“Improving processes through innovation can boost productivity by 25%” says Nestor Gismondi (2/2)

Recently, Nestor Gismondi and I talked about how to improve process productivity by 25% by introducing innovation into corporate processes. Today, Nestor shows how to further improve processes.

I/ Toyota make workers critically important

However, in the 70s, Toyota introduced a new kind of production process, which is often referred to as “lean management”.

• In this process workers and employees in the company are asked participate in improving existing production processes
• They are knowledgeable because they know very well and in minute detail, the production process simply because they work on it. Unlike top engineers that have a bird’s eye view of the production process, employees know a specific part of the process in great detail
• Therefore they are the most competent to improve the process

Toyota developed the capability to collect small ideas that were generated by its employees. When added together, all of these small ideas helped to improve productivity dramatically. As a consequence, many Western companies have introduced this kind of employee generated innovations into their production process. A good implementation of the Toyota Production System (TPS) in a European company can drive a total productivity increase of 25 to 30%. Amazing isn’t it? But an often underestimated challenge in western companies, is that the TPS is a “socio-technical” system, we tend to forget the social aspects of the system, the “shared philosophy” undelaying it.

II/ A third innovation process

Nestor is currently working on a third innovation process. This process builds upon what Toyota has been doing and incorporates consumer input. Companies have a tendency to impose things onto their consumer. Think about the last time you went to buy a new car, or a mortgage. Most of the time, companies will impose onto their consumers the delivery date. Companies would be well advised to ask their consumers or clients when they would like to retrieve a purchased good, whether it’s a car, a computer, or any other thing or service where the delivery date is different from the purchase date.

In any case, companies usually don’t collect this kind of information from their clients and they promise to deliver their goods at a given time. Sometimes, they fail to deliver product at the promised time and products delivery is differed by a period of time. What Nestor is working on today is collecting information on delivery dates. Therefore, he collects every single promised delivery date and compares it to be effective delivery date. This leads to a distribution curve, such as the Bell curve as indicated below.

This shows that there basically three possibilities:

• Companies may deliver their product before the date they had promised
• Companies may deliver the product right on time
• Finally, companies may deliver the product after the promised date in which case they are late

And an imposed date is rarely the ideal one, late is always bad, and contrary to a common assumption, earlier is not necessarily better for the consumer (and always bad for the producer!).

So, Nestor collects all information related to product delivery dates. And he does this every single day, every delivery, in a continuous fashion. Then, with his client, and with his client’s employees, he looks through every single product delivery. He tries to answer the following questions for every single product which was delivered late:

• Why was a product delivered late? Or earlier? What are the causes? What are the reasons?
• What could be done to improve the existing process? How to improve the existing process given all of this collected information?

III/ Defining an efficient process

Nestor also says that an efficient process

• is not a process that delivers the product before the promised date
• nor is it a process delivers a product after the prompt state

And once the process had the capability to meet the promised date, we collected the customer WISHED delivery date and started to systematically meet it.

A perfect process is a process that delivers the product when the client wants the product to be delivered.

Our discussion revolved around the example of product or service delivery but, the same kind of reasoning could be applied to other issues including project delivery. Some very large industrial clients are working on complex industrial projects which combine thousands of very different projects. All projects need to be finalized at a given time for the overall project to be finished in time. When the project is not meeting the promised timing it is because there are thousands smaller projects that are failing to meet expected timelines. This requires

• analyzing every single project
• understanding why there is difficulty in meeting timelines
• Identifying what can be done to meet them in the future

So, this is how to incorporate innovation in processes. How would you improve corporate processes? How would you build innovation into processes?