Innovation is THE buzz word spinning out of control. Even Obama talked about how we must all innovate. REALLY! In this blog I provide three short stories of innovation with some valuable insights into the innovation process. In my experience as someone who has actually innovated, vs. those who have just studied it and wrote then wrote about it, the innovation equation almost always boils down to people, process and technology. There are many authors and self proclaimed innovators out there that study innovation and sometimes the process that leads up to it. However, there is nothing like living the innovation experience as I have now in two careers, marine science and information technology. The challenge of innovation is that there really is no equation or recipe for it beyond those three parameters.
As an innovative marine scientist at Woods Hole we leveraged the MOCNESS system, (pictured above) which enabled us to study the stratification of plankton populations in our oceans, (I won’t bore you spelling out the acronym.) We were the first scientists to walk off a ship with all our data on floppy drives. And when it came time to really understanding the behavior of juvenile cod and haddock we used remotely operated vehicles and small submersibles to see them in real time. We selected the best people, looked at process, and then leveraged the technology that was available, but most importantly there was trust amongst all which lead to unabridged collaboration. In the 1980s collaboration in a scientific community was unheard of but we had the right people and only one of us had a PHD.
In looking back at our team we had the right chemistry and cast of characters:
- R Gregory Lough the PHD of oceanography with intense focus.
- Dave Potter the fisheries biologist with unending energy.
- Hal Merry the retired Air force Pilot turned electronic technician.
- George Bolz the likeable and intense fisheries biologist.
- Peter Auditore the invertebrate zoologist that identifies everything.
- Phil LeBlanc the ichthyologist with a Napoleonic complex.
In my blog Innovating the Customer Experience , I discussed different types of Innovation, business model, product, services, organizational, and why creating a culture of collaboration which leads to innovation is king, http://thesocialcustomer.com/peterauditore1/38046/innovating-customer-experience. What was amusing about this blog was a comment that questioned how I could use innovating as a verb. Well, guess what that is just me. Last fall Dr. Henry Chesbrough of Berkeley’s Center for Open Innovation, and I embarked on an innovation research journey that profiled companies in two industries and one governmental organization that innovated their business processes.
- Insurance: AAA Michigan
- Automotive: Colmobil Israel
- Government: City of Birmingham, United Kingdom
Rather than entering into long elaborative discussions about how these organizations innovated, I will provide short focused seminal insights from the interviews that Dr. Chesbrough conducted. So let’s start with AAA and end with GOV who in my view really needs innovation in nearly every way to serve us citizens.
AAA of Michigan Innovation: Customer Experience Management
The objective of AAA’s Claims Core Redesign Process was to reduce the increased cost per claim due to inefficient processes, in order to improve the efficiency of their Claim Organization and the service to our members and improve employee morale in the claims processing unit. An innovator was brought in to evaluate and make changes to the claims processes.
Business Process Environment
- Organization and processes were fragmented with 3 different claims systems, plus 4 or 5 ancillary systems, this made it difficult to identify areas of inefficiencies that needed to be addressed.
- Call times were 15 minutes on average or longer.
- This translated to increased cost per claim because it took longer to resolve claims.
- Customer satisfaction needed improvement.
- Employee morale was the lowest of the whole organization.
The innovator realized that the problem was not simply one of technology, but rather one that required addressing people, processes and technology; so the project moved from technology only, to an initiative that encompassed people, process and technology. They created cross-functional teams to address the people, processes and technology.
AAA senior leaders understood that this was a complex initiative, and realized there are moments where you need to balance the right amount of communication as you run into challenges that inevitably occur during development. Initially they had weekly steering committee meetings and that moved to bi-weekly, and finally monthly. As the project rolled out, perceptible improvements in employee satisfaction emerged. Now they are “not a bad place to work” and there are improvements in job turnover and retirements as well. There are still parts of the company using the old processes, and when those adjustors see other adjustors using the new system, they get envious. “When can I get on the new system?”
Process Innovation: One of the insights that emerged was the existence of 6-7 layers between managers and the claims adjusters, in order to improve our processes; they took out layers of management, and segmented by product line.
Technology Innovation: Their goal from the beginning was to integrate their claim application with policy management and existing financial systems, along with other core applications in the company. AAA needed to align cost, expense, and customer service through the same data, rather than requiring different views of the data through different applications. The goal was to be able to use the claims record as the core hub of the process, and view all of their processes through a single shared file and they did this by standardizing on a single vendor.
Colmobil of Israel Innovation: Customer Experience Management
Colmobil imports some of the leading automotive brands in Israel, Mercedes-Benz, Hyundai, and Mitsubishi, traditionally each brand was a separate company, with its own unique business processes and IT requirements. Today the customer has become more and more important, and they could no longer afford to be so product centric. The same customer might appear to them in three different ways across three brands. They might be a fleet manager, responsible for a dozen or more Mercedes trucks, they might drive a Mitsubishi SUV, and/or, buy a Hyundai for a relative. Their systems could not track this.
Business Process Environment
- They shared IT resources, but had three flavors of IT, one for each brand and very product centric.
- Every brand had a long product cycle, from the initial placement of the order through to delivery, maintenance and repairs, recalls, and so on post-sale.
- The information travelled with the vehicle and the customer data they had was subordinated to the vehicle data, and the VIN was the centerpiece of each data record in the system.
- They had no way to modify these systems and solve this due to their deep product centricity.
People and Process Innovation: The world is becoming customer centric and they needed to change their culture, processes and how they would work to address this. If they tried to do it in stages, they would get lots of resistance from employees. So in the end they did it in 20 months, and after 2-3 months of breaking it in, they were back in business and there was only a marginal impact on business during this transition. Now they’re in the second phase and plan to make the system more intelligent. This also gave them confidence to reorganize the company to be market focused.
Technology Innovation: They perceived only two options, either implement a CRM system on top of the product legacy system, and train our people to work on two systems simultaneously; or reinvent everything to free themselves from the constraints of the legacy systems. This way the employee would only have to work with one system, and the CRM would generate all the transactions. All the ERP would be done under the hood, so to speak.
In summary, they now have a passenger vehicle division, a premium vehicle division, and a buses and trucks division. When the customer comes to them now, they have a full view of him/her. In summary, they had 25% more vehicle sales this past year with no increase in headcount. Their stock keeping in spare parts is much improved, and their data is more accurate now as well, and most importantly, the owners are very happy.
City of Birmingham United Kingdom Innovation: Citizen Experience Management
The City of Birmingham has a “corporate director of business change” and they are responsible a wide variety of business services that spans everything from refuse collection and includes child social care that serves three different groups: disabled children, antisocial behavior in children, and children suffering child abuse. They have one of the most unique business change process methodologies I have ever seen in GOV:
- Implementation and realization of benefits from the business model change.
People & Process Innovation: One of their business model changes was to move from a reactive model to a more proactive model, where they could utilize analytics to identify at-risk children and households. This has allowed child services to make interventions long before the behavior occurred, such as providing coaching on parenting skills to the parents. They still need to react when problems arise, but they are trying to shift to a prevention focus and are running a series of concurrent pilot programs in schools to test this, and to compare which interventions are most effective in reducing later incidence of anti-social behavior or child abuse. The people management changes were rolled out one directorate at a time. They started with the corporate directorate, where there was strong support for the change. Having brought that off, they rolled it out to other directorates
Technology Innovation: They started a program to transform their business models in 2006, covering about 2/3 of their business functions and delivered through 9 different work streams. These changes were enabled by IT and three of the core change programs depended heavily upon ERP. The financial back office change was a big bang approach, with no pilot testing and it delivered the goods by reducing headcount in the back office finance functions by 28% and by performing financial processes accurately and efficiently.
People, process and technology are consistent in all these innovation stories along with buy-in and support from senior management and strong governance processes. Change management is often overlooked in many attempts to innovate, however, it was an important parameter in these innovation successes. And for the most part customer experience management is one of the primary objectives of each innovation initiative. Until next time I wish you great selling and marketing in the millennium.