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Peter Drucker can be seen as the founder of scientific management, calling for the collection of data and deliberate decision making towards specific goals. This concept is what allowed the United States to shift from a civilian to wartime economy and produce more tanks and planes in six months than the Germans though the US could produce in five years, allowing the United States to win World War 2. While that is in the past, Drucker’s insights on the methodical cultivation of innovation and process improvement remain not only relevant today but intertwined with the steps you need to take to improve your operations tomorrow.
Drucker’s Four Questions on Innovation:
1. What do you have to abandon to create innovation?
Drucker considered the most important and most difficult step of innovation. You must abandon what is no longer profitable, the products and services that are on the decline, the zombie projects that take up time and resources from the future bread and butter of the company. And you have to abandon projects that were tried and failed instead of continually trying to launch what won’t fly in today’s market, so you can develop what will work.
2. Do you systematically seek opportunities?
Does your business have a plan to identify new niches or customer market segments for existing products? Do you have processes to capture customer suggestions or do focus groups to identify what you can improve in your current product, service of it or distribution? Do you capture ideas from your own staff on how to improve your processes or procedures?
3. Do you have a disciplined process for converting ideas into practical solutions?
This question is the keystone of most continuous process improvement methodologies. Do you have a disciplined plan for measuring the as is state of operations, quality, delivery or other requirements of quality? After you’ve determined opportunities, you have the ability to plan how you’re going to make changes to better meet customer requirements or meet them for a lower price, with fewer resources or better performance.
Perhaps you’re implementing lean concepts to reduce waste and earn environmental certifications the customer sees as a mark of distinction. Perhaps you’re using Six Sigma to improve the quality of your product or improve the manufacturing process to reduce rework and its associated costs. Incremental improvements in the efficiency and performance of the production line can reduce manufacturing costs and improve profits, though whether this results in lower priced products or margin to integrate new features for the same price depends on the product itself.
All of these continuous process improvement methodologies are a variation of the plan–do–check–act Deming is credited for or Define, Measure, Analyze, Improve and Control cycle.
4. Does your innovation strategy work?
You have to have a plan to define the state of operations, collect the data, determine how best to proceed, make the changes and then verify that the change had the desired effect or verify that it worked. This is where the last step, whether a check or verification, is to make certain the change worked. If it failed, you either roll back the changes or study what to do instead. What you cannot do is make changes, assume they work and move on to the next project.
Another version of the innovation strategy innovation is studying the positioning of the product relative to the customer’s desires, expectations and position. You may need to alter the product to fit changing customer expectations, develop new products to be first in a new market, adapt to fit market and industry changes, update to integrate new knowledge into product design or business operations or alter your product line to suit demographic changes.
Constantly studying the state of the market and your product’s performance relative to competitors is part of this, and that market analysis, especially the emotional intelligence direct from customers, can give you information you need for future process improvements. For example, if customers expect the products to arrive in five days and your average is four days, many customers are getting their products on days six and seven. Now you know the next process improvement project to tackle – reducing delivery times for those customers.