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  • Writer's pictureMicha Veen

Reintroducing operational innovation to transform your silo back-office and add value to your organi

Operational Innovation

Introducing operational innovation at the heart of your business is easier said than done. Although many organisations actively striving for excellence, through initiatives like; Finance Excellence, Operational Excellence, Performance Leadership, Supply chain effectiveness and other transformational solutions, many organisations don’t know how to introduce operational innovation.

Even though executives continue to spend large funds on improvement and excellence programs, often the following questions are ignored:

  • Are we making continuous progress towards our goals?

  • How do we know that we’re on the right improvement path?

  • What is the definition of excellence in our business? And when is it reached?

  • Are our teams taking the necessary effective and innovative improvement initiatives to deliver excellence?

  • Do our teams use the right framework, mind-set and approaches?

  • When excellence is achieved, what are the next steps?

Many organisations are investing in transformational programs and operational excellence initiatives with the aim to deliver operational improvements. However, in our current business and technology landscape, operational effectiveness can’t be categorised as a static end-state. As our global landscape is continuously evolving and changing, thus operational excellence targets will continuously need to evolve. To deliver this continuously changing operational excellence, and deliver the right change, organisations have accepted that operational excellence needs to be replaced by operational innovation.

So, why should you introduce operational innovation?

Operational improvement or operational excellence refer to achieving high performance via existing modes of operation: ensuring that activity is executed as it efficient as possible, to reduce errors, rework, costs, and delays but without fundamentally changing how that activity gets accomplished.

Operational innovation means coming up with entirely new ways of executing the relevant tasks or activities. Operational innovation focuses on continuously exceeding the expectations in how you deliver the activity, e.g. providing customer service, delivering financial data to make relevant business decisions, increasing cash flow or doing any other activity that an enterprise performs. Successfully executing operational innovation requires a continuous innovation approach that is embedded into the performance management environment and mind-set of every employee.

Operational innovation is focussed on delivering continuously the right change, through incremental, iterative improvements. This means that operational innovation will periodically question every step of the process to asses its relevance and added value to the organisational goals (or sub-organisational goals).

Operational innovation has been central to some of the greatest success stories in our business history, including Wal-Mart, Toyota, Gillette, Zara and Dell, however, many operational innovation leaders highlight the lack of ownership across the end-to-end operation landscape, which has significantly reduced operational innovation in the current business landscape. Although some organisations have combined operations in Global Business Services (GBS), many inefficient operations are still working in silos across:

  • Finance & Accounting

  • Procurement

  • Human Resources

  • Supply Chain,

  • Marketing,

  • IT/ Technology

By creating a single operational owner, e.g. Chief Operating Officer, Global Business Services Executive or Chief Innovation Officer, organisations realise that they can break the silo-environment are able to transition towards cross-functional operational innovation without:-

  • Introducing high transformational or people development costs,

  • Losing focus on the day-to-day operational tasks and initiatives,

  • Affecting well-working organisational models, processes, technologies and internal working relationships,

  • Creating separate organisational units without any relationship to the core business,

Through using Enterprise Transformation Leaders with self-directed, cross-silo innovation teams and innovation roadmaps, a number of recent high-profile technology, product and service businesses have started to embark on the operational innovation journey, again!

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