If you’re in charge of significant processes, then process innovation has to be on top of the agenda to stay competitive. It’s a matter of bottom line and top line impact, and as such, a responsibility that must be executed continuously and successfully. With that said, embarking on this path can mean entering unfamiliar territory. Some questions commonly arise. What is process innovation? What are the real benefits for the company’s precious bottom- and top line? And what does successful process innovation look like in other organizations?
In this article, we provide answers and offer insight into tools that can improve the process innovation practice. It should be a stepping stone that brings anyone, whether you’re a Sales Executive, CTO, Chief of Operations, or leader in another department entirely, closer to a stack of excellent processes providing a true competitive advantage.
What is process innovation?
Process innovation refers to finding and implementing new or improved ways to deliver products or services. Typically, process innovation affects the bottom line, however, it can also have a positive impact on the top line. It is crucial for all departments in an organization because it drives improvements in efficiency, quality, and effectiveness, ultimately leading to better overall performance.
Importance of business process innovation
As change is inevitable, so is process innovation for those who want to maintain their operational excellence. Between evolving customer expectations, changing regulations, and strong competitors, improving working methods and operational tools has become a continuous exercise.
Bottom line benefits of process innovation: Impact on net profit
Inefficient and outdated operations have a significant negative impact on a company’s bottom line. When processes are not optimized, operational costs increase due to wasted resources, unnecessary tasks, and slow production process times. This inefficiency not only leads to higher expenses but also affects product or service quality, resulting in customer dissatisfaction and lost sales. Additionally, outdated operations can hinder a company’s ability to innovate and respond to market changes. As a result, limiting its competitive edge and growth potential. This situation creates a ripple effect where missed opportunities for improvement and innovation translate into a negative impact on the bottom line.
Teams most commonly facing these challenges include Operations & Production teams, Supply Chain Management teams, Finance teams, and HR teams. These three benefits of process innovation stand out when it comes to a company’s bottom line.
- Reducing costs: Implementing more efficient processes can lower production and operational costs, which increases net profit.
- Improving productivity: Streamlined workflows and better use of technology can enhance employee productivity, leading to cost savings and higher margins.
- Enhancing quality: Better processes can reduce waste and errors, leading to cost savings and higher profitability.
Top line benefits of process innovation: Impact on revenue
Where certain teams aim to overcome the negative impact of process inefficiency on the bottom line, others approach process innovation with the top line in mind. Teams commonly tasked with this include Sales & Marketing teams, Customer Service teams, and Innovation teams.
When processes are slow and ineffective, sales cycles are extended, and customer relationship management suffers, resulting in missed sales opportunities and decreased customer satisfaction. This inefficiency can lead to a loss of potential customers and reduced repeat business, directly affecting revenue. Such operational shortcomings can restrict the company’s ability to generate new revenue streams and maintain a competitive edge in the marketplace. Process innovation is thus essential to streamline these operations, enhance customer interactions, and accelerate product development, thereby driving top-line growth and ensuring long-term business success.
These three benefits of process innovation stand out when it comes to a company’s top line:
- Faster time-to-market: More efficient processes can speed up product development and delivery, allowing the company to capture market opportunities more quickly and drive revenue growth.
- Improved customer satisfaction: Enhanced quality and service delivery can lead to higher customer satisfaction, loyalty, and repeat business, boosting sales.
- Competitive advantage: Superior processes can provide a competitive edge, attracting new customers and increasing market share, which contributes to revenue growth.
Best practices: How to manage process innovation
While both bottom-up and top-down approaches to process innovation can be effective, crowdsourcing process improvements from the entire company has proven to be a successful strategy. Just like with other innovation efforts, it’s those who experience organizational processes daily that can spot valuable process changes. Take customer-facing employees for example. As they talk to clients regularly, they’re confronted with product-related pain points and problems with the tools that are used.
The bulk of employees within the companies that are usually not involved in innovation are actually the ones to experience newly implemented processes first-hand. While leadership talks strategy, they are talking about why the newly designed assembly line, marketing software, or recruitment process is not all that great.
5 steps to successful process innovation
So, there’s a 5-step process to successful process innovation. One that’s been proven successful by many corporates that are still reaping the benefits of this approach, today.
1. Identify opportunities for process innovation
Start with conducting a comprehensive assessment of current processes to identify process inefficiencies, bottlenecks, and areas with the highest potential for improvement. An innovation management platform can help crowdsource data and insights from various stakeholders within an organization. Prioritize these areas based on factors such as impact on revenue, cost savings, and strategic importance.
2. Gather innovative solutions and ideas
Then engage a diverse group of innovators to contribute solutions for the identified gaps and opportunities. This group can consist of employees, students, startups, or even suppliers and vendors. Depending on the scale of the project or engagement of the audience, steps one and two can be merged when using a robust platform. Through features like commenting on ideas, making virtual cash investments, and inviting expert judges and voters into the innovation process, solutions can be developed collaboratively.
3. Assess and test solutions
Select the most promising ideas and develop pilot projects or prototypes to test their feasibility and effectiveness. This step, too, is efficiently done using a platform that fosters collaboration. It can help track the different solutions submitted, assign experts to assess key success indicators and measure outcomes.
4. Implement
Once the pilot projects have demonstrated positive results, plan the implementation of these innovations on a larger scale. Create detailed implementation plans, assign responsibilities, and monitor progress. Ensure that all necessary resources, training, and support are in place to facilitate a smooth transition.
5. Monitor and iterate
After implementing process innovations, continuously monitor their performance to ensure they deliver the expected benefits. Use analytics to track key performance indicators (KPIs) and gather ongoing feedback from stakeholders. Regularly evaluate the impact of the new processes and make necessary adjustments to optimize their effectiveness. This iterative process ensures that the organization continually improves and adapts to changing conditions.
Improvement methodologies
While starting the 5-step how-to on process innovation, it can be useful to revisit common innovation frameworks that have been developed over the past decades. Many organizations use a mix of them, integrated into the 5 steps approach, to build their process innovation strategy. Learn about improvement methodologies here.
Examples of process innovation
Today’s industry leaders across sectors are already leveraging advanced solutions to manage continuous process innovation. It’s been particularly relevant for those operating in rapidly changing and highly competitive sectors, such as process outsourcing companies like Majorel and retailers like F&B giant PepsiCo.
Majorel
One of these industry leaders is Majorel. This leader in business process outsourcing operates on behalf of the largest international brands. To continue delivering services that meet increasingly high client expectations, they used an innovation platform to improve their business processes.
They opened an idea box with Agorize, which invited customer-facing employees to submit their ideas for improvements. The RoI was observed fast. Within just a few months they saw a 50% improvement in processing time and 3x faster skills transfer to new recruits.
Learn more about Majorel’s success story.
PepsiCo
The global F&B group PepsiCo wanted to accelerate and improve its product development process using an open innovation program. Teams of employees were invited to submit ideas that would evolve the product portfolio and take the PepsiCo Group’s sustainability to the next level.
After an engaging few months of submissions and assessments through virtual cash investments by fellow employees, the winning team’s idea went to market at a tremendously improved speed. Go-to-market time was reduced from 24 months to 9 months thanks to the use of Agorize’s efficient innovation management platform.
Learn more about PepsiCo’s success story.
Conclusion: Accelerate the innovation process
Process innovation, in all sectors, is crucial for organizations striving to maintain their competitive edge and operational excellence. As organizations face continuous changes in consumer preferences, technological advancements, and regulatory environments, process innovation becomes essential for sustaining growth and profitability. Structured approaches to innovation help companies positively impact their bottom- and top line.
Leveraging advanced innovation management platforms to achieve this can catalyze this process, enabling a more collaborative, transparent, and efficient environment for idea generation and implementation. As showcased by examples from Majorel and PepsiCo, these platforms an enhanced innovation process. In essence, the pursuit of process innovation is not merely about incremental improvements. It is also pivotal in driving substantial enhancements in both the top-line and bottom-line results.
Ultimately, by fostering a culture that embraces continuous improvement and leverages technological tools, organizations can not only adapt to but also anticipate changes in the business landscape, ensuring long-term success and resilience. As we move further into the digital age, the ability to innovate processes efficiently will increasingly distinguish leaders from followers in every industry sector.
