Innovation VS Process Improvement

9/14/2013

You may argue that innovation, breakthrough ideas and invention have more impact on improvement than process does. But a higher level view makes it clear that moving a big idea from the brain that created it into your operations requires not just one well-designed process, but many well-designed interconnected cross-functional processes, to deliver a profitable outcome for your company.

Marketing has a process. Operations has a process. Research and Development has a process. Logistics has a process. Finance has a process. And inside of these processes are many sub-processes. It's often down in the layers of the sub-processes where you discover defects, delays and variations.

In theory, improve the processes, improve the results.

7 Comments

Robert Baldridge

9/15/2013 04:24:12 am

To sustain your current market position with projected % yearly increases, process improvement is necessary. But in order not to be obsolete, you need to have an innovation. It will all depend on the company's financial and talent/skill capabilities because with innovation, more often than not, needs a lot of funding.

Jun Dulay

9/15/2013 01:17:26 pm

For me, the main difference between process improvement and innovation is the degree of uncertainty in the result. In process improvement, you are working with an existing system which you change incrementally. As a result, you are able to study the change needed more carefully and your decision is based on a lot of actual working data. In an innovation, you rely on the claims of the innovator, whether external or internal and a lot of experimentation or trial-and-error will be needed to make the change. Even with these, the probability of success is still uncertain. The scale of innovation can vary from small to a total change and the uncertainty goes up, maybe exponentially, from one to the other. And, of course, the cost impact and benefit impact goes up exponentially from process improvement to innovation. I guess the decision is dependent on the risk-taking attitude of the owner or company president/board of directors.

Zeny Ramirez

10/9/2013 04:32:20 am

As business evolves and so is the innovation. However, it requires lots of funding. In this time, I'd go for process improvement as it is cost-efficient. Existing process is in place and all you need to do is improve it to meet your company's goal. Whereas innovation, you need to reinvent your business plan to coincide with your business interest. Innovation speak for itself already, innovation = more fund allocation.

Jun Dulay

10/9/2013 10:37:51 am

Zeny, as I said, the impact of process improvement is incremental although it has a higher certainty of result while innovation does not but has the potential of even completely changing the business operation and profitability. Remember, even efforts at process improvement do not always come out successful and so the desired cost efficiency is not achieved. When we talk about business competitiveness, a lot of companies would like to be the first-mover in the business area because with an innovative idea where nobody else is in it, the expected profitability is high because you have no competition for some time. In many successful cases, the profitability is truly much, much bigger than the cost. But these decisions are dependent on the risk attitude of the organization. A risk-averse organization would stay with process/product improvement to get ahead of competition but this will not be for long as competition will also do the same. But with innovation, the entry of competition is much more difficult so that the innovator has a lot of legroom to avail of the fruits of innovation. I guess this is why there is a lot of interest in the management of innovation. I went through a summer course on management of R&D and Innovation at MIT so many years ago and I can only say that the senior managers attending really had their hearts aimed at innovation. For R&D specialists and managers, innovation is the way to go - risk is high but with a good technical team and management, it can be give a lot of profits. Not all successful innovations need a lot of fund allocation. More than high-stake gambling, it can bring an organization to heights or areas that give it a monopoly (for a while as competition struggles to do the same).

Toby Tating

10/19/2013 07:27:56 am

For me process improvement first, when all resources are exhausted and still the desired results are not met then a innovation follows. I agree that innovation is expensive and must take care based on needs......... Innovate or you may evaporate........

Jun Dulay

10/20/2013 03:02:55 pm

Toby, I would not look at a sequential approach of trying process improvement first and then proceed to innovation if the improvements desired are not achieved. I think the decision is whether you want an incremental change or a big jump NOW. This decision requires a lot of analysis on which would be more beneficial, not only from the point of view of cost but more on the benefits to be obtained. And I guess together with the degree of uncertainty of success. Most operations would go into process improvement which is why the use of teams like Quality/Productivity Teams are more popular than having a full-blown R&D organization. Many of these teams are formed to make operation better by encouraging productivity and quality consciousness among the workforce and the savings are secondary. Others have both QA/Productivity teams and an R&D Dept. existing at the same time.

Balasaheb

11/16/2013 12:26:46 pm

It is not same answer for every company, If your company have good quality and unable to cop up changing new product demands you must focus on innovation , but if later part is good you must improve process.
In any scenario Process must be improved and not to be obsolete this is balance required throughout but focus must be decided by senior management based on situation of company.

Innovation VS Process Improvement

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Rex Jayson Tuozo "The Six Sigma Guy"

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