Innovate Abhinaya

INNOVATE TO INTEGRATE Abstract The two big ‘I’s – Innovation and Integration - are to be the key defining features of today and tomorrow’s businesses. Innovation is the vehicle to continuously enhance customer delight. It is one of the most talked about concepts in the corporate world and now looked at as the conscious competence of a business. Integration is the seamless partnership between customers and business processes that sustains customer delight. A scan of businesses however shows that the full potential of integration is not being realized, primarily because the business model seems to have evolved into a silo mode. The tool to remedy this is innovation, so as to achieve integration of business processes with customer aspirations and needs. This paper looks at examples of how business leaders have innovated to integrate their businesses. Four pillars – technology, processes, relationships and information – have been the focus of innovation on the journey towards a holistic business. Finally, the author’s personal application of the innovate-to-integrate lessons in her activities has been included as a learning experience.

1.0 Introduction In her younger days, the author was shown a picture (see figure 1) and lessons of cooperation were ingrained in her. In her current role as a student of management she has observed the business scenario and is now able to relate it to the picture and realize the wisdom of integration. Business operations can today be identified as being primarily in the silo mode. When man first started producing (rather than only hunting or farming), it was a highly integrated operation, often called craft production, due to smallness of size. With increase in size, volumes and variety, many a business became a colossus. The need to manage size lead to fragmentation. Fragmentation glorified local efficiency at the expense of overall performance. Thus mis-alignment was built into the system. Fragmentation also led to departmental boundaries – thus interface management waste was built in.

Childhood Perspective: Cooperation between Donkey A and Donkey B

Management Student Perspective: Integration between OrganisationA & OrganisationB Supply Chain Position Input Component Process Component Output Component

Organisation (Entity) A Supplier Department A Organisation

Organisation (Entity) B Organisation Department B Customer

(figure 1) The realization has dawned that waste of fragmentation is inimical to performance and the mind-set is slowly changing to integration. Partnership is the new mantra. The search

for how to move towards integration from fragmentation has led to the eureka of innovation. Thus the clarion call: Innovate to Integrate! 2.0 Integration and Innovation Integration, as stated above, is the process of eliminating the fragmented and silo mentality, structure and operations within an organization. An organization that works in an integrated manner attains success and works smoothly. In integration, there are two elements: 1. Processes 2. Customers All the processes in an organization need to be aligned according to the customer’s wants in order to attain his satisfaction. Traditionally organizations were hierarchical and structured as departments, which hindered their performance by generating interface waste. With the passage of time, cross functional and hybrid organizations came into the picture, to mitigate the hindrance to an extent. It’s now time to form process organizations (see figure 2 for a schematic) where processes work in tandem to the customers’ wants.

Interface waste

Supplier Power

Organisation Process

Interfaced Silo Organisation

Customer Needs

(figure 2) Process organizations epitomize integration. They move from the traditional vertical hierarchy to a horizontal process flow. Departments are replaced by ‘bench of skills’. Suppliers are separated only through asset ownership but are integrated in process relationships. Customers are no longer ‘kings’ to be serviced by ‘slave’ processes, but partners to help realize their needs. While the integration concept has breached the silo mentality, the practice of integration is a larger challenge. Enter innovation. Luecke and Katz (2003), who wrote: "Innovation . . . is generally understood as the successful introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services. For innovation to occur, something more than the generation of a creative idea or insight is required: the insight must be put into action to make a genuine difference, resulting for example in new or altered business processes within the organization, or changes in the products and services provided. 3.0 The Four Pillars of Business Business Enterprise rests on four pillars. These are the domains in which innovation can take place to integrate the various processes. The four pillars are: 1. Process 2. Technology 3. Relationship 4. Information Of these, Information has centrality as it binds the other pillars. A leader needs to decide which pillar to leverage on. The synergy within the organization needs to be cultivated to

foster new ideas and best practices. Integration greatly facilitates continuous innovation which will help the businesses sustain.

P Sphere

Sasken, JWT

I R

T Hilton , Wal-Mart (figure 3)

4.0 Innovation in Practice Visionary business leaders and managers have been able to respond to the need for integration, thereby transforming their organizations to performers and customer delighters. These innovations can be seen all along the supply chain processes, albeit not necessarily in a single organisation. It is also seen that innovation in one domain is used to bring about improvements in another domain, for example technology innovations (like an enterprise software package) actually leads to improvement in the information domain. Some powerful examples of innovations in practice are given in the following sections. 4.1 Technology-Process Innovation Process innovation deals with bettering the ways of delivering output. Innovation to integrate processes deals specifically with how to eliminate interface waste to deliver superior output. Eliminating interface waste results in partnership working and joint

ownership of outcomes. This requires both a change of mindset and implementation of technology. Industry Practice Sphere is a company that brings out innovative products based on connecting mainstream and conversational media content. Founded in 2005, they have built a mobile workforce where all the employees work from different parts of the world. It is a virtual company and is being supported by investors who believe in their vision. This is a process innovation where the entire organization is virtual without hierarchies, and works in tandem with the customer requirements. This innovation allows for higher levels of technical expertise where head hunting for techies who need to relocate to the physical space is not required. A group of professionals have come together because of technology and they work virtually. This process innovation is facilitated by advanced web technologies.

4.2 Technology-Relationship Innovation As the world moves beyond 3G into a complete evolution of wireless networks termed as 4G, the competition has increased manifolds. Companies are redefining their core competence. By using the seeds of innovation, companies today have integrated technologies into their system which aim at providing the intangible value that every customer looks for. For this purpose, there has been a plethora of integrated packages introduced that can be customized which promise an added value. The customer prefers businesses that provide high value in the least possible time and at a reasonable cost. Making efficient and effective use of technology to integrate various processes is of prime importance. Mere incorporation of innovative packages into the system without any integration is futile. The level and intensity of integration determines the success measure. The complexity of this is very high, especially when the business has branches working in different parts of the world and in some cases even mobile workforces. Innovation to align and integrate has occurred at the front end that deal directly with the consumer, and at the back end with the suppliers. Industry Practice One company that has utilized technology to the highest order in order to derive its core competence and stand out from its competitors is Hilton. The value it provides to its customers, by combining technology and taking advantage of its well integrated organization, is always talked about. Hilton has redefined the concept of customer relationship management by taking personalization to a higher level. They have effectively placed the customer at the centre

point of their decision making process. Thus, this provides a singular view of the customer via all touch points. The information available at any and every point had to be integrated throughout the organization for appropriate utility. OnQ was the name of this innovation that helped provide Hilton with its competitive advantage. Imagine checking into Hilton Dubai and entering a room which caters to all your requirements without asking for it. Preferences of every guest who has been a customer of Hilton anytime in the past is known. If you asked for a pot of tea with your morning newspaper in Hilton Paris, rest assured the Hilton Dubai staff will ask you if you would like the same. Technology in this context, makes it possible for information to be available at all touch points. This provides easy access for organisations to update and maintain their customers’ preferences, and the ability to make changes on a transaction-by-transaction basis if necessary. This effective and efficient utilization of the available data becomes the responsibility of the workforce. Yet again, technology innovation assists in aligning and bringing the customers wants to processes so that they can be integrated to provide a unique experience. In figure 2, customers have been highlighted on one end and suppliers on the other. The processes which service the end customer actually get divided between the organisation and the suppliers, depending on who owns the assets1. Innovation is also applied to integrate the suppliers processes with the organisation’s. Ultimately, customer wants are translated all the way down the chain upto the suppliers’ suppliers. Industry Practice One company that has used innovation to integrate its suppliers efficiently is Wal-Mart. It’s a classic case of how use of innovative IT tools (ERP) has helped the company in improving the efficiency of supply chain. Wal-Mart always emphasized the need to reduce its purchasing costs and offer the best price to its customers. The company procures goods directly from manufacturers bypassing all intermediaries. The supply chain package helps the suppliers to track every product picked up from the shelf and this becames a source of very powerful consumer behavior information. It also helped them deliver Just-in-Time to Wal-Mart, thereby eliminating storage costs. The network also gave Wal-Mart the power to negotiate and reduce supplier concentration. This technological innovation was Wal-Mart’s secret to be able to provide products at unbelievably low prices and catapulted them to become one of the world’s largest and best managed companies.

4.3 Process-Relationship Innovation 1

In an integrated Supply Chain, it does not matter who owns assets (the organisation or the suppliers). What matters is their processes and relationship are integrated as a seamless process.

Most of the times, experiences are created by relationships. All organizations are trying to discover that value which attracts a customer and transforms him into a loyalist. One such value is the experience gained by the customer when dealing with an organisation. This experience is enhanced when the intra-organisation relationships are integrated. Thus the focus on team building exercises. Many innovative processes are brought into play to achieve his end. Industry Practice The two examples of Process-Relationship Innovations mentioned here are drawn from the author’s personal experiences. During her internship days at Sasken Communications Technologies LTD, the author witnessed a classic case of an attempt to integrate the organization by its top management via innovative means. As it was in it’s inorganic growth stage, Sasken had acquired Isoftech, Chennai. The employees in Isoftech were informed of this move a couple of hours before Isoftech was integrated into Sasken. There was a lot of resentment among the employees. Though this would give them an opportunity to work for a much bigger brand, they had difficulty digesting it. Moreover, an entire vertical in Isoftech was new to Sasken and the employees in that vertical were afraid of losing their jobs. To provide an experience to all employees and help them take a peek into the Sasken culture, Sasken’s top management put together an innovative large scale integration program in Chennai which sent all employees of Isoftech and just the top management of Sasken to a far away resort for 3 days. Here, a change agent was invited to assist the integration process and innovative ideas were being tossed by all. During the brainstorming session, a whole program structure was formed which was put into effect immediately. As an observer and facilitator, the author could see a visible change occurring because of the innovative means employed to achieve integration. On the first day, there were boards put up all over the walls in the auditorium and everybody was asked to write all what they felt. They were then divided into groups and went through a series of creativity stimulant games, training sessions and outbound training. All this resulted in creating a favourable experience for the audience. Toward the end of three days, a meter was set up to measure the level of change. Results - more than 85% wanted to be renamed as Sasken Chennai. An integrated organization which enjoys an unbreakable bond between all departments and levels within will be a sure shot success story. The employees are usually diverse with a varied culture. To fuse all these cultures into the corporate mindset has been one of the toughest issues to handle. Here is a company that has achieved great success and one of the important factors is the bond shared by the workforce.

The other example is of JWT. The success of JWT is attributed to the creative ingenuity of a hard working team, which is not necessarily fair. There is something beyond the talent that they possess which helps them attain name and fame. The office is always engulfed in an air of enthusiasm and the employees are willing to work late hours (sometimes not go back home for days!), travel anytime and push themselves to any limits to meet the clients’ requirement. A job of this kind predominantly requires inner motivation. This drive should be created through relationship innovation. The top management of JWT strives in building a bond between all the employees belonging to different departments that will help them work in an integrated manner. This is where the concept of JWT’s “Get Physical” comes in. Recently the Chennai team went on a trip to the Himalayas. The entire workforce spent the days there together, be it the strenuous walk or the night parties. Since this trip involved a lot of physical activity, the concept of Get Physical was born. This created an experiential learning for all which was integrated into the daily working as well.

4.4 Information Innovation To facilitate the process of innovation at the three pillars, appropriate information needs to flow within the organization. From the customer’s end, appropriate information about their needs and wants has to flow to the organization, so that they can be integrated with the processes. The characteristics of the information can be captured in the acronym SITA2. S I T A

-

Simultaneous Instantaneous Transparent Accurate

Any information characterized by the above eliminates waste in the form of time-delays and errors due to multiple processing. SITA information underlies most of the technology innovations that impact process (as seen in the Hilton and Wal-Mart examples in section 4.2). The focus of information innovation is mainly in enhancing the SITA component. 5.0 A Personal Learning Experience The understanding of ‘innovate to integrate’ has personally benefited the author, albeit in retrospect, in the responsibilities she has had to execute. Last year in October, she was given the responsibility of handling a team for the institute’s (KIAMS’) rural marketing program known as Pragati. There were 22 members in the team belonging to varied backgrounds. As a prospecting team, they were given a total target sponsorship of Rs. 6 2

SITA as a concept was coined by Pinak Kulkarni, visiting faculty at Kirloskar Institute of Advanced Management Studies (KIAMS)

lakhs. In the rural markets, especially being a saturated market, this was a tough task. There were problems within the team as well. Being the youngest in the team, she was not accepted as a lead and the team refused to work. While admittedly the results were not a resounding success, her hands-on experience coupled with her insights into innovation and integration, allowed her to arrive to some solutions which she would pass on to her juniors. The sponsors’ demands were researched into and were laid down as the customer needs. There were 5 teams working for Pragati and they had to be integrated into a process organization for smooth flow of work. Designing the process organisation for Pragati was taken up with her colleagues in the Process Management course. For the processes to be integrated, relationship innovation had to improvised. Drawing from experiences and, incorporating some of the lessons learnt, she was able to draw up a plan for relationship innovation. Some of the points: 1.

Leave an open box in the discussion room to address grievances.

2.

Instead of using the lecture halls to hold meetings, earmark a “creative room” to be maintained by the students. The team could paint it, bring in furniture, or just relax.

3.

Set up a web page for the team which they could customize, and subscribe to games as well. Every account converted would allow them to download a virtual gift!

4.

Organise weekly parties to celebrate conversions.

The author awaits the results of her suggestions of relationship innovation amongst her juniors for the same event. 6.0 In Conclusion, an Observation The business world is at an inflection point of moving to efficiencies fueled by innovation. Technology and Process changes are happening at a fast pace. The benefits seen by the early adopters has made the changes gather momentum amongst others. Probably it is the area of mind-set and relationships changes that are lagging behind. This beckons the thought leaders and action leaders to shape the future.

BIBLIOGRAPHY: www.techcrunch.com www.informationweek.com www.sphere.com Seeds of innovation – Elaine Dundon Innovation – Harnessing Creativity for Business Growth (Adam Jolly) Keen, Peter G.W. (1997), The Process Edge: Creating Value Where It Counts, Harvard Business School Press Ebscohost – library The business process innovation – Meir H. Levi Innovation theory – Schumpeter