The challenges of operational innovation

Basic operational processes

The basic business process is similar for any organization: investments, knowledge and materials going in, and results, experience and products coming out the other end. Of course, what happens in between is more complex. Operations – the primary process – concerns all day-to-day activities of a business, which entails planning, performing, producing, managing and organizing all activitiesin the organization. Where needed, operations is supported by R&D for knowledge and expertise.

Innovation in production?

Innovation means reorganizing and introducing new products, equipment and procedures. It requires new skills and even new professionals. The department where this is felt the hardest is production.

Innovation – more than just minor adjustments but major changes in products and services resulting
in new directions for the organization – most often poses a threat to operations.

A production plant is a long-term investment. Once operational it should perform at the highest level throughout many years. When new products are developed and introduced, production is expected to smoothly integrate them in its systems, while maintaining regular production. Production is an expensive process. It requires investment capital and human capital at the highest levels. It strives to achieve optimal production at minimal costs. It is everything but innovation. And if a change has to be made, it has to be planned carefully and worked out in detail. Not only the physical part but also every procedure, while also informing and educating all staff involved.

Change as a continuous process

On the other hand, this does not mean production
is averse to change. The concept of change in production processes is continuously being researched and implemented; a basic practice since the mid-1960s. The fields of process design, engineering and process control are fully-fledged scientific disciplines. All kinds of norms and standards in these disciplines have been developed by the International Standard Organization (ISO) and have been accepted worldwide.

An example is the work of Juran on statistical process control. Striving to achieve the best performances, changes in the process are continuously monitored. In case of bad performance, causes are identified and problems resolved in order to restore the status quo.

Production at any organization always uses this concept as a basis. In fact, this mechanism is
even used to introduce change. In case of under- performance, the situation is analyzed, knowledge is acquired (when needed), the work culture is changed and a new level of performance is achieved. So, for production change is a constant factor they work with and know how to deal with.

Introducing an innovation

Having said this, introducing an innovation in the production process will depend strongly on the type of production environment. In continuous production processes, every moment of change means loss of production. In batch processes, careful planning could minimize the loss by using downtime of the production line.

But in any one of these situations there will be a lot of pressure on the team, as it is used to using an optimal setting for day-to-day activities, not to introducing new tools, new machines, or new production lines. On the other hand, by using the team in the implementation process will help and train them in understanding the machinery, production line, etc. So there is a trade-off here. It is advisable to hire in externals, or even create a complete new production location (greenfield) instead of having the team implement it all.

Choices

Based on the same principles of process control, you can visualize choices. In preparation for the change, the service organization has to be prepared for new tools and technology while a project organization investment. What’s more, it is very important to realize that employees’ commitment is an unknown factor, given the speed of change. 

Here you have a choice to make: the more external resources, the sooner the change will be in place. A benefit of a quick change with external help is that knowledge and experience enter the organization, and the change process is quickly implemented. The downside is that this will take substantial investment. What’s more, it is very important to realize that employees’ commitment is an unknown factor, given the speed of change. The other extreme is to introduce the change entirely with internal knowledge and expertise. This scenario will save a lot of money and will give employees time to adjust to the new situation. However, the duration of the change implementation process will form a serious threat to success, as production will have to continue as usual.  

Decision for long-term revenue

There is no one solution that fits all. You have to decide how to obtain the best results. It is important to not only look at the financial investment, but also at the motivation and spirit of your professionals, as well as embedding the right knowledge and expertise in the organization.

In the end, the result of a successful innovation has to be long-term revenue for the company. A primary condition for this is a successful implementation of the innovation process in all operational processes, especially in the production process.