If you ever thought about improving the quality and speed of your production line or how to better leverage customers’ data by incorporating the latest CRM solution, you have definitely considered applying process innovation within your organization.
Process innovation, as defined in Oslo Manual, represents the implementation of a new or significantly improved production or delivery method, including significant changes in techniques, equipment and/or software.
Organizations apply process innovation to:
- decrease production or delivery units costs,
- to reduce the cost per produced product,
- to increase the number of products produced or
- to increase the quality and efficiency of a process.
Additionally, employees see the value of process innovation in their work performance, as it improves the way of working.
Whenever an organization intends to improve the way of doing business to make it smarter, faster and more efficient we are speaking about process innovation. Process innovation happens when an organization intends to radically change an existing business process yet it is not a part of the continuous improvement of the process, but the implementation of something completely new. For example, the implementation of automated production lines will speed up production while saving organization time and money.
Process innovations also include new or significantly improved techniques, equipment and software in related supporting activities such as purchasing, accounting, computing and maintenance. The implementation of new or significantly improved digital technologies to improve the efficiency and quality of supporting activities is also considered to be process innovation. The implementation of new or significantly improved information and communication technology (ICT) is a process innovation if it is intended to improve the efficiency and/or quality of a support activity.
When an organization wants to implement a new delivery method concerning equipment, software and techniques to make it faster, safer and more efficient, we are also speaking about process innovation. A number of companies have already begun using drones as a way of delivery.
It is important to understand and differentiate between various innovation types, as many innovations may have characteristics that encompass multiple types of innovation. An organization that introduces a new product that also requires the development of a new process is clearly both a product and a process innovation. Or if an organization introduces chatbot as a new customer service channel it represents a new service offered and also a new tool to perform the service, therefore it is both product and process innovation.
The main challenge is to make a clear distinction between process and organizational innovations. When we speak about process innovations it refers to the implementation of new equipment, software, and specific techniques or procedures, while organizational innovations refer to dealing with people and the organization of work. Both innovation types intend to decrease costs through new and more efficient ways of production, delivery and internal organizations. The introduction of lean production techniques such as 5S, whereby managers reduce waste and cost through a carefully designed system is a great example of the process and organizational innovation. When a lean approach becomes a part of your daily routine it represents your continuous improvement efforts. Therefore, process innovation is never incremental innovation or continuous improvement as it always involves total change, replacing the existing business processes with a new one.
Also, if an organization wants to digitize its innovation process and improve the product development process by implementing digital end-to-end innovation management software, that would be considered as both organizational and process innovation.
Usually, process innovation happens when an organization wants to solve some existing problems regarding business processes. Organizations apply process innovation to decrease the cost of production or delivery units, to reduce the cost per product produced, to increase the number of products produced or to increase the quality and efficiency of the process. Additionally, employees see the value on the job performed as it improves the way of working.
Finally, organizations turn to process innovation since they see a significant increase in their KPI’s.
And, what is your last implemented process innovation?