Cut the Biggest Source of Waste!

Good Morning Innovation Leaders, For most companies their biggest “wasted expense” is discounting.  Discounting can be as much as 20% to even 50% of list price when a company’s offerings are viewed as a commodity by customers.  The magnitude of the waste from discounting helps us understand why Dr. Deming said the "Factory offers just 3% of the opportunity for company improvement"

 

INNOVATION is the only known method for achieving ZERO DISCOUNTING. 

When your offering is meaningfully unique versus the competition - then you don’t have to discount.

The savings from ZERO Discounting make innovation in effect, FREE!.*

 

Using Innovation to enable Zero Discounting

Changing a culture is not a matter of teaching people a bunch of new tools.  It is a matter of changing their work values, providing role models and by changing to an Innovation driven mindset.

Creating a mindset of innovation - and Zero Discounting -  requires a commitment from management. The commodity culture that exists in most companies was created over time.  We don’t need to know how it happened and we don’t need to place blame for it.  All we have to do is gather a team of volunteers who want to change the trajectory of the company.  A team of volunteers interested in restarting the company on a path towards profitable growth through innovation.

Senior management is key to the solution.  However, senior management can’t change the culture without engaging and educating the managers and employees in the new mindset of Innovation and Zero Discounting.

 

What NOT to Do - Educate & Pray 

The way to NOT change the culture is to simply educate the masses and pray for a miracle to occur.  If you try this it will soon become apparent that most don’t actually believe in top management's new commitment to innovation.  Management’s credibility is low. Employees have been burnt in the past by management starting and stopping support for new programs.   Attempts at mass training to spark transformation often fail.

 

What TO DO - Waved Approach

1. Management Commitment To Learn More: Management makes the corporate commitment to learn more about the potential for becoming an innovation driven company.  They do this be having one or more senior managers attend training and serve as management coaches for a 3 month experiment.

 

2. Innovation Pioneers Lead the Experiment:  A small team of volunteers embark on a 3 month experiment with the new innovation mindset.  We keep the team small and focused so to not disrupt the broader organization at the start.  The Pioneers engage in a three step process:

 

a) LEARN the MINDSET: The pioneers are taught how to Create, Communicate and Commercialize Meaningfully Unique Ideas. The learning is a blend of classic education and hands on application with real life projects. Training options depend on what is available in your local community from your local coach.   They include project coaching by an Innovation Engineering Black Belt or formal programs such as Innovation Engineering Leadership Institute or Innovation Engineering Green Belt.
b) APPLY the MINDSET After training, the Pioneers engage in stimulus mining and an Innovation Engineering CREATE session leading to the definition in writing of 40 to 100 ideas for profitable growth.  The Pioneer Team then pick two ideas that are meaningful to both the company and to them personally to accelerate.  Weekly coaching increases speed and decrease risk with the projects.  After Fail FAST Fail CHEAP cycles of learning, some projects go forward - some are killed or put on hold.  Then new ideas are selected for acceleration.
c) EVALUATE the MINDSET Monthly meetings review “what have we learned” and how can we adapt the process to make it more effective.  A quarterly meeting reviews the entire process and leads us to a decision to either a) Adopt the New Innovation Mindset by starting more waves of innovation pioneers across the organization or b) Run another small experiment with a wave of volunteers or c) Discontinue the experiment.

 

The culture of the company is going to change only when all employees absorb the innovation mindset and begin to understand their individual roles in making innovation happen.   And, the best way to do that is through a waved approach - a few people at a time.   It’s taken years to develop your price driven mindset - it will will also take time to develop a new mindset of Never Ending Innovation, Meaningful Uniqueness and ZERO Discounting.

A modest goal is to double the percentage of your revenue coming from Meaningfully Unique Products and Services each year.   10% the first year, 20% the second, 40% the third, 80% the fourth.

 

Doug Hall

* Portions of this were inspired by and paraphrased from Phillip Crosby’s  book Quality without Tears