
When innovating business processes and, eventually, your products and services, never lose sight of the overall goals and vision of the company. They should remain as your focal point, even if you have to tweak the processes and implement some major changes. Even if you have to redesign your entire business process, make sure that they are still aligned with your value proposition.
A business cannot hope to innovate its products and services successfully if it does not go through the motions of looking into its processes. It’s a two-fold concept: successful innovation requires that a company first focus on innovating its existing internal processes before it moves on to innovating its products and services.