Processes: Time to Improve or Time to Innovate?

Dr. Phil Samuel and Dr. Michael Ohler

We have all learned the value of continuous improvement and appreciate the discipline of applying Lean principles to map out existing processes and remove waste. But in some cases, companies stop too soon and fail to explore more innovative opportunities.

Some years ago, many retail stores were working on improving the customer experience of buying DVDs to watch movies at home. While they were perfecting this process, Blockbuster disrupted their business by eliminating the need to purchase the movies for one-time watching. While Blockbuster was busy improving the customer experience associated with the availability of movie inventories at local stores and reducing the queue at check-out counters, Netflix disrupted the need for local stores by introducing the mail-in, no-late-fee approach to DVD rental.

Most process improvement initiatives are often paralyzed by their inability to create next-generation solutions. As Albert Einstein said, “The significant problems we face today cannot be solved at the same level of thinking we were at when we created them.” While striving for perfection within your current process paradigm is necessary at times, at other times it’s more important to destroy the very process you’re trying to perfect. How do we anticipate or, even better, exploit such opportunities ourselves? How do we make sure we are not so busy improving that we miss the opportunity to innovate?

Example: The Hotel Lobby

A major hotel chain in Europe set up one of its hotels in a smart spot, near the headquarters of three large corporations within walking distance. The expectation was that the demanding and well-paying business partners and consultants of these companies would love the convenience and hospitality of the hotel. But check-in and check-out times were slow. Consultants were lining up for so long in the morning that complaints about the hassle led one of the “Big Four” consultancies to take the hotel off their preferred list—and the others followed. The consequence was that this premium hotel failed in the midst of a premium location. What could they have done differently?

First, let’s approach the issue from a Lean perspective. Taking a closer look at this process at a hotel, we would notice that customers typically check-in and check-out with a varying takt rate, defined as the pace at which the task needs to be completed in order to meet customer demand. During peak hours there may be several people checking in or checking out every minute or so. Other times there would be very few. Unlike in a production environment, there’s no way to create a “safety stock,” so the dilemma is that we need more resources to service varying demand. Next, we look at which steps in a check-in process are value-creating and which are non-value-added. Queuing until it’s the guest’s turn? That’s inventory or waiting, depending how you see it, which are both forms of waste. Do guests really need to give their name? No, they have done that online already. So that’s another form of waste—rework. In essence, we are left with the value-creating steps, from a guest’s perspective, of “identify myself” and “receive my room key.” In traditional Lean, a team might stop here with the value stream map and work on improving the future state of the process. But by taking this a step further and applying process innovation thinking, we can use the “Lean glasses” and be radical.

Takt Rate: The pace at which the task needs to be completed in order to meet customer demand.

Lean Meets Innovation

The key question to ask is: “What is the job a customer wants to get done?” Then we can identify the “ideal innovation” for the job, the process with only the value-creating steps in it, which will be our sole reference. Once the ideal innovation is identified, we can work backwards to create the best practical solution.

The ideal innovation should provide all the benefits from getting the job done while minimizing all the harm and cost associated with it. In our example, the ideal innovation would be to eliminate the check-in and check-out process and achieve the needs behind it.

Is it really possible to build a hotel check-in process that consists of nothing but “identify myself” and “receive my room key”? It’s not only possible but already happening. On your next trip to Amsterdam, stop by the CitizenM. You will see guests using their credit card at a terminal to access their reservation information and then receiving a room key from the terminal. Similar to the electronic check-in at airports, there are still hotel staff members available if guests need help. But otherwise, this ideal innovation creates a waste-free process.

Not Simple, But Possible

While such a solution may sound simple after the fact of discovering it, don’t underestimate the cognitive journey the team needs to undertake to reach such an understanding of the opportunities ahead of them. But with the right tools and experience, it’s possible to apply both Lean and process innovation to not only realize the ideal innovation, but also implement it. Keep in mind: ideas are the easy part—making them a commercial success is where the challenge resides.

When innovation thinking meets Lean thinking, indeed new horizons arise.

Take your time to re-visit your processes. Wherever on the improvement roadmap you are, always have the “ideal innovation” in front of you. And utilize all tools at your disposal to implement it within your next project. This way, you will never be surprised by any of your competitors’ moves and may even be able to beat them. When innovation thinking meets Lean thinking, indeed new horizons arise.

Phil Samuel, Ph.D., is chief innovation officer for the Lean Methods Group. He is a highly regarded thought leader in performance excellence methodology studies including innovation, Six Sigma, Lean, Design for Six Sigma and change leadership. Michael Ohler, Ph.D., is a principal at the Lean Methods Group, with more than 20 years of experience as a scientist and performance professional. He is a certified Lean Six Sigma Master Black Belt and Kirton Adaption-Innovation Facilitator, as well as an innovation expert.