The words ‘new thinking’ and ‘innovation’ are used interchangeably about “the creation of something new”. They indicate renewal and hence a constant change to enable the organisations to match the relentless pressure from globalised markets, customers, suppliers and competitors, and the rapid flow of information. This change must constantly differentiate itself vis-�-vis other companies and add extra value to the main players in the business model. One alternative is the creation of new products/services; the other is the implementation of improved, more optimal processes. Hence there are two varieties of innovation, which are, by definition, quite dissimilar. One is product/service innovation, which is focused on the end result of the organisation’s value chain.
The other is process innovation, centred on the activities within the value chain. Organisations have a tendency to concentrate on one of them – either new ideas or new processes – in line with the theory of “lean production”. In reality, both are closely linked, as is evident from the illustration below. Figure 1. Innovation in perspective The figure shows that there is interaction between the two approaches, where new ideas are generated and efforts are made to optimise the process within the life cycle of the product/service. The more these types of innovation act in concert and the closer they are in time, the better. This interaction creates a constant flow of innovation within the organisation – a fast and continuous development.
It is a process that typically switches between externalisation and internalisation and where the boundaries of innovation are constantly challenged. Boundaries are here defined as self-imposed perceptions of reality. The interaction between product/service and process innovation also means that the external barrier of the organisation – to the customers – is eliminated. The customers are invited to join in the process. Internal barriers are eliminated as well between organisational departments, professional divisions, and hierarchies.
The figure above shows a time gap between the two forms of innovation that often manifests itself in real life. In one time period the organisation focuses on generating new ideas, and in the next it concentrates on streamlining the work processes, making them “lean”. These are entirely disparate forms of innovation, and organisations often find it hard to grasp them, when each is executed in its pure form and over a long time period. Hence, the effect of this approach ends up being limited due to the long mental adjustment process.
Ignoring the complex world where both forms of innovation are required and focusing on one only will slowly but surely make organisations “blind” to the other type of innovation. They fail to see the need for the other variety and may even be apprehensive about leaving the “simple world” of having only one form of innovation. This will slow an organisation down and make it rigid and unreceptive towards processes of change. This is, however, an acquired “blindness” which can be overcome.
Human beings are, actually, very complex and have an enormous brain capacity and ability to adapt. One only has to consider the human evolutionary process in order to realize that here is the evidence of an extraordinary ability to adapt to changing circumstances. Organisations are the same. Here the complexity and capacity to adapt is multiplied, since there will always be someone within an organisation who can contribute to the solution of a problem, provided he or she is given the opportunity to do so. A key condition for giving each employee the freedom to make a contribution to the common talent pool is that the restrictions for innovation be eliminated, externally as well as internally. The following section will take a closer look at the ability of the organisation to create new thinking.
Innovation Launch Blue and Red Oceans The Organisation and the Customer Released Energy 4. How innovation manifests itself in organisations Both types of innovation need to be applied in the most functional manner. That means incorporating both, not just one or the other. It means adopting a holistic perspective, utilising the complexity to launch the innovative process and involving the entire organisation. It may sound complicated, but it really is not, provided organisations are prepared to move or drop some of the barriers that normally exist within the organisational framework. Certain systematic guidelines are required to avoid disorder, but generally there should be as few systems as possible. A touch of chaos promotes innovation. The secret is to open the gates to new thinking while simultaneously optimising the value chain – i.e. adopting a “lean” strategy.
One way of implementing this strategy is described in the book/concept “Blue Ocean Strategy”1, where the authors coined the phrase “value innovation”. The concept incorporates not only innovation defined as pure new thinking, but also innovation as an added value to the company. The book switches between Red and Blue Oceans, representing the continuous shift between products/services and process optimisation. The book still retains a barrier, which, in the opinion of this author, poses a heavy restriction on innovation. It is the barrier between the organisation and the customer.
Breaking this barrier will release enormous amounts of energy for both product and service development and also for process optimisation. -It is necessary to go the whole length – even though to some organisations it may seem a scary approach. In reality, it is not hard, and the proposal will undoubtedly be very well received by the customers. At last someone is genuinely interested in supporting them, not only in negotiating prices and business terms.
