Tuesday, October 26, 2010

The relationship between innovation and effective systems

I'm back from a long trip to Kuala Lumpur and Dubai.  I had the good fortune to lead several innovation workshops in those two countries, and I must say I really enjoyed my time in both places.  The trip was a reminder to me that far too often we are certain of our own views and perspectives, and only when we are confronted with other perspective and other views do we really engage our brains.

I was asked in one workshop if operational excellence was a precursor or a requirement for innovation.  For many of you, you know that I believe Six Sigma, Lean and operational excellence can be inhibitors to innovation, because they often become outcomes rather than tools.  By that I mean that Six Sigma, Lean and other efficiency programs become more than tools to improve your processes, they become the mantras for success, and anything that runs in contradiction to those programs is a problem that must be snuffed out.  However, I can tell you that innovation relies on consistent, well defined systems for success, for several reasons.

First, innovation often means creating something new - a new product, service or business model.  Most firms don't have processes for the "new" - they have processes for what exists.  Since businesses are optimized to work on processes, they can easily handle the existing stuff, but quickly falter when working on the "new".  A company needs well-defined processes for new stuff, as well as for existing stuff.

Second, assuming the firm can embrace something new, people need definition and instruction on what to do with a new idea.  Certainly it can't be handled in the existing processes, so a new process must be defined, or perhaps the team can simply handle it as a one-off.  In our experience the "one-off" creates far more work and faces far more uncertainty than necessary.

Third, since innovation requires change, risk and uncertainty, the team can relieve a lot of that uncertainty by following clearly defined processes.  While the ideas may be risky, the processes and pathways CAN be well defined, but in most firms we have risky ideas following poorly defined - if defined at all - development processes. The worst of both worlds!

So, this poses an interesting dilemma.  While it's often the case that Six Sigma, Lean and operational excellence can pose roadblocks to innovation, it's also the case that innovation requires excellent processes and systems to succeed.  What is required is a good balance between the objectives of the programs like Six Sigma or Lean, which should be to optimize the process and make it effective and efficient, and the objectives of innovation, which should be to bring interesting new ideas to market more quickly.  Good ideas can't be commercialized if they can't move through the organization effectively, which means innovation will rely to some extent on well-defined processes and systems.  However, the cultural attitudes that pervade Six Sigma and Lean must allow for radical and disruptive ideas to flow through the effective and efficient processes.  Operational Effectiveness should be a tool, not a religion.  Innovation should be an enabler to business outcomes, not an outcome in itself.  If we keep the appropriate perspective on both operational excellence and innovation, they can support and sustain each other and further the cause of greater profits and lower costs.
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posted by Jeffrey Phillips at 5:12 AM


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