Change Management and the Structure of Innovation

Often innovation is cast in the minds as a pure product related process. Apple’s iPod to iPhone to iPad, for example, is, perhaps, a perfect reflection of how most people would define innovation. But innovation doesn’t have to be limited to product design and new product ranges. It also encompasses process and structure, where change management techniques and best practice need to be employed.

Innovating processes

The innovation of a process is focussed on how something is done and seeks to improve for time, cost, and experience.

Businesses rely on finding and retaining new customers for their services or products, and consumers want new (and even existing) products and services at great, value-for-money prices. This dual desire was and still is, met by things such as collectors’ stamps loyalty cards, and the like, in a centralized strategy.

Nearbuy saw the desires of both parties as mutually inclusive and created a whole new business – which has spawned an entire industry – from them. It caters to the needs of businesses wishing to gain customers while simultaneously fulfilling the desire of customers to ‘get a bargain’.

Of course, the internet has been a driving force behind process innovation. It used to be, for example, that you would speak to an insurance broker and pay commission to find the best car insurance deal. Now sites like comparethemarket.com.au do that job for you at the click of a button and a fraction of the cost. Amazon revolutionized the book selling industry and is now doing the same for the publishing industry.

The structure of Innovation

Companies that want to produce groundbreaking new products, enhance the customer experience through new processes or create cost savings and higher earnings through internalized process innovation first need to create an innovative culture. For many, this is a big change, management needing to empower employees to think differently.

The rewards can be huge when undertaking such change, however. Take Google as an example. Considered one of the world’s best companies to work for, it encourages its people to take responsibility for new ideas. It promotes staff interaction and hires staff by committee. At weekly meetings, it encourages feedback from employees about everything and asks for ideas for products and processes.

Other companies create their own structures to promote an innovative environment:

• Shimano works with focus groups of employees, retailers, and consumers when developing new products.
• At Walgreens, CIIO Tim Theriault made sure that all improvement programs were coordinated through the IT department. More than this, he becomes personally involved with the alignment of management, strategy, and vision.
• Proctor & Gamble established its Future Works division as a purely innovative part of the business. New products and processes are driven from within this division, with staff becoming involved at key stages of each innovation cycle.
• In 2005, Malaysian Airlines was struggling with crippling losses. The new CEO, Idris Jala, set up a network of ‘improvement teams’; 10 to 15 people tasked with identifying solutions to the company’s problems. These teams were diverse in nature, with members from all walks of life and different company functions. These teams were called laboratories, and over the course of the next two years the company streamlined its processes, offered better customer service and cut unprofitable routes.

All of these companies took a different approach to changing their company approach, but the result in each case was the same: innovative ideas that see the organization continue to grow and win customers.

Now, the innovation of structure

A new organizational structure is now being employed by some companies. Named as the ‘holacracy concept’, the idea is that organizations should be structured around the work being undertaken or created, rather than the work assigned to a traditional management hierarchy.

This means that employees don’t have job titles, though may have several roles with clearly identified responsibilities and outcome expectations. And they are likely to work in several different teams, too.

Managers are gone in this system, too. ‘Lead links’ assign and remove co-workers from roles, but aren’t tasked with telling employees what to do. Instead, workgroups self-manage through cooperation.

Poor performers are identified as those that are not in demand: they don’t have enough tasks to fill their time and workgroups decide such individuals are not good enough for their team.

Companies that have adopted this organizational structure, such as Medium, led by Twitter co-founder Evan Williams, and now Zappos, say that the lack of a leadership structure is unimportant and that leaders naturally emerge, usually on a project by project basis.

Zappos are relatively new to this new organizational structure, and openly admit that making and managing the change through to completion is likely to take until at least the end 2014 – and it all started in April last year.

Just like any good innovation, Zappos has started small, experimenting with the process of change and learning from any small failures along the way. Now the innovation of its structure is gathering pace, with the final goal of producing a truly innovative culture, where employees are fully engaged and thinking differently at all stages of their professional career.

Want to Learn More About Change Management?

I’ve created a free eBook on Fundamentals of Change Management. In this ebook, you’ll learn the fundamentals of change management, why it’s critical to achieve business outcomes, as well as tools and techniques to make change work for you. Click Here to Download

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Daniel Lock helps organisations unlock value and productivity through process improvement, project & change management. Find out more about him at daniellock.com.