How too much process is killing innovation
Does a focus on problem solving leave you at risk of missing major market changes?
Too much focus on process and their methodologies stifles innovation and creativity. Instead, stop fixing and restoring and instead focus on improving, writes contributor Daniel Lock.
In a study of U.S. and European companies, the Boston Consulting Group found that "over the past fifteen years, the amount of procedures, vertical layers, interface structures, coordination bodies, and decision approvals needed...has increased by anywhere from 50 percent to 350 percent." In addition, "managers spend 40 percent of their time writing reports and 30 percent to 60 percent of it in coordination meetings."
Systems and processes should empower your people, not make their lives more difficult. When this happens the processes have instead become a bureaucracy; stifling flexibility and effectiveness, as well as sacrificing innovation and creativity.
A standardised and efficient process for ensuring that payroll goes off without a hitch and is cost effective is important to a company. But procurement processes that prevent managers from accessing outside help in order to exploit a market opportunity has caused a missed opportunity.
This, combined with a gravitational pull that organisations tend to have around problem solving and firefighting, embed a process first culture instead of a customer and innovation first culture.
When process methodologies go bad
Examples abound where companies have taken on top down, methodology driven approaches to improving their company and come off second best. Take 3M for example, long a leader and oft cited for its innovation, employed Six Sigma as a strategic enabler when the then new CEO James McNerney, from GE, came onboard in 2001. He cut costs, trained thousands of employees in the method and demanded rigorous process metrics on R&D.
During his tenure to 2005, they indeed cut costs and improved efficiencies, but at a cost. 3M’s revenues it makes on new products that didn’t exist in three years previous typically sat at around 30%. During McNerny’s time at the helm, it reduced to 21 percent. Efficiencies were indeed made, having improved margins by some 17 percent, but at the detriment of innovative new products.
Consider also Home Depot, who enthusiastically implemented Six Sigma. In an article in Business Week, put it bluntly: "Profitability soared, but worker morale dropped, and so did consumer sentiment. Home Depot fell from first to last among major retailers on the American Customer Satisfaction Index in 2005."
Stop fixing and start improving
In addition to bureaucracy, process methodologies can breed a pernicious focus on problem solving. Six Sigma, Lean and others are, at their heart, problem solving methods used to "fix", "solve" and "repair", as well as being used to put out fires.
In most cases the businesses are trying to restore previously held performance. For example, an individual or departments performance has slipped, or in manufacturing environments perhaps equipment has failed.
Problem solving is not the opposite of innovation and it is not necessarily mutually exclusive. After McNerney’s departure for Boeing in 2005, 3M still kept Six Sigma as a tool for improving their manufacturing efficiencies, but left it out of the rest of the organisation where instead they instituted a significant innovation program once again. They set up small, cross-functional teams who were moved away from their existing departments to network and collaborate on new projects across the organisation. Each new contact offered a new opportunity to redefine important attributes of future market demand and/or innovative approaches.
3M went on to create a safe environment allowing people to take risks and allowed the time required to develop novel, hopefully revolutionary strategies, products and services that change the basis of competition in the markets applied, and in 2010 their percentage of sales from new products was back at 30% and growing.
Assess your organisation’s focus
Consider your own organisation using this simple diagnostic. Imagine a pie chart, and divide it into the amount allocated to problem solving versus innovation. Is it 90/10 to problem solving, or more like 65/35 to innovation? There is no exact or correct amount, but as 3M and Home Depot demonstrate, organisations who are looking inwards with a focus on problem solving are missing the market shifts and will ultimately become minor players if they don’t shift their thinking to a focus on improvement and innovation instead.
Raising the bar
To raise the bar consider these three keys:
1. Understand that innovation and problem solving require discrete approaches and thinking.
2. When considering problems to be solved, emphasise and look for opportunities to raise standards instead
3. Don’t wait for problems to arise to raise standards, continually seek opportunities to improve and innovate.
Lean, Six Sigma, ISO, TQM, all embed policies, procedures, and ultimately bureaucracy, in businesses which de-emphases the organisation’s innovation capacities.
But what do you think? Is there such a thing as process gone mad? Join the discussion by leaving a comment.