Often used interchangeably, process improvement and process innovation are actually two different concepts that can affect your business in separate ways. Implementing each requires a different skill set and a different long-term vision. While a process improvement can be a component of a process innovation, the two concepts have different end goals. The key to using them appropriately is knowing the difference and how each can benefit your organization. Here’s how they stack up:
Vincent Mirabelli, Principal, Global Project Synergy Group; firstname.lastname@example.org
Vincent will be speaking at the Business Analysis Conference Europe 22-26 September 2018 in London on the subject, ‘Driving Innovation with 20 Questions‘
When we say process improvement, we’re talking about enhancing or adapting one or more specific steps in a process. Usually this is done with the goal of making a process more efficient or generating different results. An example of this could be having customers at an administration desk take a number before their appointment, instead of checking in manually with a receptionist, or a different way of packaging products before they’re displayed to the public.
In the first example, this could lead to a reduction in staffing costs, paired with an increase in the number of patients that are seen, increasing both the clinic’s profitability and increasing efficiency. In the second example, this could lead to more sales of a particular product and a decrease in waste or packaging time. You’re looking at this in a very systematic way, searching for specific improvements to your organization’s efficiency and effectiveness.
Process Innovation is the act of creating an entirely new aspect of a process – or even overhauling the process itself – to reach a different market, grow your business or disrupt a particular industry. An example of this is the idea of using an app to access and pay for an Uber, instead of calling for a cab. Or, for example, using software to deliver remote learning, as opposed to traditional on-campus education. These are not just process re-works, they’re entirely new ways of providing service and reaching a client base.
The two terms become confusing because a process innovation could, in fact, involve a process improvement. It’s also possible that an improvement could pave the way for an entire innovation. The key with process innovation is that while it can certainly improve a process, that’s only part of the equation. A true process innovation shifts a process into something completely new, engaging and different. In extreme cases, it can mean the overhaul of an entire industry.
Why does it matter?
It’s important to be clear on the difference between these two terms and the role they play in your company because they require different skill sets and different approaches.
Process Improvement is a very systematic undertaking, requiring more of an analytic approach. The end goal is usually quantifiable; to increase profits, decrease wait times, to multiply the amount of items produced, or to increase engagement. For this reason, a process improvement, when executed correctly, usually results in a more efficient or effective process.
Process Innovation has a much larger scope and requires elements of analysis, but also a strong sense of creativity. While process innovation usually has a goal in mind, it often has elements that are less tangible. For example, look at the online grocery delivery service. Shifting the way buyers interact with merchandise may increase sales – a very tangible result – but it has also revolutionized food retail the industry in ways that are harder to pin down. Anyone who studies sociology or psychology can certainly speak to the way that online shopping has shifted the way we look at the world and the way we interact with it, but this is not necessarily a quantifiable shift.
Asking someone to evaluate a system and recommend ways of streamlining it is vastly different than asking an individual to tap into their creative, innovative side and overhaul an entire concept, which is why it’s imperative that leaders and business owners understand the difference between these two terms.
While it’s possible that a single individual may have the skill set to handle both these tasks, ultimately, they’re two separate procedures and will require two separate workflows and schedules.
It’s also worth noting that there are systems and principles that are popular in the process improvement sphere, like Lean and Six Sigma. These are common ways that organizations approach the task, but you can’t really say there is a standardized set of principles for implementing process innovation. It replies so much on creativity and scope that it’s harder to plan for, and it’s certainly not something that companies undertake as regularly as process innovation. Indeed, a business may go its whole lifespan without undergoing any type of process innovation.
While it’s not uncommon for a process improvement to lead to a process innovation, in reality the two concepts have different approaches and different end goals. Many people confuse the two terms, and, indeed a process improvement can be one aspect of a process innovation, but an organization will use each in a very different way.
While there are training methods and principles commonly dedicated to process improvement, the business world has yet to standardize any kind of system for process innovation, in part because it’s so intangible and such a large-scale undertaking.
Your company may benefit from a process improvement approach – resulting in driving sales or decreasing production time – or it may be ready to look at a process innovation; maybe changing the way your products are produced entirely. Knowing the difference is the first step to helping shape, enhance or innovate your organization’s process.
Vincent Mirabelli is a leader in the fields of business process improvement, business analysis and Lean Six Sigma, and lives by the simple phrase, “the world runs on process”, with the goal of fixing it, one process at a time. A highly sought after speaker and instructor, Vince’s primary focus has been to share his knowledge and experience, helping businesses achieve optimal project and process outcomes. He is a certified Project Management Professional (PMP®), Certified Business Analysis Professional (CBAP®), Certified Customer Experience Professional (CCXP), and a Lean Six Sigma Master Black Belt.
Copyright Vincent Mirabelli, Principal, Global Project Synergy Group