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• Finding #8: Process Innovation is as equally powerful in creating competitive advantage as Technology Innovation.
There is a great misconception in the world about what Innovation really means. Most managers equated Innovation with Technology Development or Technical Invention. This myopia prevented them from seeing the other half of the Innovation equation that focuses on Process Innovation.
Companies that created process innovations were highly profitable and created virtually invisible competitive advantage. (Perhaps this is why so many people don’t register it)
- Implications:
- Any company interested in creating trans-corporate or even intra-corporate innovation projects should be considering a very wide range of possible innovation target areas, including:
- Product Improvements and New Products
- Service Improvements and Breakthroughs
- Technology Improvements and New Core Technologies
- Forecasting Improvements
- Productivity Improvements
- Quality Improvements
- Speed/Cycle Time Improvements, including Faster Adaptation
- Effective Use of Information
- New Services Delivery Capacity
- Integration of Solutions & Systems
- New Delivery Mechanisms
- Technology Breakthroughs
- Evidence:
- A perfect Case Study Example is Dell Computers.
- Just over 10 years old, and $40 billion in sales, it may seem surprising, but the company has the lowest R&D (as a % sales) budget of any of the computer companies.
- However, it is highly profitable without technology innovation (even though it is a high-tech company).
- All its innovation has been from process innovation along every step of its value chain from supplier fulfillment to customer satisfaction.
- It drove HP & Compaq into an unhealthy merger, and IBM into an exit strategy. Dell’s competitors could not seem to compete successfully because Dell’s process innovations were essentially invisible.
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