I mentioned that next I’d like to share some thoughts around innovation as we move into the fall.  As many of you are aware, innovation is one of the ways by which we add value for our customers, however it is elusive to find at times.  When we look at the levers we can control when it comes to justifying our cost, we can improve quality, mitigate risk, reduce cost, or we can innovate.  You can’t reduce costs while improving quality and mitigating risk (typically), nor can we innovate while we’re in a cost cutting phase.  However, all three of those efforts can lead to a reduction in costs longer term.  Innovation usually has the most return for investment when successful and can lead to greater investment overall because of realized savings or increased revenue down the road.

There are many barriers to innovation that we have to overcome: Intrinsic (fear of failure, uncertainty, lack of talent), Managerial (maintaining status quo, risk aversion, rewards discourage innovation, limited resources), and Institutional (threat to career, territorialism, hard work).

Some ways to pursue innovation include:

• Out-operate for competitive advantage
• Execute in a totally different way
• Basis of great success stories, but rare

Also, remove organizational barriers by:

• Business culture undervalues operations
• Operations is out of sight, out of mind
• Nobody owns it

Then promote operational innovation:

• Benchmark outside of your organization
• Identify, then defy constraining assumptions
• Makes special cases into the norm
• Rethink critical dimensions of work
• Practice fast-cycle iteration with feedback

Before we dig deeper on innovation, it’s helpful to look at how we prepare our organizations for innovation when what we do is provide a service.  In this article from Forbes, the author outlines three areas for focus: aligning around a shared purpose, understanding future customer needs, and doing the doable.