How to observe, from innovation point of view?
In the previous articles we were talking about innovation and have concluded that it could be stimulated, or managed. We also talked about what is innovation, and how it can be stimulated. Now we will see how can we observe and analyze any organization, from the innovation point of view.
Communicating with people
The problem is that innovation could be applied everywhere. Anything could be improved (made better). Innovation management is a multi-disciplinary field, and it covers every aspect of the company-organization it is applied to. How can you narrow your focus and look at the specific areas of your organization.
You have all heard about marketing mix or, 4 P’s of marketing (Product, Price, Place, Promotion). They were invented so you can narrow your investigation on to a specific area of your organization. There are also 4 P’s of innovation. They are (Product, Process, Position and Paradigm). Lets go at each of them and see what do they mean. Better yet, lets take a virtual case study and look at them in real situation.
Lets take a simple example, something everybody can relate to easily. How about a small bakery. Wherever you live, you can visualize the bakery you stop by every day. Also, lets take one more parallel example. How about your local municipality offices, or to be more precise, the office where you go to get your birth certificate? Lets call them from now on ‘bakery’ and ‘birth certificate’.
So how would you innovate your product if you are running a bakery? First that comes to mind is that you would try new baked products, new ingredients, new shapes, colors and so on. That sounds ok, and if these new products are selling well, you got yourself real innovation. But like with its brother ‘Marketing P’, with ‘Innovation P’, there are many other aspects we can look at. Here we can also improve on packaging, delivery methods, freshness of the product, and so on. So is with anything related to your bakery’s products that could be improved (made better).
Now lets think about ‘birth certificates’. Yes, they have a product which is a printed sheet of paper, but the essence of this ‘product’ is the service, you as citizen, are provided. Of course they can change the look of the certificate and make it prettier, more colorful and stylish, but is that where product innovation is hidden? As a citizen-customer you would probably be more interested in other aspects, like product delivery speed (waiting in lines), quality of service (smiling clerks), and hours of operation (24 hours ???). Any changes, or new ideas applied in these areas would definitely make you a happy citizen, and qualify these new ideas as innovations.
Even at this first example, you can see the importance of making everybody in the organization part of this, so called, innovation culture. In short, you need everybody to innovate. Why? Because in the bakery only the sales clerks are in direct communication with the customer. In today’s economy happy customer is the synonym for profitability, and there is no way around it. So when making questionnaires for your employees, make sure your first question is: “What can you personaly do, or improve, to have our customers smiling, when waking out of the store with our baked products”.
Needles to say, the same applies to the municipality office. What is the main goal of any elected official, anywhere in the World? To be elected again and again. The smiling citizens are the same method of gaining profitability for the municipality, as are for the bakery.
What are the processes in the bakery? We can think of preparing the doe, baking and so on. But there are many other processes, like all the processes connected with supplying, selling, recruiting, and even accounting. Here you can see that 4 P’s of innovation are not strictly differentiated. A lots of the issues on ‘product innovation’ we discussed earlier, are itself a processes, so we can talk about them here too. So, ‘process innovation’ is anything we can do to improve processes in our organization, so they are quicker, more efficient, or cheaper. All in all, its any new ideas that applied to the existing processes result in increased profitability. It also means innovating new processes to add to, or replace, the existing ones.
What about ‘birth certificates’ municipality? I am sure you would like to go there and look into their processes (running with the speed of bureaucracy). For any organization, to run efficiently, its about all external and internal processes. How they communicate between themselves, with their clients, how are they managed, or what about their decision making processes, and so on?
You may consider ‘position’ similar to ‘promotion’ in marketing mix, but it is not. Position is related to our own perception. It is a psychological category, and promotion is just one of the processes in the organization that affects this aspect of the innovation. Lets look at the bakery. What is the perception their customers have about them? What about their employees, or business partners, or subcontractors? Do they pay their bills on time, or their employee salaries? So many things could affect people’s perception. Today, on the global marketplace, position is everything. What makes the organization profitable is not how good its products or services are, but what their customers perceive about them. Again its all about smiles on the faces of your satisfied customers.
Same applies to municipality example. Happy citizens-customers are also happy voters.
This is somewhat specific innovation category. It concerns the change (sometimes radical) in the way something is done in the organization. It could be anything. For the bakery it may be in the way the products are sold, from off the counter, to catering system, or to selling on the Internet. On-line bakery, can you imagine! Again, to be an innovation, it has to be profitable. Radical changes don’t necessarily mean better business. Shifting your product selection to vegetarian diet wouldn’t work well in the neighborhood full of meat eaters.
As per municipalities, they can also innovate by shifting the paradigm in the way they do ‘business’. They may use Internet to enable on-line application for birth certificates and even payment for services. Document delivery may be worked out over the post office. Can you imagine getting your birth certificate over your computer instead of standing in long lines.
Don’t forget that these ‘Innovation P’s’ are not narrow categories. Their borders are foggy and intertwined. Company or organization can use some of them, or all of them at the same time. Improving the processes could result in better products. Better products would result in better position. What is important is that all of them have one single purpose, to make you and your organization better, more efficient, and at the end more profitable.
Miodrag Kostic - Director of VEZA d.o.o.
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