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Fostering Innovation in Mature Enterprises
Dave LitwillerExecutive-in-Residence
Communitech, Waterloo
Overview
• Adoptable innovation practices• Empirical performance gains• Winning framework• Getting started• Overcoming resistance• Preferred practices and areas to watch
Dec. 1, 2011 Dave Litwiller
Adoptable Practices from the Tech Industry
The Toyota Production System(TPS)
Dec. 1, 2011 Dave Litwiller
What TPS Means for Innovation
The expenditure of resources for any goal other than creation of value for the end customer is
waste, and target for elimination
Dec. 1, 2011 Dave Litwiller
Efficiency Gains
• Manufacturing 5* at basic proficiency, 25* at the highest
• Healthcare 60% to 70%
• Professional Services and Consulting 25% to 60%
• Sales, Research & Development 2* to 5*
Dec. 1, 2011 Dave Litwiller
Where to Start
Source:http://www.mbakku.com/STD/CourseSyllabus1-52/1_52/OM-Montri/Leasons%20Learned%20from%20Toyota%20Way.pdf
Dec. 1, 2011 Dave Litwiller
Where Further to Look for Improvement
• Processes Waiting Rework Errors Flawed early assumptions which surface later
• People & Teams Outsider-insiders Anonymized brainstorming Reference class benchmarking
• Five WhysDec. 1, 2011 Dave Litwiller
Dec. 1, 2011 Dave Litwiller
Group Change from Within (I)
• Each member anonymously submits one item for collective improvement which (s)he deems most critical to group progress
• Facilitator aggregates topics, and divides them into member subgroups for a working session
• Each subgroup develops results driven change plans for its topics over the next two hours
Dec. 1, 2011 Dave Litwiller
Group Change from Within (II)
• Each subgroup reports back to the full group with action plans, weekly milestones
• Rank impact and attainability of each plan, and get to work on the most promising with a coalition of willing participants
• Use pilot efforts to build social and other proof points for change to larger group
Getting Started Results-Driven Change (RDC)
Dec. 1, 2011 Dave Litwiller
Productive Incremental Innovation
• Division of solution into a series of non-overlapping increments
• Increments measurable, and consistently interpreted
• Increments implementable under 2 weeks• Adjust plan after each increment• Each increment has to deliver enabled results
Dec. 1, 2011 Dave Litwiller
Finding Resources
• Cut back on administrative overhead in low leverage areas
• Help staff see their own self-interest through longer-term gains from shouldering the load of near-term change
Dec. 1, 2011 Dave Litwiller
Common Myth to Dispel
• The cost of workarounds to quickly interface new experiments with existing operating methods and business processes will eat up efficiency gains
Dec. 1, 2011 Dave Litwiller
Dec. 1, 2011 Dave Litwiller
Dealing with Failure
• Embrace it, especially during the early stages of an innovative initiative
• Early on, failure is ok, as long as it is done quickly and cheaply
• Learn from each failure• Maximum information is released from
experiments having a 50% chance of success
Evolving Toward an Innovation Culture
• Every task, every interaction, every result is a chance to learn and improve – continuous improvement
• Gain energy from small things that go wrong because they are the ways to improve and differentiate – focused creativity
• Management immerses itself in the process of value delivery and directly confronts all the manifestations of waste
Dec. 1, 2011 Dave Litwiller
Preferred Practices
• Don’t jump prematurely from problem to solution. Always ask five whys
• Visual control. Make work visible• Constrained inventory of work in progress• Fast cycles of action, quick changeovers• Control group testing, a.k.a. A/B splits• Bottom-up, concrete projects; top-down support• Reflection events
Dec. 1, 2011 Dave Litwiller
SummaryTraditional Innovative
Benchmark to justify being good Ultimate performance comes from absence of
waste
Volume lowers cost Reducing cost comes from lowering cycle time, removing waiting, trimming inventory, root-cause diagnosis and repair of errors, and otherwise reducing waste
Internal focus Customer focus
Anecdote driven Data driven, rigorous experimentation, empirical
Performance metrics stay the same Tactical metrics evolve, strategic metrics remain
My job is to do my job My job is to do my job better, and communicate those lessons to others so they may do same
1* Speed 1.5* to 4* Speed
1* Efficiency 3* to 10* Efficiency
Dec. 1, 2011 Dave Litwiller
Dec. 1, 2011 Dave Litwiller
Thank-you. Questions?
“It is not the strongest nor the most intelligent of the species that survives, but the one that is most adaptable to change.”
-Charles Darwin-
Dec. 1, 2011 Dave Litwiller
References and Further Reading
“The Toyota Way”, Liker, McGraw-Hill, 2004http://www.amazon.ca/Toyota-Way-Management-Principles-Manufacturer/dp/0071392319/ref=sr_1_7?ie=UTF8&qid=1322495130&sr=8-7
“The Lean Startup”, Ries, Crown, 2011http://www.amazon.ca/Lean-Startup-Entrepreneurs-Continuous-Innovation/dp/0307887898/ref=sr_1_1?s=books&ie=UTF8&qid=1322495184&sr=1-1
“The Principles of Product Development Flow”, Reinertsen, Celeritas, 2009http://www.amazon.ca/Principles-Product-Development-Flow-Generation/dp/1935401009/ref=sr_1_1?ie=UTF8&qid=1322530117&sr=8-1
“Your Company’s Secret Change Agents”, Pascale & Sternin, Harvard Business Review, May, 2005http://www.onlinecoaching-freiburg.de/uploadfile/PDFs/your_companys_secret_change_agents.pdf
Dec. 1, 2011 Dave Litwiller
The Toyota 4 P System
