Transcript MBA 8220 Session 1 - Home - Department of Computer

MBA 8125:
Innovating Business
Processes
Authors:
Mike Gallivan
Lars Mathiassen
Richard Welke
Adapted by C. Stucke
© Richard Welke 2002
Agenda
Innovation
Process innovation
Case discussion
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Topic one
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What is innovation?
Dictionary-style …
The act or process of inventing or introducing something new
Something newly invented or a new way of doing things
The process of adopting a new thing, idea, or behavior pattern
into a culture
The act of starting something for the first time; introducing
something new
Authors on innovation …
Leifer, et.al. (Radical Innovation, HBP, 2000)
Producing an outcome with:
An entirely new set of performance features
Improvements in known performance of 5x or greater
A significant (30 reduction) in cycle-time and/or cost
James March
Exploration vs. Exploitation
Yours? …
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Who is innovating?
“Midlevel managers play a crucial role in every
company’s innovation process, as they
shepherd partially formed ideas into fully
fledged business plans in an effort to win
funding from senior management.
It is the midlevel managers that decide which
ideas … they support and carry to senior
management”
From C. Christensen: The Innovator’s Solution, HBP, 2004
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What types of innovation?
Sustaining innovation (exploitation):
Successful companies are good at responding to
evolutionary changes in their markets
Makes a product or service perform better in ways
that mainstream customers already value
Typically developed and introduced by industry
leaders
Creating change
capability
Disruptive innovation (exploration):
Where they run into trouble is in handling
revolutionary changes in their markets
Creates entirely new market by introducing a new
product or service that mainstream customers initially
sees as worse
No company has a routine for handling them
More difficult for large, mature companies, easier for
smaller, immature companies
Creating new
capabilities internally
Creating capabilities
via a spinout
organization
Creating capabilities
by acquisition
Adapted from Christensen & Overdorf (2000)
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Which capability to change?
Resources
• Tangible and intangible
• High quality resources facilitates change
Processes
• Formal and informal
• Processes are not meant to change
• Disabilities to change in less visible
processes
Values
• Basis for judgment at all levels
• Clear/consistent values facilitate change
• Two key values influence change
capability … How:
Which forms
of change are
your
organization
capable of
handling?
1.Acceptable gross margins judged
2.Interesting opportunities judged
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Capabilities evolve over time
The factors defining an organization’s
change capabilities evolve over time:
Change easier
Begin with resources (primarily people)
Departure/addition of just a few people can have dramatic
effects
Some fail to ever develop processes
Consistency, quality, and productivity suffers
Move to visible, articulated processes and values
Founders impact initial processes and values
Success becomes independent of individuals
Repeatability
Migrate to shared and invisible culture
Enables people to act autonomously and consistently
Can both enable or inhibit change
Change more difficult
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Fitting tactics to needs
Poor
Use heavyweight team:
within existing organization
Use heavyweight team:
in a separate spinout
organization
Use lightweight or functional
team:
within existing organization
Use heavyweight team for inhouse development;
but commercialization requires
a spinout
Innovation fit
with processes
Good
Good
(sustaining)
What’s a “heavyweight” team?
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Poor
(disruptive)
Innovation
fit
with values
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When & how to innovate? (1)
From: “Darwin and the Demon” (HBR, Geoffrey Moore, Jul-Aug 2004)
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When & how to innovate (2)
Surface modifications to
improve customer exper.
Main Street (early)
Established offers in
existing markets to
next level
Reframe established
value proposition
Existing technology
to new markets
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Improve customertouching processes
Restructure industry
relations
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Topic two
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Process & innovation
Business Context
Market
Business
partners
Technology
How is innovation organized to facilitate
enhanced process performance?
Process
Innovation
• Why are processes created?
• How are processes managed?
• What are the defining elements?
• How are the elements related?
• Why is innovation needed?
• How is innovation managed?
• What are the defining activities?
• How are the activities related?
How does business process configuration
influence and shape innovation?
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Degrees of change
Improvement
Innovation
Incremental
Radical
Process problems
Environmental change
Frequency of change
Continuous
Discrete
Participation
Bottom-up
Top-down
Risk
Moderate
High
Statistical control
Information
Technology
Level of change
Starting point
Primary enabler
Adapted from Thomas H. Davenport: Process Innovation: Reengineering Work Through
Information Technology, Harvard Business School Press, 1992.
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Outcome and Process Focus
Poor
Use heavyweight team:
within existing organization
Use heavyweight team:
in spinout organization
INNOVATION
INNOVATION
Innovation fit
with processes
Good
Use lightweight or functional
team:
within existing organization
Use heavyweight team inhouse; commercialization
requires a spinout
IMPROVEMENT
IMPROVEMENT
Radical versus Incremental
Relates to both outcomes and
Process and can be combined
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Good
(sustaining)
Poor
(disruptive)
Innovation fit
with values
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Managing the BPI project portfolio
Prioritize, coordinate, and
monitor portfolio of BPI
projects
BPI management
BPI project
Focused BPI projects
BPI project
BPI project
BPI project
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Building innovation capability
TYPES
1. Leadership-driven capacity:
Individuals see opportunity and
run with it
INGREDIENTS
2. Structural-driven capacity:
Mechanisms are put in place to
enable change
2. The desire of people to act in an
innovative manner
3. Organic capacity:
Employees see innovation as an
integral part of their job
1. The ability of people within the
organization to innovate
3. An environment that enables and
empowers innovation
Innovation is like jazz -- not random; requires improvisation
Creativity is just having enough dots to connect
Is your
organization
Innovative?
Adapted from Shapiro: Innovate your organization.
The 24/7 Innovation www.24-7innovation.com.
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Innovation and improvement
Improvement
Innovation
1. Process defined
1. Success indicators defined
2. Process measures defined
2. Current strength-weakness analysis
3. Process diagnosis
3. Future opportunities-threat analysis
4. Improvements identified
4. Innovations identified
5. Improvements prioritized
5. Innovations prioritized
6. Process design and test
6. Process design and test
7. Implement improvements
7. Implement innovation
Adapted from Beechner & Hamilton: “Infinity: A Model for Organizational Excellence”
(www.paragonstar.com)
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IDEAL improvement model
Document & analyze
lessons
Revise
organizational
approach
Define processes & measures
Plan & Execute pilot plan
Execute, & Track installation
INITIATING
ACTING
LEARNING
Establish process
action teams &
action plans
ESTABLISHMENT
Stimulus for
Set context &
improvement establish
sponsorship Establish
infrastructure
DIAGNOSING
Set strategy & priorities
Appraise &
characterize
current process
Develop recommendations
& document results
McFeeley, B. (1996). “IDEAL: A User's Guide for
Software Process Improvement”, CMU/SEI-96-HB001. www.sei.cmu.edu
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See also:
CMM
CMMI
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Critiquing the as-is process
7R’s of process
innovation
Rethink
2. Reconfigure
3. Resequence
4. Relocate
5. Reduce
6. Reassign
7. Retool
1.
Adapted from Stephen Shapiro
The 24/7 Innovation
www.24-7innovation.com
© CEPRIN (2007)
Question
Apply when…..
How can activity
frequency be
reduced or
increased?
An activity is non-value added but
necessary
There is low variation in the process or
product
There is high variability and low setup
costs and times
How would more
information
enable greater
effectiveness?
Higher accuracy is needed
Greater segmentation would yield greater
marketing effectiveness
How would less
information or
fewer controls
improve
efficiency?
A high proportion of costs goes to data
collection and controls
The value received from information or
controls is minimal
Absolute accuracy is not necessary
How can critical
resources be
used more
effectively?
Utilization of key resources is low
Critical resources are performing nonvalue-added or waste work
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Reviewing the BPI triangle
Steven Alter (2002). Substitute:
- Work system  Business process
1. Create a snapshot of the business
process
- Business process  Work practices
2. Find problems and opportunities
for improvement
Customers
3. Explore effects of
proposed process
changes
Products & Services
Work Practices
Participants
Information
Technology
Infrastructure
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