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Innovation and competition: Start with your business processes

Innovation is key to keeping your organization competitive, and successful innovation plays a fundamental role in increasing your productivity and growth. However, you may fail to realize the important role that information flow plays in fostering this innovation — and the need to optimize your business processes in order to make effective use of that information.

In a global study of more than 1,700 board-level executives, PwC1 found that two-thirds of the more innovative companies identify innovation as a competitive necessity. Ninety-three percent of these executives say that the greater proportion of their future revenue will be driven by “organic growth through innovation.”

Building an innovative culture

There are many factors that contribute to building an innovation-based culture, but I’d like to focus on one: making good business decisions.

In a series of interviews about how larger companies can continue to innovate and grow, Intuit co-founder Scott Cook2 cited a change in how the company made decisions as the top reason for his success at fostering innovation:

“If I had to point to one thing that’s made the biggest difference at Intuit — and there’s a package of things — it was to change how we make decisions, whenever possible, from decision by bureaucracy, decision by PowerPoint, persuasion, position, power, to decision by experiment.”

In order to take the learnings from your innovation experiments and make better, more productive business decisions, you must capture and have ready access to all of the relevant information. For example, how successful was your experiment? Did you really improve your product or service? Ultimately, are your customers more satisfied?

Let’s say manufacturing comes up with a new production process that shaves material costs by 5 percent. Even if you test the material and experiment by putting this into limited production, without complete, up-to-date information from customer service and sales as to how this is playing out in the field, you may be unpleasantly surprised. That 5 percent you are saving in new material may be costing you far more in returns, customer service complaints or brand damage. That is information that you need to know. Unfortunately, actually getting that information can sometimes be a challenge.

Getting the right information to the right people is paramount when it comes to making the right business decisions. But often, information can become siloed within a department as a result of poor information processes—and without this agility, your business will struggle to innovate and thrive. Optimized business processes improve the flow of information throughout an organization and enable you to make better decisions. And ready access to information can even improve your success rates with innovation experiments.

For help re-engineering their processes, many organizations are turning to managed service providers with whom they’ve already outsourced part or all of a specific business process. One reason for this is that it can be difficult for managers in operational roles to carve out the time needed to effectively re-engineer business processes, while service providers are focused entirely on these challenges.

Service providers also have experience with the flow of information throughout an organization, and can examine how information flows across functional areas, or if that information is being siloed and kept away from key decision-makers. These providers bring a broader perspective and the expertise to improve your flow of information. And sometimes this independent, expert perspective can help move initiatives forward, as service providers can give an outside, impartial view of your organization, the challenges it faces and the solutions that can help solve them.

Working with top-notch partners, more and more companies are seeing the business benefits from innovation within processes themselves. Two examples:

  • A service provider for a healthcare company deployed analytics to predict claims more likely to result in rework, saving the client $25 to $50 in administrative costs per single overpaid claim.

  • An aerospace manufacturer working with its provider added new key performance indicators and processes to manage third-party vendors. Customer-order fill rates for new parts went from 60 percent to 85 percent and turnaround times for delivering parts to grounded vehicles from 21 hours to 17 hours.

We’re always looking to help organizations understand and implement what it takes to nurture innovation — the strategies, behaviors, best practices, investments and business outcomes that characterize the most innovative companies around the globe.

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