Process Innovation and Customer Value [Video]

Oct 28

posted by Dr. Art Weinstein in Innovation | 15 Comments

Dramatic shifts have occurred in technology and have transformed how firms do business and connect with their customers.  Innovation is enabling firms to organize in new ways, design better products, and manage supply chains. Winners in today’s economy will be those companies which can clearly define their processes, organize around those key processes, and work closely with their business partners.

      A key question is how do managers employ innovation as a best practice tool to effectively create maximum value for customers? There are three sources of technological “know-how”  --product technology (the set of ideas embodied in the product), process technology (the set of ideas embodied in the manufacture of the product), and management technology (the set of procedures associated with selling the product and administering the business unit).

      In a national study of 70 B2B technology companies, research found that process technology was the weak link with only 49% of firms mastering this activity (in contrast, product technology and management technology were successful in 81% and 70% of companies, respectively). Success rates were 67% for innovative cultures and 60% for research and development expertise. Medium and large companies were more successful in technology usage than smaller firms.

     There are many ideas on how to best innovate. Typically, various multi-step approaches are used to illustrate the innovation process. The accompanying video advocates a 5-step approach to innovation consisting of: 1) identifying the problem/challenge, 2) generate ideas, 3) find a solution, 4) test with customers, and 5) go to market/adjust.

     Innovation management can be studied as a process improvement technique across a spectrum of activities (R&D, new product management, cycle time reduction, creative personality types, etc.) and over the short-term and longer planning horizons. A variation in these findings may depend on organizational size, business or nonprofit, industry sector, environmental dynamics, or other considerations (management commitment to innovation, organizational capabilities, resources, etc.).

Video On Innovation

 

Reference

Weinstein, Art, Jin, Yan, and Barrett, Hilton (2013), “Strategic Innovation in B2B Technology Markets: A Need for a Process Perspective ,” Journal of Supply Chain and Operations Management,  11 (1), 64-76.    http://www.artweinstein.com/uploads/strategicinnovationB2Barticle.pdf

*Photo Credit: Forbes.com

 Art Weinstein, Ph.D., is Chair and Professor of Marketing and the co-creator/advisor for the Huizenga School Means Business Success!  Faculty Blog. He is the author of 7 books and more than 70 scholarly articles. His latest book is Superior Customer Value – Strategies for Winning and Retaining Customers, 3rd Edition, CRC Press (2012). More Info

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• #1 by Bahaudin on 10/28/13 - 10:26 AM

  

  Thank you for providing the nice easy-to-understand model.
  
  Innovation is the key to job creation in our society, which we really need nowadays. I like the model and the research on creativity in different ages.
  
  Modern managers should revert to "the 4-year old age" of creativity in the workplace and encourage their employees to do the same in order to be competitive and offer the best value for their customers.

• #2 by Lazaro Hernandez on 10/28/13 - 7:51 PM

  

  Nice article, I guess when one thinks of innovation; one does not think about how far it carries into a business.
  
  I agree, innovation is the future and it has always been. Your competition is always innovating and if one does not innovate, than you will become a dinosaur. I would however also like to comment on the video. It talks about that as we get older we become less of an original thinker. I feel the reason for this is what we have managed to learn as we get older. For instance, we educate ourselves with the same theories, practices, etc… we then let these things block our ability to think out of the box. I have known some very educated people who lack common sense, ability to reason and/or think practically. I am not condoning that we give up on education, as it is a very integral part of any society.
  
  So I digress back to the process innovation and the delivery of the value proposition. Yes, the process technology is important like that of product and management technology. It is sometimes directly linked to the product and as is the management technology. They each play an integral part to be overall successful against the competition. The lack of all three being exploited to their full potential will only mean that someone else who does will have a competitive advantage in being able to deliver the value proposition which is necessary to excel. At the end of the day those businesses who plan accordingly will continue to prosper by innovation as they have in the past.

• #3 by Nikki Carpenito on 10/28/13 - 8:10 PM

  

  I strongly feel that innovation should be openly discussed and practiced in every business. This article gives you the "easy to understand" view of how innovation works. I think that many companies should be more like 3M or Google and allow all employees use more of their creative side of their brains during the day. Product innovation will be more challenging, but process innovation should be practiced everyday to create a more efficient work flow.

• #4 by Elia Ruiz on 10/28/13 - 8:15 PM

  

  Innovation in a business is good and in today’s business most innovative companies recognizes that it is not unique technology or features alone that drive winning innovations, but the value and impact that those innovations contribute to their customers. In a nation study of 70 B2B technology companies, research found that process technology was the weak link with only 49% of firms mastering this activity (in contrast, product technology and management technology were successful in 81% and 70% of companies, respectively). Success rates were 67% for innovative cultures and 60% for research and development expertise. The reason why research found that process technology was the weak link, was because business focus on product than in their customers. When they developed a new product, their main idea was how to improve this product or make it better but never thinking in their consumers or the value to the consumers. Value has traditionally been a vague metric only spoken about in marketing and sales meetings. Even when product developers engage directly with consumers, the focus is on features, attributes and usability, not value. And often a customer can’t even anticipate the value of a product they haven’t experienced (think of the iPhone)
  Innovation always involves some element of risk along with the constant prospect of individual,
  Collective and organizational failure. Innovation creates deep concerns for human beings who fear the negative impact of unintended consequences on their professional or personal lives. And yet, the only way to truly make innovation work both today and in the years ahead is to engage the whole organization.

• #5 by Lawrence Howell on 10/29/13 - 4:38 PM

  

  I agree with Dr. Weinstein, that innovation through creativity is a core business activity within an organization that leads to entrepreneurial opportunities. At my place of employment, we just implemented an innovative process called "Project Momentum.” Our CEO challenged the whole company to generate ideas on how the organization can reduce operations and maintenance (O&M) through creative and innovative ideas. This is all happening while the company is in good financial strength. Through this challenge, the organization was able to generate over 9,000 Ideas Company wide. The Project Momentum Team went through all 9,000 ideas and decided to implement 1,500 with a possible cost savings of $200M in the next 2 years. Similar to the 5-step approach advocated by Dr. Weinstein of 1) identifying the problem/challenge, 2) generate ideas, 3) find a solution, 4) test with customers, and 5) go to market/adjust. This project not only allowed us to reduce O&M, but it created new innovative processes to increase customer value, which in turn increases profits. Innovation is the key to 21st century organizational growth and achieving superior customer value!

• #6 by Art Weinstein on 10/29/13 - 9:36 PM

  

  Excellent comments made on the need for innovation in job creation, competitive strategy, and nurturing a creative corporate culture. As Peter Drucker said, "the best way to predict your future is to create it".

• #7 by Art Weinstein on 10/29/13 - 9:43 PM

  

  I am most impressed with Project Momentum. It's great to see a visionary CEO energize an organization and design and execute a pragmatic, results-oriented plan for innovation that saves millions of dollars and increases customer value and overall business performance.

• #8 by Bethany Uhrinek on 10/30/13 - 1:38 PM

  

  It's interesting to see this type of posting and how other companies are being innovative. I feel that often at my company we engage in various activities, but don't ever discuss/benchmark what other companies are doing. Innovation is a perfect example as recently my company implemented an innovation program. The program was developed by our Corporate Operational Excellence team and rolled out to all Six Sigma Black Belts and Master Black Belts. The expectation is that these folks would be thought leaders in the organzation to promote new and innovative ideas for continuous improvement. In additional to this type of program, we also encourage employees who develop new patents by providing them with an incremental bonus.

• #9 by Jina Barthelemy on 10/30/13 - 5:49 PM

  

  For a company to gain and maintain a competitive edge, it must embrace innovation. But coming up with new and creative ideas are difficult because of adults' lack of creativity/originality and companies leaving the creative thinking to a selected few. This is when a company should an take advantage of its diverse workforce, embrace differences in cultures...nothing is lost by allowing people within the organization brainstorm. Who knows about what a customer wants then the person that deals with him/her regularly?

• #10 by Art Weinstein on 10/31/13 - 12:50 PM

  

  Benchmarking is a low cost and relatively easy-to-do process management tool. As such, it is often a go-to technique in many organizations. Also, realize that employees have a unique knowledge base and are a great source of ideas - companies just need to listen to them.

• #11 by Ernesto Garcia on 10/31/13 - 4:22 PM

  

  Innovation is an important with keeping a competitive advantage. Being able to forecast and anticipate the next challenge will allow an organization to remain relevant and sustain value. For example, the organization I am employed with uses virtual engineering to reduce the costs of the process and mitigate unforeseen discrepancies. Moreover, having a system that allows employees to articulate, research and discuss repetitive issues is paramount with advancing customer value. The article and video provide an excellent process with identifying challenges and factors that is relevant with increasing positive outputs and customer value.

• #12 by Nadia Campbell on 11/1/13 - 12:30 AM

  

  I agree Innovation is enabling organizations to organize in new ways. Organizing for innovation includes organization to achieve maximal performance I delivering the current strategy it requires organizational designs that facilitate focus and execution. , and continues innovations in the current business. Innovation encourages direct communication among management teams by giving the freedom and autonomy to decide how and what needs to be accomplished. Organization should require every new product development plan to contain a sizable component of new to market innovation. Organizations must develop multiple business opportunities, and to continue to grow and survive by staying consistent. Associates throughout the organization must be involved, the knowledge of how thing really work, how customers may behave, and how choices really interact is highly dispersed. Leaders must provide a vision of the strategy and organization, by indicating the core principles. They need to communicate for others to have a full understanding and embrace it; in addition on getting motivated to realize what is important for the organization.

• #13 by Fady Ebaid on 11/1/13 - 6:22 PM

  

  Many companies failure is due to the fact that management does not understand the importance of innovation and creativity, that is because they think that other factors are more important than to invest in innovation (such as the cost that it can be added, if they try to follow any innovation process). This is wrong; major big companies adapted the innovation process to reach the top of the industry and to gain the bigger market share, such as Apple Inc. I believe companies should consider the creativity of their employees and give them the chance to express their ideas; these companies can also review and adapt one of the benchmark that can be innovative and successful for other companies. All companies must know that innovation is the process of finding better solutions that can solve problem, meet or exceed customer expectation, and offering more effective products or services.

• #14 by Rich gaus on 11/1/13 - 8:23 PM

  

  Excellent article. Our company has what we call innovation greenhouse where employees can offer ideas and fellow employees can vote and comment on what they think should be implemented. Without this intrapreneurial spirit in a company it will be unable to maintain a market driving approach.

• #15 by Art Weinstein on 11/2/13 - 10:08 AM

  

  Very good insights/additions by all. Virtual engineering and an innovation greenhouse are some very interesting ideas that may be adopted by forward-thinking companies in the strategic innovation process.