Monday, 21 May 2012

Innovating the business process

Another thought, following on from the video about generating business outcomes via value networks which sparked my last post.

One of the arguments made for developing these value networks was that they allow individuals to introduce their own variations into a process designed to achieve a consistent outcome.  This then helps organisations to innovate more easily, letting them try out different ways of developing or delivering products and services because they aren't tied down to a single prescribed method.

I'm all for innovation - it's what gets me out of bed and to my desk every day - but the idea that anyone within an organisation has the ability to do their own thing when it comes to providing customers with the stuff they're paying you for - the stuff on which your company's reputation is based - makes me very nervous.

These kinds of innovations need to be managed carefully.  Any changes to the way a product is delivered should be analysed and tested first: are the cost savings sustainable?  What are the impacts on the supply chain?  Can we confirm that quality won't be affected?  What are the risks associated with the change? 

By all means, look for ways to improve the way you do business, but do it in a sandbox environment: behind closed doors, away from the watchful eyes of your customers: 
  • Carry out an impact analysis: make sure that you aren't introducing problems in other areas of your operation which will end up costing you money in the long run.
  • Compare the predicted costs and benefits against your existing baseline, and not just over the next few months, but forecast over the next few years. 
  • Implement the process changes in a development environment. Run the new process in parallel with the existing one for a while and make sure the changes have the effect you though they'd have. 
Then (and only then) migrate the tested processes into your production environment and start looking for the next thing to improve.

Continuous process improvement is all about shortening the cycle time to complete these tests and introduce changes, not about taking the gloves off and turning your operation into a free-for-all.