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THE POTENTIAL OF BUSINESS EXCELLENCE IN DEVELOPING AN INNOVATIVE APPROACH: the logistics of innovation

Mark BrownHalcrow

Contents

• Exploration of innovation• The feedback loop• Business excellence• Case studies• Conclusions

Innovation: it isn’t just…

• …the R&D department

• …new technology

• …a discrete outcome

Innovation: it can…

• …embrace the wholeorganisation

• …the whole work-force

• …be continuous

…but be challenging to sustain…

Process prevents innovation being a one-off ‘bonus’

Source: Think forA change, LLC, 2008

Process embedsinnovation acrossthe wholeorganisation

Linear approach to meeting market need

strategy objectives approach delivery outcome

Problem/opportunity

Marketneed

…if we keep on doing what we’ve always done, wewill keep on generating the same outcomes…

Iterative approach: the innovation loop

strategy objectives approach delivery outcome

Problem/opportunity

Marketneed

reviewassess

change Learning &innovation

Double looplearning

Nothing new under the sun!

strategy objectives approach delivery outcome

Problem/opportunity

Marketneed

reviewassess

change Learning &innovation

MANAGEMENT BY OBJECTIVES

HARD SYSTEMS ENGINEERING

BUSINESS EXCELLENCE

PLAN DO REVIEW

The fundamental concepts of business excellence

Results orientation

Customer focus

Leadership and constancy

of purpose

Continuous learning,

improvement and innovation

People development

and involvement

Management by processes

and facts

Partnership development

Corporate social

responsibility

Customer feedback

Staff feedback

Leadership

People

Policy &Strategy

Partnership& Resources

Processes

People Results

CustomerResults

Society Results

Key Performance

Results

Innovation & Learning

Enablers 50% Results 50%

EFQM Business Excellence Model

Leadership10%

People9%

Policy &Strategy

8%

Partnership& Resources

9%

Processes14%

People Results

9%

CustomerResults

20%

Society Results

6%

Key Performance

Results15%

Innovation & Learning

Enablers 50% Results 50%

Drivers of innovationStaff feedback

Customer feedback

Responsive tostakeholders

Alignment of organisationTo strategy Process

improvement

Alignmentof partners

Assessment & reviewfeedback loop

RADAR LogicRADAR Logic is applied to all ‘enablers’ to:

• Determine the Results aimed for as part of its policy and strategy making process

• Plan and develop an integrated set of sound Approaches to deliver the results

• Deploy the approaches in a systematic way to ensure full implementation

• Assess and Review the approaches, comparing outputs against expectations and amending approach where required

A focus on results along with assessment and review of outputs against these drives the feedback process

Continuous learning, improvement and innovation

Ingredients for continuous improvement & excellence

• Strategic leadership & direction…to drive change

• Creating strategic linkages across organisation

• Clarity on objectives

• An ability & desire to review progress

• Willingness to change if objectives are not being achieved

Case studies

• Leadership and people

• People engagement & recognition

• Aligning partners through procurement

• Process improvement

• Context: program behind time and over-budget - ‘monster of the deep wreaks havoc’ - threat to remainder of programme. Concluded whole workforce must be engaged in turn-around

• Goals: 20-30% reduction in costs/boat – change in project culture

Source: Murray Easton, World Quality Day, Sellafield, November 2009

Leadership & Innovation: Astute class submarine development

Leadership, teamwork, engagement

• Approach: strong focus on employee engagement and teamwork: Behaviours (sickness, motivation, reward); recruitment; coaching; open to challenge; communication;

• Outcome: employee satisfaction 39% to 80%; absence down by 66%; costs reduced; program returned to timetable and continued

Excellence & Innovation: staff recognition and feedback

• Context: We thought our staff were happy, but…Halcrow staff survey showed poor results for ‘feedback’ &‘recognition’ (10 points lower than any other measure) 2004-7

• Goals: engaged and motivated staff; need to raise BEM score Sample of staff survey results

2000 2002 2004Job Clarity 74 75 75Client Focus 71 74 76Competence 73 74 76Feedback 45 58 58Recognition 54 62 63

Excellence & Innovation: staff recognition• Approach: introduction of monthly ‘gold’, ‘silver’ &

‘bronze’ awards (cash + certificate); line managers to nominate staff; target set for no. awards to be given per month

• Outcome: 2008 ‘recognition & feedback’ score increases by 8 points…improvement sustained in 2009

Recognition score: Staff Survey

58

60

62

64

66

68

70

72

2004 2006 2007 2008

Year

Scor

e

Excellence & Innovation: aligning partners through procurement

• Context: how to align supply chain to your goals (eg: best value in government) and evaluate complex tenders?

• Goals: auditable tender process; value for money

• Approach: Highways Agency; DfT Rail; TfL all applied EFQM ‘Radar’ to structure bidders’ tender documents

• Outcome: alignment of supply chain to client goals; auditable bid appraisal; measureable value for money; many suppliers now using BEM themselves

Excellence & Innovation: process improvement

• Context: Spanish textile company, Inditex, facing growing global competition; major threat to domestic based industry

• Analysis of competitive environment rejected low cost models of others: instead, focus on time

• Goals: ‘adapt offer to customer desires in shortest possible time’

Excellence & Innovation: process improvement

• Approach: introduction of high degree of vertical integration with closer links between design, manufacture & retail by systematic feedback of trend data from stores to designers

• Outcome: Turnaround time from ‘detection’ of a trend to design-on-shelves down to 15 days; Spanish manufacturing base maintained; growth to 2000 outlets in 52 countries

Excellence & continuous improvement

Business excellence winners and control groupAverage % change in performance measures

0%20%40%60%80%

100%120%140%

Stock p

rice

Operat

ing in

come

Sales

Return

on sa

lesNo E

mploye

esTota

l ass

ets

Award winnersControl Group

>Twice as

good!

>Twice as

good!

CONCLUSIONS• Innovation is more usefully viewed as a process (verb)

rather than an event

• Successful firms innovate continuously across the full range of their activities

• Innovation is driven by the feedback loop

• Frameworks exist to hard-wire innovation into firms (& projects) eg: business excellence

• Firms which apply business excellence techniques are more successful, partly because they are more innovative

Thank-you

‘I’d be happy to give you innovative thinking…..what are the guidelines?’