"Deep Change: How Operational Innovation Can Transform Your Company"
Harvard Business Review
April 2004, pp. 85-93
The author of this article (Dr. Michael Hammer, of reengineering fame) defines operational innovation as "the invention and deployment of new ways of doing work." He also states that "Operational innovation should not be confused with operational improvement or operational excellence. Those terms refer to achieving high performance via existing modes of operation: ensuring that work is done as it ought to be to reduce errors, costs, and delays but without fundamentally changing how that work gets accomplished."
Though the author discusses several organizations that have achieved great results through operational innovation (Wal-Mart, Toyota, Dell Computer, Met Life, Shell Lubricants, Progressive Insurance, American Standard), he says that its revolutionary nature requires active executive leadership. However, there are three difficulties with getting executive support:
- Business culture undervalues operations (compared to strategy, finance, marketing, and sales)
- Operations are out of sight and out of mind-set (Many senior managers have entered the organization through finance, strategy, or marketing, and they rely on others to take care of operations)
- Nobody owns operational innovation (It is organizationally homeless; Innovations cross organizations boundaries; There is no budget for it; and it can become lost in the multiple smaller change initiatives most organizations have going at any time)
In those organizations that manage to overcome these management barriers, organizations must first pinpoint key areas for innovation and set performance goals. Hammer also offers the following suggestions to accelerate the speed of organizational innovation:
- Look for role models outside your industry—Otherwise, you can do no better than imitating what your competitors have done
- Identify and defy a constraining assumption—There must be a totally new way of looking at how work should be done
- Make the special case into the norm—Crisis in some part of your organization can be the mother of invention, and these ideas may be made into the standard
- Rethink critical dimensions of work—This includes what work should be done, when it should be done, where it should be done, etc.
Hammer also suggests an approach to implementing operational innovations: "an idea variously known as iterative, evolutionary, or spiral development. One begins with one's best estimate of the innovation, builds a first version of it, and then tries it out with customers or users. Knowledge gained form these tests is then fed back into a fast-cycle iteration of the next version."
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