Operational innovation can make the difference between a company's success and failure today. In fact, many startups are built on ideas that don't reinvent the wheel but simply introduce better, more affordable or more practical ways of creating the wheel. For established companies relying on age-old processes and tried-and-true methods, the need for innovation is often painfully obvious.
Barriers to Operational Innovation
There are several barriers to operational innovation, from a lack of awareness to fluctuating market conditions to an affinity to the, "If it's not broken, don't fix it," mindset, over-centralization that hinders cross-team communication and collaboration, and more. That's why change management is a necessary function; employees with decades of experience accustomed to doing things the way they've always been done aren't always enthusiastic about innovation that changes the very core of how they work. It's not that people are inherently opposed to learning new things; it's that people often fear change, particularly drastic change that they may perceive as a threat to their job security.
Another primary barrier to operational innovation is a lack of data. While many organizations today strive to inform all decision-making with data, it's a larger challenge to prove the viability of a concept that's never been done before. For this reason, innovators often use predictive models to analyze the likely future outcomes of decisions, relying on the available data on the company's products and services, operations processes, market conditions and customer and vendor feedback to devise innovative solutions.
Companies Stand to Make Major Gains through Innovation Properly Executed
Despite these obstacles, companies that successfully execute operational innovation are making tremendous gains. From dramatic reductions in operating costs to capturing new markets thanks to improved service delivery, the financial benefits of successful operational innovation are perhaps the most obvious. But the bottom line isn't the only target that the best innovators are eyeing; with successfully executed operational change, employees once hesitant to adapt to new processes and who find their jobs easier or more efficient may experience less on-the-job stress.
Likewise, vendor and customer relationships are often strengthened following successful execution of innovative operational changes. Delivering better services, faster, and at a higher quality makes everyone happy from stakeholders to front-line employees, partners, vendors and customers.
A Roadmap for Success in Operational Innovation
Operational innovation is clearly desirable, especially if companies are able to execute seamlessly while effectively managing change to overcome barriers. If it seems like an uphill battle, it is – but it's also easier than it seems when you lay a solid foundation. "Today, many leaders are feeling heavy pressure to create a more innovative climate in their businesses and some are frustrated with the difficulty in leading this effort. Fortunately, like other organizational problems, enlightened leadership, effective management and time and patience can make the difference," says Robert Tanner of Management is a Journey. "Creating a culture of innovation begins with leaders and managers changing their everyday practices of leading and managing with new thinking patterns and work methods."
1. Foster a culture of innovation and open collaboration.
Successful operational innovation begins with fostering a culture of innovation, a collaborative culture that promotes the free-sharing of ideas and welcomes suggestions. As most managers know, innovation doesn't always come from the top; in fact, it's often the front-line staff that are acutely aware of shortcomings in existing processes and procedures. From these pain points, ideas often arise.
Hold informal team meetings that encourage the free sharing of ideas and brainstorming sessions that give every team member a sense of empowerment. Employees who feel like they serve as the catalyst to change are more likely to embrace it, and they'll often take the lead in selling new ideas to their coworkers.
2. Adopt an agile mindset and implement effective change management strategies.
Resistance to change often arises from fear – fears that can be overcome when employees feel as though their opinions and contributions are valuable. That's where effective change management strategies come into play, fostering the confidence necessary for employees to readily adapt to and embrace operational changes.
Additionally, the agile mindset is helpful in squelching fears, allowing for rapid iterations that can be halted as quickly as the ideas arise when testing and data reveals ideas aren't fruitful after all. Set clear key performance indicators (KPIs) and parameters for success, and clearly identify deadlines and important checkpoints.
3. Make operational changes that complement and integrate with existing behaviors, solutions and methods.
Operational innovation almost always involves change that impacts employees at every level of the organization. Dramatic, sudden shifts in working methods can initially meet resistance, and learning curves make implementation slow and sluggish. Implement change in stages, allowing your team to adapt to new methods gradually.
Whenever possible, implement changes that integrate into your team's ordinary lives and behaviors. For instance, use barcode scanner apps to enable employees to scan company assets and products from their mobile devices rather than require them to carry a separate barcode scanning device, particularly if they already use mobile devices to carry out other job duties, such as mobile workers or field technicians typically do. Implement new software applications that integrate seamlessly with the other software employees are already comfortable using every day. Start by introducing changes to a select member of each department to serve as the "champion" for the change who can sell it to their team members and help them troubleshoot problems.
4. Measure, measure and measure some more.
With the agile mindset comes a need to always-be-measuring. While you shouldn't allow your company to become so obsessed with the metrics that it loses sight of the big picture, the ability to measure everything in today's climate is an incredibly powerful capability that can cost or make your company millions, depending on how well you use it. From equipping company assets with tracking labels to better measure usage and performance to comparing changes in customer perception and satisfaction following the introduction of the first phase of a major operational change, data is what enables companies to adapt on the fly to accommodate needs and laser focus on the changes that work while discarding those that don't.
Despite one of the primary barriers to true operational innovation being the lack of clear-cut, actionable data, most innovation begins with data that illustrates the problem. Thus, these insights can be used to set appropriate KPIs to measure the impact of innovation on the primary pain points. For instance, if your company adopts a new processing method to deliver goods or services faster in response to declining customer satisfaction rates, you can easily measure the impact of change on satisfaction as well as the speed at which new methods are enabling you to deliver.
Operational innovation was once an added benefit, but in today's competitive landscape, it's a must. Decades-old companies are forced to innovate to remain competitive and outpace the competition. It's an atmosphere which companies must innovate or get left behind. While there are barriers to operational innovation, companies that lay a solid framework, foster an agile mindset and culture of innovation, and implement effective change management practices are those that successfully turn ideas into action.