The Need For Change
Automation and AI technologies are advancing at a breakneck pace and showing enormous potential to increase productivity, innovate new products and services, and reduce costs. However, history has shown us that large-scale business transformations with complex technologies often come with significant business risks or promised benefits that fall far short of expectations. Even worse, successful programs that achieve their short-term objectives are often dismantled to save costs.
Innovation Excellence Operating System
An innovation excellence operating system (INEX) is a separate but essential management system needed to foster and sustain the continuous innovation of customer products, services, and operational processes. INEX uses Lean, Agile, and DevOps methods to enable strategic improvements, innovation, rapid execution, and flexibility while managing risk. A critical requirement is its capability to integrate sophisticated technologies like automation and AI into products and processes. Its organizational structure is more like a startup, a dynamic network of creative innovators who operate with speed and agility. INEX also operates in parallel and integrates with the current management system in place, with no increase in operating costs needed.
Performance Excellence Operating System
In contrast, the performance excellence (PEX) operating system dominates organizations today and is tasked with delivering consistent cash flows and profits using methods such as Lean Six Sigma and Total Quality Management to enable world-class quality, high efficiency, and cost reduction. It has a hierarchical organizational structure that is seen in most companies. In PEX, change is inherently slower with strong risk aversion, which tends to worsen as a company grows and matures. Scores of leaders and initiatives have ultimately failed to change the hierarchy-based management system to respond in time to seize shifting market opportunities or transform operations.
Scaled Agile Framework
An excellent starting point for building out an effective INEX is leveraging a scaled agile framework such as SAFe, Nexus, or LeSS. Scaled agile frameworks are designed to deliver enterprise-wide product and process innovation continuously and improve benefit realization while managing risks. The frameworks are adaptable to any industry, both service and product-oriented. In the entrepreneurial spirit, they are launched quickly at low cost with appropriate executive support, planning, and expert coaching and training. The initial rollout can start in one part of the enterprise and grow and accelerate organically into other parts of the organization.
Although there will be dual management operating systems in place, that doesn’t mean you start building another silo with full-time staff and redundant responsibilities. The two systems need to partner and collaborate and can share resources when required. Some limited capital cost allocations may be needed to implement INEX, but operating costs do not increase; they are shifted to a new way of working together.
Moving Forward with Speed and Agility
Frontier firms are effectively adopting digital technologies at an accelerating pace and are being rewarded with higher productivity, increased profits, and growing market share. Most already have their innovation excellence operating system in place and are reaping the benefits. They also may become the next industry leaders as they rapidly increase scale and grow with exceptional products and services.