Innovation During a Recession

Innovation is bringing creative ideas to life. It occurs in the organizational context when individuals and teams work to spark new product development, to implement new technology and even to transform the organization. Innovation is always linked to performance and growth through incremental improvements in efficiency, productivity, quality and services. On the other hand, it is also associated with radical improvement like inventions, new products and radical changes in the business model. It is a balance of incremental improvements and radical innovations that keep the company competitive in a changing world.

NY StocksWe are on the brink of important change in the world— and it is economic in nature. We have seen massive job cuts, company bankruptcies, budget reductions, etc. We are in a period of profit-focused cost cutting. Innovation may be a low priority for many companies in this period of recession but I think it is a big mistake. Innovation ought to be a crucial element in a firm’s recession strategy. It will allow them to do more with less and to generate profit by exploiting existing resources.

Two kinds of Innovation that are especially valuable in a recession:

Internal and External Collaboration

Greater internal collaboration– between departments and business units, as well as external collaboration– with customers and suppliers, are essential if companies are to stay healthy during the recession. For example, internal collaboration could result to a Cross Selling strategy that could increase sales to the existing captured market while lowering cost of selling.  Collaboration can be a channel for transfer of best practices between operating units. Internal Collaboration can also result to inter-business-unit product innovation by creating new products and services from existing knowledge, technologies, products and brands.  External collaboration, specifically with key entities of your supply chain network — from suppliers to customer, is vital to staying in business during a recession. The big challenge to firms is to reduce cost while maintaining service levels. Businesses need to have open communication with suppliers and customers alike and ensure a more effective and efficient supply chain.

It is also important for firms to use new technology and cheaper options for collaboration. Leveraging Web 2.0 in the enterprise can be one option. Let me give you a clearer example. It is critical for companies to understand how customers reassess priorities, reallocate funds, switch brands and redefine value of products and services. Web 2.0 platforms can be both a source of information and a channel to facilitate this kind of collaboration in a cost effective way.

Leveraging Shared Services

If it’s all about cost reduction and economies of scale, it’s probably the best time to implement Shared Services. In these demanding times, companies are challenging themselves to discover business processes and business models that will open undiscovered synergies. Shared Services could be the answer to companies keenly looking for convergence and streamlining of an organization’s functions.

Shared Services has to ensure that they deliver the services required of them as effectively and efficiently as possible. In a recession, this convergence enables the appreciation of economies of scale within the function and can enable multi-function collaboration where there is the potential to create more synergies. A word of caution though, a Shared Services implementation involves a large scale cultural and process transformation; it must come with a well-planned organizational transformation and change management strategy.

In a nutshell

Shared Services has been around for years and companies have always strived to collaborate — internally and externally. I think the emphasis this time should be precision, timing, and bringing the best ideas forward. Forward looking and innovation-focused companies are seeing the light at the end of the tunnel. I strongly believe that this is the best time for innovation, for breakthrough value and for paradigm shifts. This is the best time to position your company ahead of the pack when the economy regains momentum again.

Four Key Elements of a Process Initiative

No two process implementation initiatives are the same. It varies in scope, objectives and limitations because of budget, time, resources, and complexities. Although process initiative projects may vary, there are four key elements which assure good results. These four critical items are: (1) Process Definition, (2) Process and Activity Roles, (3) Available Tools and (4) Training.

Plain and simple reality- these elements are inseparably linked. The absence of one element will hugely affect the result of the process initiative. On the contrary, if the factors all are well attended to, you can expect excellent results.             

Many process initiatives fail because:

• Processes are not well designed and documented. People in operations were not involved in the design process.
• Processes are well defined but roles are not clearly assigned in the organization as to who is responsible and / or accountable for a certain process.
• In some instances, limitations in the tool or lack thereof make the organization resort to workaround and this is time-consuming and costly.
• All systems go but people are not well trained, resulting to inconsistency in process execution

To give a more tangible example, let’s say that you are implementing a logistics dispatch system. You have selected the platform and made sure that it is customized based on the needs of the operation. During the process design, different levels of the organization were involved and consulted. You came up with a clear and concise documentation of the processes and roles that will perform the activities. Roles are defined, assigned to personnel in the organization and was clearly communicated. System procedures and policies are in place.

Then you and your team decided to forego the well planned training program that you have scheduled to speed up the rollout of the initiative and reduce travel costs for people who will need to come from different dispatch locations. You are comfortable with the training manuals and the quick guides. Communication is already done and the operational support structure is in place.

Your decision to forego one key process initiative element will result to the following possible outcomes:

• Dispatch process will be executed inconsistently depending on the user’s personal understanding of the manuals and materials.
• You can be flooded with manual errors due to the user’s unfamiliarity of the system.  This results to spending more time in correcting and stabilizing these errors.
• You risk affecting customer service delivery because of probable incidents like wrong orders and delayed deliveries

The project team in the example above seemed to have done everything correctly.  However, they made one crucial and costly mistake.  User training, as with the other elements, is equally important.  Neglecting one of the key elements could result in project failure.

This does not mean to say, that the project team must focus solely on these four key elements. These cannot substitute existing important process and project implementation methodologies and practices. These key elements are only intended to complement whatever process implementation methodology you follow.

Process Elements