Operational innovation is often confused with operational excellence, business transformations, ERP deployments, global business services and other transformational initiatives. Most organisations look to achieve high performance operations via existing modes of operation to:
Ensure that work is done as it should be done to reduce errors, costs and delays,
Relocate certain operational activities and functions to low-wage countries or tax beneficial regions (Shared Services/ Centres of Excellence) or outsourcing the operational activity (Business Process Outsourcing). A number of leading multinationals have been implementing Global Business Services, a combination of SSC/ BPO/ CoE to increase further optimisation and effectiveness of their operational activities,
Introducing process and data standardisation/ harmonisation to allow single application automation (e.g. ERP/ SAP)
Even though there will be a number of adjustments due to location, partnerships, etc., the majority of these operational initiatives continue to be executed without fundamentally changing “how” that work gets accomplished…
Operational Innovation is fundamentally different, as it requires organisations to come up with entirely new ways of executing their operational activities. Organisations that have started to introduce Operational Innovation have been able to deliver the operational result that supports the organisational goals and targets, e.g.:
A connected supply chain through timely and complete delivery of your products/ services to existing and new markets, and scale new offerings:
Transition towards Digital Supply Chain that unites not just physical flows towards your customer, but also people (capability and talent), technology, information/ data and finance/ procurement,
Physical supply chain – relate more fully to existing customers to scale new products/ services effectively and timely, minimal delays, close customer collaboration, clear and traceable hand-offs, effective product/ service traceability during the end-to-end supply chain process, continuous KPI and performance monitoring, etc.
Technology supply chain - real-time system integration, secure data exchange, visibility and traceability between disparate in-house and partner systems across multiple supply chains and industry verticals,
Financial and Procurement supply chain – effective customer and supplier partnerships to introduce interim and final financial supply chain validations, procurement collaboration intensity, financial hand-offs and accuracy, scenario planning,
Sophisticated financial data analysis to deliver swift, decisive business actions:
Financial accuracy – any “expected” financial transaction is recorded and/ or captured as part of the physical transaction,
Real-time finances – transitioning from an annual, quarterly, monthly towards a weekly or daily financial status to adapt to the rapid pace of change and greater financial regulation and complexity,
Data analysis – effective translation from finance to business data to allow short-term decision making with medium and long-term implication/ impact assessments.
Consumerisation of Human Resources to create a social, technologic and consumer-style employee experience:
On-demand education and innovation – all employees are able to learn and develop their business and technical skills at any time to drive value-add innovation in/ outside the organisation,
Real-time people innovation monitoring – abandoning performance appraisals, etc. and transition towards real-time social innovation assessments with people becoming the brand-ambassadors of the organisation,
These three example business functions show how the focus has shifted from operational excellence or transformation, optimising a process or technology, towards operational innovative solutions, abandoning process steps or technologies, to deliver the intended organisational goal.
Moving towards Operational Innovation requires a different mindset, approach and framework as it is distinctly different from how most organisations are reviewing operational effectiveness. To create momentum, it’s crucial for organisations to combine internal talent with experienced operational innovation leadership external talent in:
Transformational services – from operational transformations, incl. Finance & Accounting, HR, supply chain, manufacturing, etc. through technology transformations, incl. SAP/ ERP, leading-edge technologies, system optimisations, etc.
Shared Services, Business Process Outsourcing and Global Business Services,
Global cross-industry operational leadership positions across finance, HR, operations, IT/ Technology,
Consultancy, relationship management or business solution leadership to ensure operational innovation meets the organisational effectiveness targets.
Why the focus on external leadership to deliver Operational Innovation?
As the business landscape is rapidly changing and globalising, it’s crucial for organisations to focus on the operational innovation. External cross-functional, cross-industry operational innovation leadership will challenge organisations to introduce entirely new ways of executing their operational activities, differentiating them from their industry competitors, as emphasis is placed on questioning the status quo and introducing the most effective route to obtain the desired operational result.
The typical steps through which leading operational innovation experts introduce operational innovation, is through Agile Innovation with the following key elements:
An innovation roadmap - a roadmap document, which reviews minimal viable solutions, current metrics and expected organisational targets, operational/ financial benefits and other potential impacts, usually presented to the sponsors and stakeholders to aid in their priority setting
Goals, targets and outcome statement - a short statement reflecting the desired result, goal or final deliverable of the operational innovation,
Metrics - define a set of operational metrics that collectively measure the organisational innovation performance against the outcome statement,
Financials and Incentives - develop a set of financial curves, which set out the expected finances for a performance regime i.e. how much the savings/ revenue increase has been achieved for every iteration, which adds value to the organisational goals. By setting out a group of incentives that encourage positive behaviours and discourage negative behaviours, additional financial targets can be achieved,
Review, learn and adapt - conduct an analysis of the outcomes of the operational innovation at each iterative deployment phase, taking into account the differing definitions of success from the different groups involved in the outcome statement to learn and adapt for the “next” innovation iteration…
By using external leadership to assist your business teams introducing operational innovation effectively, it allows a sustainable mind shift change across your organisation to deliver operational innovation at the HEART of your business…