Bit120 m04 l01 - innovation and change

© 2011 Neumont University

Innovation & Change

© 2011 Neumont University 2

• Business Process– Customer Facing Process vs. Business Facing Process– Process Improvement

• Sources of Innovation and Change– Lean Manufacturing– Kaizen – Six Sigma

• Innovate or Decline

Overview


Customer vs. Business-Facing• Companies have business processes that are oriented toward making the

business operate efficiently and others that result in the delivery of a product or service to a customer.

– Business-facing processes include planning and budgeting, manufacturing & supply chain.

– Customer-facing processes include sales and marketing.

• Businesses may have completely separate departments for these different kinds of activities or there may be some overlap, especially in smaller organizations.

• Companies can improve their performance by making sure that even business-facing processes are responsive to customer demands.


Disruptive Innovation• A disruptive innovation

is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances.

Product Category

Innovation Market Impact

Academia Wikipedia Traditional encyclopedias

Communication Telephony Telegraphy

Computing Hardware

Personal Computers

Smart Phones

Work StationsWord Processors

Personal ComputersLaptops & PDA’s


Sustaining Innovation• Innovation that does not significantly affect

existing markets.– Evolutionary … an innovation that improves

a product in an existing market in ways that customers are expecting (e.g., fuel injection for gasoline engines, which displaced carburetors.)

– Revolutionary … an innovation that is unexpected, but nevertheless does not affect existing markets (e.g., the first automobiles in the late 19th century, which were expensive luxury items, and as such very few were sold)


Value Chain

• Adding value along the path from raw material to finished product.

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Lean ManufacturingA systematic approach to identify and eliminate waste (non-value added

activities) through continuous improvement by flowing the product at the pull of the

customer.


VALUE - what customers are willing to pay for

VALUE STREAM - the steps that deliver value

FLOW - organizing the Value Stream to be continuous

PULL - responding to downstream customer demand

PERFECTION - relentless continuous improvement (culture)

--- Lean Thinking, Womack and Jones, 1996

Key Principles of Lean Thinking


• Improve Customer Satisfaction• Increase Sales and Profits• Insure Long-term Health of Company• Create Sustainable Competitive Advantage

Why LEAN?


Kaizen


What is “Kaizen”?• Kaizen means “continual improvement".• It is a Japanese workplace philosophy which focuses on making

continuous small improvements which keep a business at the top of its field.

• The philosophy involves everyone in the organization – managers and workers alike – and urges them to make never-ending efforts for improvement. – For example, in Japanese companies, such as Toyota and Canon, several

suggestions per employee are written down, shared and implemented.


The Origin of Kaizen• The foundation of Kaizen was laid in Japan after the Second

World War, when the country was attempting to rebuild infrastructure and rethink many systems.

• Several American experts on workplace improvement including W. Edwards Deming and Joseph Juran went to Japan to lecture and teach.

• Using information from these individuals regarding the Training Within Industry programs, the concept of Kaizen began to be formed and it took off in the 1950s.


Post War Japan


Post War Japan


Kaizen : Key principles The first is a heavy reliance on teamwork, in which everyone's opinion is

valued and considered.

Workers also have strong personal discipline, and morale in factories must improve under kaizen.

Workers should also be confident about offering suggestions for improvement, even when a system appears to be functioning adequately

Kaizen recognizes that there is always room for improvement

Finally, the system uses quality circles, worker groups who meet and work together to solve problems and come up with innovative changes.


Quality Circles• A quality circle is a volunteer group composed

of employees, who are trained to identify, analyze and solve work-related problems and present their solutions to management.

• This improves the performance of the organization, while also motivating and enriching the work of employees.

• First established in Japan in 1962 in the Nippon Wireless and Telegraph Company, it quickly became popular and spread to more than 35 companies in the first year.


“5 S” in Kaizen1. “Seiri” (Sort): Tidiness, keeping only

essential items.

2. “Seiton” (Set In Order): Orderliness, eliminate extra motion.

3. “Seiso” (Shine): Cleanliness, keep the workplace clean.

4. “Seiketsu” (Standardize): Standardize work practices

5. “Shitsuke” (Self Discipline): Sustaining, maintaining discipline and reviewing standards.


Six Sigma• Quality Management System.

• Set of techniques and tools for process improvement.

• Measure of quality that strives for near perfection.

• Disciplined, data-driven methodology focused on eliminating defects.

• Developed by Bill Smith at Motorola in 1986.

• Jack Welch made it central to his business strategy at General Electric in 1995.

• Today, it is used in many industrial sectors for minimizing errors, reduction of costs and increase in profit.

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Six Sigma MeaningLevel # / Million % Defective %Yield

1 691,462 69% 31%

2 308,538 31% 69%

3 66,807 6.7% 93.3%

4 6,210 0.62% 99.38%

5 233 0.023% 99.977%

6 3.4 0.00034% 99.99966%

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Six Sigma Principles• Six Sigma seeks to improve the quality of process

outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.

• It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization who are experts in these methods.

• Each Six Sigma project carried out within an organization follows a defined sequence of steps, and has quantified value targets, (for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits).

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Six Sigma Hierarchy• Consider quality above everything else

• Worked on at least 10 to 15 High Impact Black Belt projects.

• Received Black Belt training, and has a detailed understanding of Six Sigma concepts

• Received requisite training for quality improvement, with support from Black Belts

• People with Basic Knowledge about quality.

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Innovate, or Decline• WordPerfect

• Novell

• Blockbuster

• Eastman Kodak

• Blackberry

• Polaroid

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