Ways to develop Innovation in your business

The rate at which globalisation is constantly changing the external landscape has underlined the strategic importance within organisations to develop capabilities that ensure the continued process of seeking out all forms of innovation to keep the competitive advantage in the commercial marketplace because when innovation is created and implemented, marketplace needs are met and when met successfully, value is created.

Innovation falls into two types of collaborations, ‘formal’ and ‘informal’. Informal is the wider range of common participation in problem-solving and can be extended to a very wide audience, whilst it is argued that formal collaboration brings about a greater concentration in the transfer of knowledge and also results in greater leaps in solutions. Equally another characteristic of innovation looks at the incremental or radical rate of change needed. Incremental refers to the small steps needed to improve a product or service to remain competitive, whilst radical implies a more turnaround model where the product or service has to be significantly changed.

All sources of innovation are insightful and progressive in their nature and here we look at just a few of the different types that have a huge persuasion in organisations whilst equally having some of the biggest impacts on the world.

Open Innovation
The importance of open innovation is widely accepted as being the main component to create business value. The popularity of open innovation has transpired due to the great importance that social, economic, and environmental factors have greatly contributed to a company’s objectives. A concept moving away from traditional thinking that once considered that innovation is an exclusively an internal process and work towards and acknowledging that ideas and creativity can equally come from outside the organisation and bring alternative fruitful thinking. Open innovation has had to engage in activities that include learning by interacting and learning from each other from both internal and external sources. An amazing example of open innovation is the company Openideo that has created an open innovation platform (similar to crowdfunding) that reaches out to global audiences, addressing innovation in global challenges for social good. A platform we can all contribute to encapsulates innovation in specific projects making a difference around the world, proving the point of diverse open collaboration working on innovating projects that make a positive impact.

Lead User Innovation

Considers the idea that it is often the user/s of innovative products and services that provide the greatest feedback for organisations to further research and develop until the final product or service is achieved. A concept coined in 1998, acknowledged that there will always be more users of innovation than there are testers and developers and therefore the most obvious place for feedback and innovation improvement will reside with the user. As an example of this, is to consider the development of a piece of ‘software’ or ‘equipment’ process that will really benefit from feedback from the actual users that have deep experience in older, previous models and really knows the ‘special element’ that would bring about a ‘light bulb’ moment and potentially revolutionise that particular industry………..

Now, this all sounds very simple, yes?

No – There is a flaw with this source of innovation because on one hand, manufacturers and organisations need to keep their innovations broadly available in the marketplace in order to remain viable, get thoroughly tested and to receive the greatest range of feedback, yet this subsequently means that they are unable to keep their innovations secretive to competition and with exposure to the world, ideas are likely to be stolen. When all organisations are focussed on gaining a competitive advantage, this mode of user feedback provides a challenging conundrum.

Disruptive Innovation
Understanding disruptive innovation is when there is an introduction into the marketplace of alternative new forms of products and services with slow incremental changes, challenge the incumbent’s expensive option. History suggests that disruptive innovation occurs in marketplaces that have been often ignored by the incumbent leaders.

As the disruptors gain a foothold in the market, by simplifying, generating affordable alternatives then marketing the incumbent’s target market, they can potentially result in the erosion of share price of the incumbent business as the new rivals proposition eventually reshapes the market. This can be witnessed in the airline industry as low-cost flights disrupted and shaped that industry, equally in the mobile phone industry that has seen aggressive-disruptive product innovation consistently challenge the status quo.

One of the cycles of product disruptive innovation, that demonstrates the process of elimination can be shown here in these three steps:

1. The era of ferment: When there is a flood of businesses ideas and entrepreneurial ventures into the marketplace, that results in a fermentation process of several prototypes with wide-ranging degrees in stages of development.
2. The shakeout: Is traction in the marketplace, as the most prominent designs emerge on top. The results in the ‘shakeout’ of designs witnesses a series of mergers and acquisitions to reduce the number in competitors whilst other designs phase out or step aside.
3. End of growth: As saturation eventually occurs in the marketplace, designs mature and become difficult to make incremental changes and growth become slow. This stage typically generates a fresh breed of entrepreneurial spirit that looks forward to the next generation of concepts with fresh and radical innovation.

And so the cycle continues to evolve and as a business, you have to weigh up if you are prepared to……disrupt or run the risk of being disrupted…………………..

Service Innovation
Whilst most people think of innovation being focussed on products ie, mobile phones, computer software, hybrid cars, all that have immeasurably changed the way we operate our lives, innovation is not exclusive to products and is as important in the service sector. However, unlike products, services depend on customers engaging with and encountering differing levels of experience and as services are intangible, they, therefore, are more difficult to innovate than products, for example reading emails or listening to the radio, both supplied by service providers.

Alternatively, the concept of creating joint ventures between the local authorities and the private sector has been exposed by the UK government as a perfect example of service innovation as collaborative initiatives have allowed local authorities to raise additional revenue by being both housing developers as well as land vendors. Cormac in Cornwall is an example of this hybrid mix that witnesses service innovation initiatives between the local authority and their own private company.

The Bottom Line
Regardless of the range or level of service or product innovation provided a business, this out-looking approach creates value for the company. There is a strategic need for leaders of organisations to encourage and develop innovation in all forms. If you are struggling to see the way forward in development or need help identifying these opportunities, S.M.A.R.T Turnaround are leading experts in extracting value and aligning innovation with the long-term health of the organisation. To see how we can reshape your business with the latest innovative thinking by contacting us today!

Are you wearing S.W.O.T goggles?

S.W.O.T analysis will help you better understand how to diagnose your business. Read here to learn how to do a S.W.O.T analysis and improve business.

What if there was an easy technique to make your business stronger every month? As it turns out, S.W.O.T analysis is the perfect tool to help your business achieve its goals. However, many people do not know enough about what S.W.O.T is and how it works. Keep reading to discover our S.W.O.T analysis example and definition!

What Is S.W.O.T Analysis?

S.W.O.T is actually an acronym. It stands for Strengths, Weaknesses, Opportunities, and Threats.

S.W.O.T analysis is an honest evaluation of what your business does well and what it could stand to improve. The goal is to use this analysis to develop a business strategy that emphasises your strengths while finding ways to address your potential weaknesses and acts as a visual aid to evaluate the holistic dimensions of your business.

Benefits of S.W.O.T Analysis

The S.W.O.T analysis remains popular because it has a number of benefits. The first is the simplicity of it: you can present analysis findings in a single image, making it easy for anyone and everyone to process. A good S.W.O.T analysis is also thorough. By looking at opportunities and threats in addition to strengths and weaknesses, you are able to create both short and long-term plans for success. A S.W.O.T analysis is very versatile. You can apply it at the macro level to your entire business or on a micro level to a smaller team, division, or individual within the company. Finally, a S.W.O.T provides insight into the external changing environment and provides management with the tools to gain or sustain the competitive advantage.

Drawbacks of S.W.O.T Analysis

The S.W.O.T analysis is still widely used because of its many benefits. However, this form of analysis is not without its drawbacks. First, a good S.W.O.T analysis is only as good as your information collected. If you put together analysis without very much detailed data and research, then you will come out with flawed results. Second, it can sometimes be difficult to categorise certain things. Sometimes, changing external factors, such as customer attitudes, means something could be a threat or an opportunity. Finally, for all the S.W.O.T analysis opportunities, there is the risk of oversimplification. By reducing complex data into a handful of talking points, you risk overlooking the need for complex solutions.

SWOT Analysis Example

Now you know a bit about what a S.W.O.T analysis is. Now, the big question: how to do a SWOT analysis? We’ll answer this by way of example.

For example, if you managed a Chinese Fusion restaurant. Your strengths might include that you offer customers a convenient location and that you are a fast and affordable alternative to going to a drive through. Your primary weakness might be that your business is new. As such, you might be struggling to pay back some of your start-up loans. Opportunities might represent factors such as the city population increasing and/or visitors increasing. This means opportunities for greater profit. Finally, your threats might be other nearby restaurants targeting your demographic. In this way, they are the primary obstacle to your success.

The Bottom Line

Now you have a good S.W.O.T analysis example. But do you know who can help you analyse your business? At S.M.A.R.T. Turnaround, we are experts at business strategy. With our analysis, you get all the benefits and none of the drawbacks.

To see how we can reshape your business, contact us today!

The Four V’s

The main characteristics of the processes that transform the resources into outputs are generally categorised, into four dimensions Volume, Variety, Variation and Visibility.

The heartbeat of operations management lays in the ability to manage core activities that transform key resources into deliverable products or services.  The process of creating the products and services are based fundamentally on converting original input resources through a conversion process that creates value by eventually outputting transformational products and services.

Volume

Denotes the process of managing volume output dimensions.  If the volume of an operation demands it, a streamlining of the processes to create a uniform system will provide the quality of goods being common and offers an opportunity for an increase in the speed of production.  If significant volumes can be met, with bespoke equipment, will produce a uniformed result, the operation ultimately will lead to lower unit costs. A biscuit factory is a perfect example of this.

Variety

Denotes the dimension that clarifies the differences between standardised goods and services V’s non-standardised, providing flexibility.  Providing services that are standardised, attracts the lower costs and creation of profitability as, flexibility and additional goods and services increase the core transformational costs.

Variation

Variation dimension addresses the contrasts in the business model and the impact on costs and volume as the businesses address the variation. The advantages of a low variation of business allow predictability as a strong consideration for lowering costs.

Visibility

Allows the amount of visibility to the customer, of its operations, as most manufacturing operations have very little visibility to the customer.

The role of operations is to transform the original resources to goods and services that create value.  The characteristics of the four V’s confirm that there are many clear principles to monitor processes.  By understanding the holistic processes this opens up opportunities for management to address and change the operation, to become a far more efficient business that gains lower unit costs and more profitability, which goes some way to claw back the advantage over the competition.

Five Performance Objectives

The Five Performance Objectives of quality, speed, dependability, flexibility, and cost can be grouped together to play a pivotal role in business. Interwoven through every aspect of operations allows management to draw attention to areas within an organisation that is not performing well and provides opportunities to address them.  The characteristics of each objective allow management to assess operations both internally and externally to benefit the business by gaining and creating the competitive advantage.

 QUALITY

Quality is the most visible part of what an operation does and acts as a consistent indicator of customers’ expectations, in other words, ‘doing things right’, but the things which the operation needs to do right will vary according to the kind of operation. All operations regard quality as a particularly important objective. Quality is something that a customer finds relatively easy to judge about the operation. Is the product or service as it is supposed to be? Is it right or is it wrong? There is something fundamental about quality. Because of this, it is clearly a major influence on customer satisfaction or dissatisfaction. A customer perception of high-quality products and services means customer satisfaction and therefore the likelihood that the customer will return.

When quality means consistently producing services and products to specification it not only leads to external customer satisfaction but makes life easier inside the operation as well.

Quality reduces costs – The fewer mistakes made by each process in the operation, the less time will be needed to correct the mistakes and the less confusion and irritation will be spread.

Operation principle
Quality can give the potential for better services and products and save costs.

SPEED

Speed means the elapsed time between customers requesting products or services and them receiving them. The main benefit to the operation’s (external) customers of speedy delivery of goods and services is that the faster they can have the product or service, the more likely they are to buy it, or the more they will pay for it, or the greater the benefit they receive.

Fast response to external customers is greatly helped by speedy decision making and speedy movement of materials and information inside the operation.

Speed reduces inventories – The material’s journey time is far longer than the time needed to make and fit the product. It actually spends most of its time waiting as stocks (inventories) of parts and products. The longer items take to move through a process, the more time they will be waiting, and the higher inventory will be.

Operation principle

Operations principle is that speed can give the potential for faster delivery of services and products and save costs.

DEPENDABILITY

Dependability means doing things in time for customers to receive their goods or services exactly when they are needed, or at least when they were promised. Customers might only judge the dependability of an operation after the product or service has been delivered. Initially, this may not affect the likelihood that customers will select the service – they have already ‘consumed’ it. Over time, however, dependability can override all other criteria. No matter how cheap or fast a car mechanic garage is, if it always later than promised to finish or the same parts continue to fail, the customer will go elsewhere.

Dependability saves time –  Managers and workers spending time firefighting chaos, simply waste time!  If they had machinery and services that they could depend on, much valuable time would be saved to concentrate on other aspects of the business.

Dependability saves money – Ineffective use of time will translate into extra costs.

Dependability gives stability – The disruption caused to operations by a lack of dependability goes beyond time and cost. It affects the ‘quality’ of the operation’s time.

Operations principle
Dependability can give the potential for more reliable delivery of services and products and save costs.

FLEXIBILITY

Flexibility means being able to change the operation in some way. This may mean changing what the operation does, how it is doing it, or when it is doing it. Specifically, customers will need the operation to change so that it can provide four types of requirement:

product/service flexibility – the operation’s ability to introduce new or modified products and services.

mix flexibility – the operation’s ability to produce a wide range or mix of products and services.

volume flexibility – the operation’s ability to change its level of output or activity to produce different quantities or volumes of products and services over time.

delivery flexibility – the operation’s ability to change the timing of the delivery of its services or products.

Holding the flexibility to change and adapt quickly to market conditions provides the business with a competitive edge, as larger centralised companies that do not have that flexibility will at times take weeks and months to adapt, meanwhile the more flexibility can capitalise.

Operations principle
Flexibility can give the potential to create new services and products, in a wider variety and with different volumes and with different delivery dates, as well as save costs.

COST

To the companies which compete directly on price, the cost will clearly be their major operations objective. The lower the cost of producing their goods and services, the lower can be the price to their customers. Even those companies which do not compete on price will be interested in keeping costs low. Every pound removed from an operation’s cost base is a further pound added to its profits. Therefore, low cost is a universally attractive objective.

All operations have an interest in keeping their costs as low as is compatible with the levels of quality, speed, dependability, and flexibility that their customers require. The measure that is most frequently used to indicate how successful an operation is at doing this is productivity. Productivity is the ratio of what is produced by an operation to what is required to produce it.

Both the reduction of cost through internal effectiveness is as important as the focus on making improvements to all the other operational objectives.

Cost operation principle
Cost is always an important objective for operations management, even if the organisation does not compete directly on price.