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Sunday, June 12, 2011

Strategic Innovation and Productivity Management

Strategic Innovation and Productivity Management –
Capabilities needed by every company/group/team

1. Work Flow Maximization - so that there are no delays - Value Flows through the streams; When value flow is maximized, inefficiencies of the stream are minimized. (Please see value, value stream and flow below)

2. Future Road Mapping for the group - in terms technology and products that may become useful - **how do we roadmap future to discover products/tech direction the company need to go to?**

The functions performed by the customer remain constant – however solutions change. Also meaning of products or services can be changed. When we say road-mapping – we look at all the functions that the customer performs and looks at the existing methods of performing that function. Simultaneously we track new technologies through for example continuous patents tracking and products tracking to look at what is coming up. Roadmapping exercises typically look at new ways that are emerging so that the company doesn’t suddenly get the surprises that future typically throws up.

3. Productivity Improvement - briefly - what are obstacles to productivity and what tools we are talking of improving it. Are there ways to measure productivity or its improvement?

The Output/Input definition of productivity is Industrial era definition, the new products, new output are knowledge and information products hence they require understanding of knowledge work productivity.

There are two main metrics which I define as Cacophony and other Process productivity defined by Putnam. Cacophony should be minimized and process productivity should be maximized for end-customer delight. But for each context we need to define specific metrics to measure output of each value stream including knowledge components of the value streams. This requires a deeper look at the work that happens – which is increasingly knowledge, problem-solving and solution implementation work that doesn’t come under the industrial Era organizations definitions.

4. Maximize synergy with other groups in your Company

In a large company many groups work together to create end-customer value through multiple value streams. During the evolution of companies – organic or through M&A, these value streams get entangled with each other to create Spaghetti’s that are extremely difficult to untangle. Through a process of looking at Dependencies and Value streams interaction, one can map the spaghetti and bring to the fore the deceleration that complex spaghetti creates, which leads to minimum synergy and value degradation. Synergy Maximization through the process of untangling value streams is needed in large organizations on a more systematic and scientific footing. This requires comprehensive and strategic focus.

5. Complexity reduction - Entropy Minimization - **what is entropy - chaos?**
Entropy is a term from Information theory and physics which provides a measure of disorder in the system. Complexity means merging of two or more entities in a manner that individual element are not trivially visible. In the organizations that we have created we have increased complexity to generate more and better functions – however we also have increased entropy without being aware of it. This leads to stress on the system that leads to chaos. Chaos is a situation where it is difficult to predict what will happen from a set of given initial conditions.

Some terms:
1. Value: "value," "customer value" and "customer value proposition" tend to be overused, as companies and customers incorrectly assume that the terms are easily understood by one and all. In fact, value may be the least understood concept in business parlance. Value is “Function performed by the system”. Then there are many attributes of the function – timeliness/cost etc. Our problem lies in forgetting about the function and focusing on some attribute of the function or system as a quality parameter and trying to optimize it. This leads to sub-optimal results.

2. Value Streams: An organization creates value for the end-customer for letting him/her perform some function through various steps performed by various actors within the organization. These actors have various skill levels and specific awareness of the work that they perform, but they typically do not have end-to-end understanding. Because of this and many other reasons they actually may be adding wasteful steps in the process or creating delays without being aware of end customer value. This leads to inefficiencies that are hidden from each actor. Someone needs to follow the value streams to create an end-to-end awareness of end customer value. Once this awareness is created all actors/participants become aware of what is adding waste in creating end customer value. Wasteful steps, also called Non-Value Adding (NVA), can be such that one cannot avoid, however, the time spent on those NVA steps can be minimized. The second type of NVA steps are those which can be totally avoided. These steps need to be deleted from the streams. The method requires continuous awareness of what is happening at each step and how each step actually is impacting the end customer value. This leads to continuous problem awareness and problem-solving as a way of doing work – cutting across silos, political equations and beyond limited vision of people’s immediate scope of work. Work actually becomes FUN!

3. Flow: When value flows through the value streams to reach the customer in the time, effort and quality needed by spending only the steps that are needed, then flow is achieved. This is like flow of water in a stream.
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