A case for a clean slate
Business Process Analysis (BPA) can be applied with various methods and breadths of scope depending on the situation at hand and the desired outcome. In this Insight, I will be advocating for Operational Innovation and how it surpasses all other BPA approaches with regard to long term impact on revenues and market position.
Operational Innovation takes a fresh look at how to deliver business value independent of existing industry norms and current practices as well as the current organizational structure, business processes (sourcing, provisioning, distribution), sales/communications channels, and infrastructure – a clean slate approach.
Transformative VS incremental
An early example of this, in the tech age, is Progressive Insurance who entered a mature 100-year-old industry – automotive insurance. It had $1.3B in sales in 1991, $9.5B in 2002, and $42.7B in 2020. How did they do this? Through the advanced use of technology, yes, but also establishing new models for risk-based pricing, immediate response claims adjustment, improved fraud detection, and more (HBR, Michael Hammer, Deep Change: How Operational Innovation Can Transform your Company, 2004). More recent examples include the likes of Amazon and Tesla who are disrupting their respective industries.
Of course, not all efforts at Operational Innovation result in industry disruption. However, the above examples illustrate how taking a new look at a business situation can result in transformative (versus incremental) results. Such results can lead to a competitive advantage through reduced prices, enhanced services, and, possibly meeting a consumer need that has not been addressed before (ex. Facebook).
Technology is the engine of today’s companies
Most of the differences in BPA approach to Operational Innovation lie in the Ideation Stage. Operational Innovation goes beyond establishing a view of the current state of the organization and best practices in the industry to establish a broader view of the marketplace, customers, sales channels, service/product delivery models, and technology in order to define the go-forward strategy. And, while technology is listed lastly in this list, it is a consideration at the forefront of the analysis, since technology is the engine of modern-day companies and, via Artificial Intelligence, getting closer to becoming the driver.
Operational Innovation is an alternative to deal-making (mergers, acquisitions, divestitures) by making transformational change within companies and positioning them for the future. Note that Operational Innovation can also be a way of thinking that can be applied to smaller scale projects focusing on corporate divisions and/or product lines – it is as much a perspective as it is an approach
