If you’re doing it properly you can.
Innovation can always be applied directly to cost reduction through Lean strategies and process improvement. However, the bigger fish to fry is always going to be through new ideas that lead to increased revenue. This is often considered a luxury during lean times. Implementing an innovation capability initially seems to be a resource overhead as new processes need to be integrated, skills developed and ideas managed. In addition to the blue sky opportunities to build revenue, organisations should consider the additional benefits that occur when building an innovation capability that will naturally reduce cost.
How an innovative organisation reduces cost
Helping the organisation to become more agile
Innovation projects must be agile to maximise the chance of delivering something of value to the customer. Agile methods and approaches should not however be restricted to innovation. Agile is a philosophy that can help the whole organisation transform. Introducing agile through the innovation capability and encouraging agile values to filter up through the organisation will spread benefits such as:
– Putting the customer / end user first when planning and designing new products, services and projects.
– Embedding a culture of continuous feedback and learning to improve everything the organisation does.
– Encouraging a more open and collaborative organisation that is built on trust.
– A focus on getting things done and delivering real value.
Agile is a philosophy that need not be restricted to software development. Driving agile upwards in the organisation so that leaders can embrace and support new practices can help to reduce cost across the organisation. Leadership approaches to agile such as APMG Agile Programme Management and Axelos AgileSHIFT can help to inform leaders in the organisation of the benefits.
Creating a culture of continuous improvement and ideas
An innovation capability that encourages new product ideas from employees, customers and other stakeholders will also encourage an environment of continuous improvement. When people are asked to think about new ways of doing things they will naturally look at their immediate environment and find things that can be changed and improved. This will seed ideas that help the organisation to reduce bureaucracy and improve efficiency. The same idea management process that is used for new product or service ideas can be used to filter continuous improvement ideas. Inevitably people will use the process to submit these ideas anyway, so operational stakeholders should be engaged to process those ideas.
Improving cross departmental collaboration
Innovation will often require multi-disciplinary teams to work together on initiatives. This is often counter to how the organisation works. Existing processes that are well embedded are designed around teams and silos so working outside these silos does not typically occur. Innovation breaks down these barriers as new ideas require different functions to work out how something new can be integrated into the organisation. This helps to build a culture of collaboration across departments, geographies and skills. Initially this collaboration can seem clunky and it results in more questions than answers but, after a few projects, new cross-collaborative networks are created and working collaboratively becomes second nature.
Building creative skills in the organisations
Simply asking people to contribute ideas and suggestions forces them to think creatively about what they do. While some people are naturally creative others are happy just to do things as they’ve always been done. Creative workshops, meetings and training can help employees to tap into their natural creative ability and think outside the box. This can help people to see the organisation less as a functional machine and more as a flexible and responsive entity that is always changing. Creativity will help the organisation respond to change more quickly as people become more open minded about how their work is delivered.
The risk of not innovating
Finally, it should not be under-emphasised how risky it is for organisations to de-prioritise innovation. A single minded focus on the bottom line will ultimately result in market impassivity. In the digital age change is accelerating and new entrants, market disruption and new business models are continually emerging. Organisations must innovate what they do, now more than ever, to ensure their survival. Cost containment is important, remaining relevant is more important.
What does it mean to be an Agile leader – https://www.forbes.com/sites/forbescoachescouncil/2018/06/29/what-does-it-mean-to-be-an-agile-leader/#53435fb74db4
How to be innovative AND cut costs – https://www.inc.com/soren-kaplan/what-do-you-get-when-you-combine-innovation-with-cost-cutting-costovation.html
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