Process design and process innovation

This chapter goes deeper into process design and process innovation: the human side, the four elements of process design, types of process innovation, and how product and process innovation relate over the life of an industry.

People and process innovation

Innovation in operations often comes from employees who work with the processes every day. Managers should create an environment in which employees suggest improvements, design workplaces that support communication and learning, and align technology, workflow and job design. Successful process innovation requires attention to both technical and human factors.

Four elements of process design

These elements are interdependent: a change in one element often requires changes in the others. More automation (process technology), for example, changes the skills and roles needed (job design).

Incremental and radical process innovation

Process innovation can create significant competitive advantage but often gets less attention than product innovation because it is less visible.

• Incremental process innovation: improves existing operations; focus on efficiency, quality and cost reduction.
• Radical process innovation: completely redesigns production systems; often accompanies new factories, technologies or business models.

Process industries

Process industries (for example food processing, chemicals and packaging) typically have high production speed, short throughput times, rigid process control, high capital investment, limited flexibility, standardized products and low product complexity. Because volumes are so large, small improvements can generate substantial financial benefits.

Job shop versus flow shop

These are two ends of a spectrum; industries position themselves at different points on it.

Relationship between product and process innovation

Most innovations contain elements of both. Product innovations often require process changes, and process innovations can improve product quality and competitiveness. In highly differentiated markets the emphasis lies on product innovation (competition on unique offerings); in standardized markets on process innovation (competition on cost and efficiency).

Abernathy and Utterback: product versus process innovation over time

This transition reflects the movement from exploration to exploitation.

Barriers to innovation over time

In the early stage the questions are technical and market-related: does the innovation work, and does it solve a real customer need? In the mature stage resistance comes from existing systems, organizational routines, vested interests and fear of disruption.

Manufacturing and R&D

In process industries, innovation success depends on close coordination between manufacturing, engineering and R&D. Process innovation is often the main source of competitive advantage there, because production efficiency directly affects costs and profitability.

Stretch

Stretch is continuing innovation after major investments have been made: improving production after a factory is built, learning effects from repeated production, and incremental optimization of equipment. It stresses continuous improvement rather than redesign. Managers must allow experimentation and process changes even after production systems are operational.

Application development

Application development means adapting products to specific customer needs, such as modifying machinery for a particular customer or improving performance for a specific application. It creates extra customer value, strengthens long-term relationships and bridges the gap between supplier capabilities and customer requirements.