Archive for the ‘Productivity’ Tag

Being a frugal innovator

Apple and Google recently created a buzz as they launched their latest phones with all sorts of new features.

Improved cameras, fingerprint sensors and gizmos to save battery life were among the offerings to win over the public.

Slick designs and major international product launches may make innovation seem like a sophisticated practice that’s easy for companies with big budgets and plenty of time, but what if you don’t have that luxury.
The reality is that some of the most successful innovators get significant results without outspending their rivals. For example, Procter & Gamble minimizes research and development (R&D) investment and time by getting product teams to tap into the creativity and problem-solving efforts of outside entrepreneurs, universities and start-ups.

Apple has launched some of the world’s most successful products despite spending less on R&D (as a percentage of revenues) than many of its competitors. And companies such as Amazon and Google have used quick, low-cost experiments to quickly gain consumer knowledge and to identify and scale winning ideas, while also to pulling the plug on white elephant projects.

Most companies need a practical approach to innovation that can be used regularly to get good results.

More than 15 years of client work and research has taught me there’s a middle way between ad hoc initiatives and building expensive innovation factories. We developed a system I call the Thrifty Innovation Engine (TIE), which offers companies an alternative approach.

It’s based on the view that innovation is simply fresh thinking that comes from inside or outside of the organization, combined with actions to create market results through higher revenue, or lower cost.

Here’s how the process worked for a software client. This firm’s approach to innovation veered from rushing emergency product upgrades for single clients to funding ‘new venture’ business units that looked well beyond a two-year planning horizon. Neither approach delivered the expected business results, but they did generate plenty of politics and expenses to boot. We helped the client implement a TIE – a 120 day innovation germination and commercialization process.

Phase 1 – 10 days

Assessment, priority-setting and getting a team together

This was vital, as management didn’t have a clear picture of spending, or accountability. A small team of product managers, programmers, financial analysts and marketers looked at ideas and bucketed them according to potential customer appeal, capabilities, financial returns and ease of commercialization. The team then chose five ideas for customer feedback.

Phase 2 – 20 days

Market validation

We introduced the five ideas to 16 strategic and prospective clients and four industry leaders through a series of sessions. Our goal was to find out how each idea met customer needs, what features were important and how emerging technological trends could be used. Two of the ideas generated significant customer interest and were placed in the commercialization pipeline.

Phase 3 – 75 days

Commercialization

A small and highly motivated group of programmers were dedicated to each idea, along with a budget and internal mandate. This wasn’t a sideline project starved for internal support. The core project group continued to be accountable and provide input but were told to use a minimalist touch. Low cost, speed and client consultation were guiding principles. For example, the team was encouraged to use lean methods such as open source tools. Each team also collaborated with the clients to minimize risk and assure market acceptance.

Phase 4 – 15 days

Final steps

The team reviewed the process and what they learned to fine tune the framework, which included committed resources, defined practices, metrics and knowledge management policies. A system was also set up to track the business results and customer feedback and to cycle these findings back into the TIE knowledge bank.

Developing an innovation engine like this won’t guarantee your firm becomes the next Apple or Google, however it can help your efforts become more productive and ensure your great ideas are market driven and not long shots.

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Unleash performance

Every company wants to improve margins, be more agile and generate higher levels of innovation — and they often spend a considerable amount of effort trying to get there. Improving business performance, however, is easier said than done. The executives we speak with bemoan their organization’s challenges such as lack of flexibility, poor employee engagement, and stagnant productivity. Is this feedback the entire story, or does something else account for the gap between intent and results?

Any productivity and performance discussion inevitably comes down to what the employee is doing and how does the organization enable their success. When we ask workers what frustrates them we get an earful. The first culprit is their long task list, which often limits focus and follow through on any one activity. Their second frustration is the need to adhere to corporate policies and practices that seem to be disconnected with their performance priorities and the firm’s strategic goals. Both these issues have a basis in two important but often unexplored areas.

Psychological barriers Individual frustration with their workload has some form of psychological underpinning. While many managers complain about being overloaded with responsibilities, very few are willing to jettison any of them. For one thing, they are hesitant to stop things because they don’t want to admit that they are doing low-value or unnecessary work. This is especially true in recessionary times or when firms are in cost-cutting mode. Second, some employees are workaholics who take pride in having a full plate. These individuals will take on more work even when they know it’s counter-productive for them or the company. Finally, many people fall victim to the sunk cost fallacy i.e. they are reluctant to quit something after they have invested so much time and reputation in it. Productivity strategies that fail to address these psychological considerations will likely fail.

Organizational dynamics Well-meaning, but onerous, corporate norms and practices can drag down operational performance and drive up hidden costs. Examples of these obligations include the need to regularly engage multiple stakeholders for input or buy-in even when they are not critical to an initiative’s outcome, or; the requirement to perform certain time-consuming, administrative tasks that generate more effort and cost than they were intended to save. These types of over-management can have unexpected consequences. For one, it creates an organizational paradox: companies regularly start new things — forms, committees, initiatives — but have a much harder time stopping ones that exist. The result is ever-increasing complexity. Furthermore, when managers over-react to problems by instituting new policies or processes, they can inadvertently reduce business performance by distracting people from their objectives, fragmenting their effort and slowing down operational tempo. Leaders need to carefully consider the long-term implications before adding or changing processes and practices.

The interplay of all of these factors drive organizational complexity, extend project lead times and foster operational inefficiency. Given the powerful institutional and psychological factors, how can you unshackle your organization?

Plan better

Leaders need to take into account their firm’s actual capabilities and capacity during their planning exercises. This allows them to better match their resources and skills with project and activity demands. Furthermore, using portfolio management methodologies can help pre-empt misaligned priorities and resource conflicts.

Tweak the performance management system

There is a strong correlation between what workers are measured on and how they behave. Many companies evaluate employee performance based on effort and number of tasks, not results or value. While effort should count for something, performance measurement systems must prioritize individual value creation on strategic or “lights on” activities that link directly to key goals and key performance indicators, not “busy work.”

Focus on strategic execution

As every company knows, execution is often the difference between a winning strategy and business failure. Looking at execution “strategically” and not as an afterthought can significantly improve project outcomes and reduce cost. For example, there should be clear visibility across the organization to what is being done, where and by whom with particular clarity and alignment as to “who owns what” decisions and interdependencies. All projects and practices should be regularly evaluated for relevance and efficient deployment. Finally, each project and committee should have a charter, which stipulates end-of-life dates so people understand things come to an end.

Address collectively

The best way to accelerate individual and initiative performance — given their psychological and cross-functional basis — is to employ a cross-functional team to analyze and tackle the root cause problems. This approach, though time-consuming, ensures issues become visible, collaboration is maximized and cross-organizational action is triggered.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

Innovation from left field

Most companies are on the hunt for breakthrough ideas and technologies that will enable them to leapfrog competition. Increasingly, the big innovations are found outside of their existing products’ or technologies’ domains.  Usually this is a result of serendipity but it doesn’t have to be. New research out of Wharton Business School (published in the Knowledge@Wharton newsletter) outlines how creative problem-solving techniques can be used to bring new innovation to products and service categories.

There are many examples of innovation that have seemingly come out of left field.  Semiconductor firm Qualcomm’s unique colour display technology is rooted in the microstructures of the Morpho butterfly’s wings.  The cushioning in Reebok’s best-selling basketball shoe is based on technology borrowed from intravenous fluid bags. Design firm, IDEO, leveraged technology from a shampoo bottle top to create a leak-proof water bottle.   How can other firms efficiently find and exploit innovation from the outside?

Wharton management professor, Martine Haas and doctoral student Wendy Ham, studied how to harness ideas from the “periphery”.  Their conclusion — supported by our client work — is that there are two ways to bring in peripheral knowledge to advance breakthrough innovation: Idea transplantation and perspective shifting.

Idea transplantation is the leveraging of technologies or practices from outlying areas into core product domains, with or without some modification. This is what IDEO and Reebok did.   Perspective shifting occurs when a R&D team’s know-how or experience in a tangential area leads them see a problem in their core category differently, thus revealing new solutions.  The researchers cite the example of Israeli entrepreneur Shai Agassi and his mission to commercialize electric cars.  Agassi borrowed the concept of contract-based leasing from the mobile phone industry and applied it to battery purchasing and consumption, one of the barriers to consumer acceptance.

Both idea transplantation and perspective shifting rely on individuals paying attention to and filtering seemingly irrelevant information in a systematic fashion. This can be a time consuming task fraught with many false starts and dead ends.  Some of the challenges include information overload, not choosing enough peripheral domains to study, and neglecting the importance of idea filtering criteria.

As with other complex undertakings, using a disciplined analytical framework can help improve the chances of success.   The authors along with our innovation generation model recommends a number of strategies including:

Consider multiple external domains

Initially, there is often no way of knowing whether one external domain will yield breakthrough innovation.  The odds of success improve when the team considers a range of peripheral areas and where these might be compatible with the current technology set.

Naturally, companies that already compete in different product categories will be at an advantage (although internal silos may scuttle this advantage).  For single-domain firms, managers should look outside through open innovation strategies and regularly engage in collaborative outreach.  A word of caution:  studying too many peripheral areas can result in diminishing returns.

Focus matters

Since exploring new domains is not easy, companies can maximize the effectiveness of the effort by increasing organizational and individual focus like adding more people, raising the percentage of the day focused on key domains, and lengthening the mandate.

Yet, sustaining this focus can be a challenge.  Firms need to ensure their R&D initiatives have the appropriate internal priority and time to conduct a proper assessment.  Furthermore, managers can institutionalize  “patience” by tweaking management schemes.  Still, being focused is not a sufficient condition by itself.

Dabble outside

The Wharton study reinforces the problem-solving and brainstorming value of taking breaks and engaging in outside activities (like a hobby or project) while undertaking innovation-oriented work.  However, it is unclear how much outside activity is too much or too little to stimulate the identification of peripheral innovation. The research suggests that breakthrough innovation will be more quickly generated by input from seemingly irrelevant areas, such as creative industries, product design or entrepreneurship” – as opposed to fields that have “rigid problem-solving paths,” like engineering or accounting.

Some of the innovative companies we work are successful at bringing outside creativity in.  They maintain a variety of policies including deliberately looking for hires outside of their industry or technical domain; encouraging employees to pursue outside interests during company time, and teaching creativity and problem solving skills as part of corporate training.

At the end of the day, you often don’t know where the big idea will come from.  Firms that can be optimistic, patient and deliberate in their approach will maximize their odds of success. They should also be mindful that tapping peripheral innovation is as much about the journey as the outcome.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Social media’s productivity boost

Most companies are using social media exclusively to drive marketing objectives such as building product awareness or highlighting new promotions.  A small number of dynamic organizations, however, have deployed social media as an instrument to improve employee productivity and engagement.   Research suggests that (at least for now) the biggest payoff from social media will come from higher corporate productivity in terms of better communications, enhance data management and improved collaboration.  As such, leaders should consider adding internal social media tools as part of their corporate social media plans. However, they need to be mindful of organizational challenges that can limit the payoff.

Social media has hit the big time.  According to comScore more than 1.5B consumers worldwide are registered on a social networking site.  Almost 20% of the time online is now spent on social network sites, triple the amount spent in 2008. Not surprisingly, marketers have been the first to exploit this growth by launching new advertising programs, setting up their own social sites and engaging in real-time dialogue with their consumers.  This initial consumer focus has produced crucial insights on how people interact with the technology as well as communicate and collaborate with each other.  Savvy managers are analyzing these learnings and the experiences of some early adopters to explore how their firms can leverage social media inside the organization.

When properly designed, social media applications can dramatically improve communications, knowledge management and collaboration within and across the organization and with external stakeholders. The McKinsey Global Institute estimates that in the packaged goods, consumer finance, advanced manufacturing and professional services sectors alone, new social technologies can produce between $900B to $1.3T in value creation.  Two-thirds of this benefit would come from improving collaboration and information flows between knowledge workers in the product development, marketing, customer support, sales and operations departments and across the organization.  One third of the incremental value is created from using social applications within these functions.

Social media is a powerful communication and collaboration enabler.  For one thing, most employees are already comfortably using public platforms and storing information there.  Furthermore, these tools have a unique ability to catalyze rich and varied interactions as well as enable easy data searching and archiving.  Finally, social platforms are not hamstrung by the technical, physical or behavioral limitations of existing email and knowledge management systems.

New research suggests that middle managers, in particular, will get a performance boost from using social technologies.  Middle managers are important, expensive and skilled individuals who spend an inordinate amount of their time communicating in email, looking for data and attending meetings.   Improving their effectiveness can significantly enhance organizational productivity, and decision-making. McKinsey estimates that middle managers that use social technologies in their everyday work could save 20-25% of their time and effort – and solve real business problems.  In our experience, social media-enabling a firm can also unlock the latent creativity and problem solving skills of newly empowered workers as well as serve as a powerful tool for reinforcing corporate values and strategies.

We witnessed first hand how social media can improve a company’s performance. Our firm helped a major IT services provider develop a private-platform social media strategy to support customer service in their financial services business.  The platform expedited the dissemination of time-sensitive information (e.g., upgrades, announcements) and reduced the time to respond to end user queries. Moreover, the firm unlocked the problem solving talents of hitherto overlooked employee groups.  Productivity enhancements like these led to higher customer satisfaction scores and improved service team effectiveness and efficiency.  Other companies such as Cisco and Dell are benefitting from internally focused social platforms.

Capturing social media’s value creation is more than choosing the right technology – although that is vital. The bigger challenge is on the organizational side.  For example, managers need to consider how new social platforms will fit with their existing (and implicit) workflows.  In many cases, these will have to be tweaked or new processes will have to be created.  Furthermore, the leadership should seek to maximize employee participation across the enterprise. This will depend on the leadership commitment, the firm’s culture (i.e. is there an environment of sharing and trust?) and the employee’s inclination to embrace change.  To improve the odds of successful change, managers should think about how their on and offline practices will co-exist, and how they can leverage proven change management methodologies like Gamification.

For more information on our goods and services, please visit the Quanta Consulting Inc. web site.

Drive innovation by unlocking middle management

For many companies across a variety of industries, the rate of product innovation is a major driver of competitiveness and shareholder value.  When high levels of R&D spending and new innovation strategies do not turn into product wins, leaders will naturally question how innovation is spawned, cultivated and commercialized.  While idea generation and marketing are crucial, one important way to increasing innovation may lie with the R&D process itself.  New research on the drug industry from the consultancy Booz & Co. suggests that midlevel managers may hold the key to improving the odds of innovation success.

Despite dramatically rising R&D spending over the past decade, drug companies have little to show for it.    Moreover, increased pharma consolidation has saddled large firms with bloated R&D departments that suffer from cumbersome bureaucracies and diseconomies of scale.  A variety of process, structure and collaboration strategies have been tried to improve R&D productivity – the ratio of R&D inputs to product outputs.  Unfortunately, most of these initiatives have not met expectations.  Not surprisingly, one industry leader dubbed the past 10 years the “lost decade.”

Booz studied R&D productivity in 15 leading academic-based pharmaceutical firms.  The study concluded that breakthrough innovation and problem solving occurs when individual scientists connect their own subject matter expertise to similar work being undertaken by their peers. One example of this was when Albert Einstein credited the discovery of his theory of relativity to his discussions with his peer, the engineer Michele Besso. 

Typically, organizations attempt to generate rich scientific interactions by executive decree, through traditional networking activities or by changes in their management systems, such as new measurement tools or reward schemes. Unfortunately, these strategies often fail to meet expectations, for a variety of reasons.  For example, in large companies the R&D leaders who set priorities and control resources are often too far away from the action:  the most creative scientists; high potential opportunities in technology adjacencies and; the mechanisms that generate deep and regular collaboration. Furthermore, even the most cutting-edge innovation strategies will suffer if the people implementing and managing them can not (or do not) exert the right kind of leadership.  I’ve witnessed these subtle organizational barriers in such diverse industries as consumer goods, software, telecom, aerospace and healthcare.

According to Booze, firms should focus on elevating the performance of middle managers in order to trigger serendipity-based innovation.  This key group has the mandate and ability to identify, connect and manage the crucial interactions between scientists, product developers and customers.  Business leaders can optimize middle management performance through a variety of measures, such as:     

Enable and empower midlevel leaders

  • Remove overlapping roles and responsibilities to avoid duplication and political strife while ensuring key activities are being executed;
  • Ensure senior, middle and project managers have the appropriate authority and autonomy to avoid decision making paralysis;

Optimize information rights and collaboration

Enhance the function

Improving middle management productivity is a tall order for any organization, but especially for those in dynamic, knowledge-intensive sectors. To be successful, senior leaders will need to adopt an innovation approach that combines talent management, organizational design and cultural tweaking.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Is Busy Work Choking your Organization?

Why are people working harder and longer than ever before but accomplishing less?  One hypothesis is that they are victims of a syndrome known as Busy Work (BW).  Simply put, BW is non-essential yet chronic organizational activity that does not link to value creation.    BW is pervasive among individuals and groups regardless of level and department;  it is often visible to casual observers as well as managers. For the individual, examples of BW include regular meeting attendance on an observer-basis only; spending an inordinate amount of time on analytical activities and; producing reports that are not reviewed or acted on.  Worryingly, employees often don’t even realize they are wasting their time and others, instead viewing their efforts as plain (and often frustrating) hard work.  In most cases, their managers are part of the problem.  They encourage and reinforce BW by rewarding its behaviors through political support and positive performance appraisals. 

BW exacts a large cost on organizations.    BW complicates resource allocation, slows down execution speed and generates higher labour costs through reduced productivity.  BW’s more subtle impact includes decreased employee satisfaction, poor strategic alignment and reduced focus on critical tasks.  In my experience, up to 60% of a firm’s junior and senior staff directly undertake BW activities, wasting anywhere from 20-50% of their time on an ongoing basis.

BW is often found in large organizations with high degrees of complexity (product, supply chain, process), geographic dispersion, and an inward-looking or dysfunctional culture.  Typically, these enterprises compete in mature markets with low long planning cycles and low levels of dynamism.  Industries prone to BW include Banking, Healthcare, Communications and Insurance.

How do you know if your organization suffers from BW?  The following are some tell-tale signs:

  • An employee’s work is not consistent with their job descriptions;
  • There are misalignments between corporate strategies & goals and what people do;
  • Email in-boxes are regularly filled at the beginning and end of each day;
  • Widely-attended, unstructured meetings take up a majority of an employee’s time;  
  • People regularly produce reports or memos that are ignored.

The only way to minimize BW is to address the root cause of the problem: namely, work habits, corporate values and measurement systems.  Senior leaders need to take a top-down approach to organizational performance by triaging attention and resources on core activities, streamlining processes and empowering the right employees to make decisions.   Some strategies to accomplish this include:

  1. Drive down decision making and empowerment to the right individual and team;
  2. Utilize standardized communication templates;
  3. Deploy knowledge management tools to foster a free circulation of information;
  4. Mandate individuals who propose change to implement their work;
  5. Reduce the amount of staff activities (read: administration) on key line functions;
  6. Articulate succinct strategies with goals, and cascade them down &  across the organization;

Reducing BW is not easy as any effort would likely would bump up against vested interests, management indifference and overlapping responsibilities.  Yet, in a cost-conscious and competitive economy, can companies afford not to tackle BW’s pernicious waste of time and effort?

For more information on services and work please visit us at Quanta Consulting Inc.