Developing and Implementing Innovation

The Latin root, nova, in the word innovation means new.

Innovation has shaped our human society and daily lives throughout the ages. Without innovation, there won’t be electric lamps to provide light to our homes and workplaces, long distance-call would not be possible, air travel would have taken days and not hours to far reaching destinations, wireless communication would not exist, and the convenience of online purchases probably a figment of imagination. We won’t have the Internet, iPod, iPhone, iPad, GPS, industrial robots, solar energy-generating arrays today.

The world that we live in is constantly changing. It is changing at a very rapid rate. And change is unstoppable. Today’s solutions will be replaced by far more superior alternatives faster – unlike anything history has ever seen – within a few short years if not months. If companies do not innovate, they may be successful with its current products or services but for only a limited time before they are eventually displaced by competition or disruptive technologies.

Innovation takes place almost everywhere. If we look around us carefully, we will find it prevalent in technology, processes, services, marketing and distribution, and supply chains. We can even find it in business models adopted by very successful companies.

We have seen how economic growth was achieved in the past on the back of technological innovations in semiconductors, biotechnology, the Internet, and telecommunications. The next big wave may see innovation in energy technology. The low manufacturing costs of paints, chemicals, petroleum-based products, glass, sheet metals and assembled goods are the result of continuous process innovation over many years that have reduced assembly steps, labor costs and improved reliability. Viral marketing, overnight delivery service, and direct distribution via the Web are all based on innovations in marketing and logistics. And just-in-time supply system assures goods are on the shelf when people want them eliminating costly stockroom inventories and delays.

In business models, Apple found a whole new approach to generating revenue through iTunes downloads of music files, films, and audiobooks. Dell, through an innovative business model, customizes and sells directly to retail customers cutting out the middlemen. Amazon’s e-book, Kindle, is a new model for generating revenues from text content.

Innovation’s starting point is creativity. There must first be creative ideas before we get innovative solutions. Hence, creativity is the fuel that sparks innovation. Only ideas that are commercialized become innovation.

The challenge confronting business leaders today is how to generate creative ideas for their businesses? How to move from ideas to bringing their innovation to the market? How to combine their innovation with a strategic plan that can move their companies forward?

The answer lies in the leadership that is needed to take the effort through idea generation, working through creative groups, recognizing and seizing opportunities, garnering the necessary support, testing it for business potential, placing strategic bets, managing their risks, positioning for market entry, whilst at the same time ensuring strategic fit.

How to Delegate and Empower Employees

Many managers believe that if they want something to be done right, then they have got to do it themselves. No one can possibly do everything. These managers also forget that management is about getting work done through others.

Delegation involves giving an employee the responsibility for part of your job and the authority to carry it out while you retain control and accountability. Empowerment is very similar to delegation with the added responsibility and authority to make decisions tied to the assignment while you retain control and accountability.

To ensure that things go smoothly when you delegate, you should:

• Make your expectations clear to your employees concerning the quality of the work, time frame for completion, etc.
• Invest time upfront preparing your employees to handle the task well by providing coaching or skills based training.
• Build employee confidence. Praise them for previous work and point up their knowledge and skills. Your staff need to know that you chose them to do a task because of their competence, and most importantly, because you trust them to do the job well.

If you want to truly empower your employees, you need to ensure the following:

• Invest in your employees’ knowledge, skills, and ability.
• Believe in your employees’ ability to be successful.
• Be absolutely clear about your expectations.
• Provide them a safety net.
• Identify those who can and those who can’t be empowered.
• Share information with them.

Delegating and empowering employees have positive benefits. Both build employee abilities, experience, and confidence. Therefore

• Use delegation and empowerment to train your staff members.
• Pick delegates who are confident enough to admit they are encountering problems.
• Make sure that those empowered to oversee tasks are not limited by lack of others’ support, both within and outside your unit.

How to Avoid Common Appraisal Mistakes

The way performance appraisal system is administered and the training given to managers using it probably have more to do with the effectiveness of the appraisal than any other factor.

The most common appraisal mistakes are:

1. Inadequately defined standards of performance
2. Overemphasis on recent performance
3. Miscomprehension of performance standards by employee
4. Insufficient or unclear performance documentation
5. Inadequate time allotment for performance appraisal discussion
6. Too much talking by manager/supervisor
7. Lack of follow-up plan

Inadequately Defined Standards of Performance

What is expected must be defined if the performance appraisal is to have any meaning for the employee, for the organization, and for the rating manager. A clear and measurable idea of effective or superior job performance is the indispensable basis for any performance appraisal. Yet, all too often, it is missing. Managers need to know what they expect of their employees otherwise evaluations cannot be made or defended at the end of the appraisal period.

Overemphasis on Recent Performance

If the manager does not gather data over the appraisal period, inevitably, whatever happened in the early part tends to be forgotten, and he or she ends up basing the appraisal on the events of the most recent month or two. Employees know the same thing and are likely to be on their best behaviour a month or two prior to their year-end appraisal. On the other hand, if the employee happens to be having some difficulty at the time the appraisal is completed, it is just as inaccurate. Either way, the manager is being overly influenced by a particular moment in time which does not present a truly balanced picture which leads to a flawed and inaccurate appraisal.

Miscomprehension of Performance Standards by Employee

Employees must be given adequate explanation of the performance standards by which they are being evaluated or the ratings at the end of the year, even if accurate, may be seen as unfair. They may not perform well in the first place because they did not have a clear target or benchmark to guide them. Employees should know not only what the standard is but also, at least in a general way, how judgments are reached.

Insufficient or Unclear Performance Documentation

Of all the performance appraisal errors, failing to document performance is the most common for two reasons: (1) managers tend to put off the work till performance appraisal is around the corner, and (2) managers seem to share a widespread ambivalence about the appraisal process as a whole. Often managers are reluctant to write down anything negative about an employee. But it is important to point out that a performance record in which accurate positive and negative factors are mentioned will give a balanced picture that is certainly a necessary basis for a plan that will go to work on the employee’s developmental needs.

Inadequate Time Allotment for Performance Appraisal Discussion

If the manager wants to use the performance appraisal as a vehicle to develop employees, help them improve in their current job, and perhaps increase their opportunity for advancement or promotion, then he or she must schedule enough time to discuss the employee’s performance in depth. It should not be merely giving the employee the evaluation but having a meaningful dialogue about the implications of the appraisal.

Too Much Talking by Manager/Supervisor

To get the most out of the discussion, a manager needs to listen as well as talk. The manager may have completed the appraisal but there are still things he or she may need to know. To make the appraisal motivating for the employee, the manager needs to know what that employee is thinking and feeling and to listen carefully to what the employee is saying. This discussion is also a chance to get at the root of performance problems. So both good interviewing as well as presentation skills is needed here.

Lack of Follow-Up Plan

Without a follow-up plan, it is less likely the manager is going to meet his or her objectives. A formalize plan is needed for improving the performance of the employee making it more likely that it is going to happen. The manager also needs to talk with employees about how they can keep, support, and advance the mission of the organization over the coming performance period.

Cut Costs The Smart Way

 

My article was featured in CATS Recruit Section, page C26, of The Straits Times on 11 June 2009. We have it reproduced below for your reading pleasure.

There are costs involved in manufacturing a product or providing a service. In fact, every activity in an organisation costs money. And prudence would have it that money in any business should be well spent or invested.

Cost is, undoubtedly, a key factor to competitiveness. As organisations face the current global economic challenge, the pressure now is even far greater for them to find ways to reduce their operating costs to remain profitable. But it has also become increasingly difficult to compete on price alone.

For businesses to remain profitable and viable over the longer term, companies will have to continue to satisfy the needs of their customers in more efficient ways, demonstrating value for money.

Prominent American quality consultants Armand Feigenbaum and James Harrington have pointed out that 25 to 40 per cent of operating costs result in waste. Separate studies undertaken by the American Society for Quality (ASQ) have also shown that waste can go as high as 40 per cent of sales.

Waste is any resource-consuming activity that adds no value for the customer. For most organisations, customers are the users or consumers of their products, services or both. Clearly, the focus is on external customers. But identifying waste can and must also be applied to the support activities that serve internal customers.

High Costs

In the past, there was insufficient information about production and service costs. Hence, there was limited scope for comparisons and benchmarking. Organisations, as a result, were able to pass on their high costs of production and services to their customers and continued to do so for a long time.

Nowadays, customers are more well-informed about processes and the service delivery supply chain. They are now able to analyse and compare the cost structure of their supplier organisations to determine where they might be able to derive highest value for the money they pay to acquire goods and services.

Limitations

In traditional accounting, organisations may know their total revenues and costs to the penny. But they have no idea how much they throw away every day on plain simple ineffectiveness, inefficiency and waste.

These are not visible on financial reports because traditional accounting methods do not provide a means of separating value-added activity from wasteful or low-value activity. As such, they do not show the high costs of ineffectiveness and inefficiency within the organisation.

Reducing Waste

Since traditional accounting methods have their limitations, the management of most organisations attempt to control inefficiency and ineffectiveness the best they can without proper tools and metrics – resulting in much wasteful activity.

If your accounting systems are of little help and your management practices lack the knowledge to be lean and productive, then how do you identify waste and unproductive costs?

There are two approaches. The first is a variation of cost accounting and is called activity-based costing, or ABC. It is an excellent system for identifying low-value activity, but it has drawbacks. It is a formal accounting system that parallels existing systems; it depends on considerable input from large numbers of individuals who already are working at their time capacity limits, and it requires a high level of system support.

The second approach is one with assessment and problem-solving capabilities and is called the cost of quality or COQ.

Improve Processes

The biggest opportunity organisations have to boost the bottom line comes from improving their business processes. The survival of many organisations is dependent on these improvements.

In many companies, management can make more profit by cutting unnecessary costs in half than doubling sales. This can be accomplished without hiring one new person, building a new facility, or finding one new customer.

Organisations must therefore identify unnecessary costs in the business processes and take action to improve the company’s bottom line.

Organisations must help their employees recognize wastefulness, maintain a high visibility of what these are, systematically reduce non-value-added activities and reducing costs the smart way.

An organisation that focuses on profit may have maximum profits in the near future. But an organisation that focuses on its reputation of being the highest value provider will provide the best return to its investors in the long haul.

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P.S. To find our more about this topic, Register NOW and enjoy early bird discounted fee (by 19 June 2009) for our 1-day workshop at ST701 Professional Development Workshop to be held on 26 June 2009. Please log on to www.jobs.st701.com or email to st701@sph.com.sg. Alternatively, you may also call 6319 5979 / 6319 5923.

Creating An Innovation Mindset – Harvard Business

Do you want to know how to create an innovation mindset?  Watch this video.