National Institute of Business Management

Chennai - 020
EMBA/ MBA

Elective: Business Process Management (Part -1)

Attend any 4 questions. Each question carries 25 marks

(Each answer should be of minimum 2 pages / of 300 words)

1. Explain the Importance of business processes.

2. Explain the advantages of functionally biased organizations.

3. Managing people and performance is a discipline and skill which requires a

careful, integrated approach to managing all issues and aspects – from
communications to behavioral consequences, from feedback to trust.
Explain the key elements of process performance.

4. Process governance is arguably the most important dimension for the

continued sustainability and long-term success in creating a process-
focused high performance management organization. Explain.

5. Process- focused leaders will create an environment where innovation is

part of what the organization does. Explain the three types of innovation
acording to Dundon, 2002.

6. Explain transactional leadership behaviors.

25 x 4=100 marks
Exam 36013 – Business Process Management (Part-1)

Explain the Importance of Business processes.

Ans 1
A business process is a collection of linked tasks which find their end in the delivery of a
service or product to a client. A business process has also been defined as a set of
activities and tasks that, once completed, will accomplish an organizational goal. The
process must involve clearly defined inputs and a single output. These inputs are made
up of all of the factors which contribute (either directly or indirectly) to the added value of
a service or product. These factors can be categorized into management processes,
operational processes and supporting business processes.

Another way to define “Business Process Management is one that is put in place to
make the workflow of an organization more effective, efficient and cause the company
to flourish despite visible changes in the business community”.

The human brain is fickle. In fact, an average person takes roughly 25 minutes to
recover from distractions. Meaning, if you were doing a task and took a short break to
eat or maybe run an errand, it would take you minutes before you are able to regain
momentum and resume the task at hand.

Put into the context of your business operations, every time your workflow is interrupted
for any reason—such as a new project or industry regulation updates—you will take a
significant amount of time to adjust to the changes and bounce back to your regular
work. If you don’t have a structured approach to handle these, it can definitely have a
negative impact on your bottom line. This is where business process management
comes in.

The need for and advantages of a business process are quite apparent in large
organizations. A process forms the lifeline for any business and helps it streamline
individual activities, making sure that resources are put to optimal use.
Three Areas Where BPM Has the Most Impact

An organization is built on the three pillars, This is what holds it all together the glue
between the assets.
People.
Having the right people, motivated and performing is naturally a key requirement to
performance.
Technology
Providing the people with the right tools to do their jobs well is also vitally important.
Computer technology has revolutionized the office environment, and with web
technologies and mobile computing we are all becoming much more efficient for longer.
Process.
Process goes right across the organisation. A Sales process may start with marketing
and production (lets set the targets right!). It may involve accounts (lets get the price
right). It will involve sales (close the deal). Then it will go back to accounts (let’s get the
invoice right and paid on time). Production’s input may involve the supply chain.

Reasons Why Business Process Management is Important

1. Strategically maximize resources to minimize expenditures Business process

management allows you to reduce the cost to execute transactions by giving you a
closer look at your workflows. This way, you can find out what needs improvement,
quickly make adjustments to eliminate bottlenecks, allowing you to spend your billable
hours on more important tasks. It should also help you have a better understanding of
how you are using your resources so you can allocate them properly and make sure
that they are being maximized.

2. Gives you better visibility and control of your business processes Running a
business involves quite a number of tasks. If you own a small startup, you may still get
away with simply knowing your processes by heart and making decisions based on
what you think is best at the moment. However, as you onboard more employees and
expand your company, you will no longer be able to micromanage your operations. You
will eventually have to delegate work and make sure that you and your employees are
working as a single entity. With business process management, you can map out
workflows from beginning to end. You can also come up with a central repository where
you can detail the protocols and tasks related to particular aspects of your operations.
This way, you can avoid confusion and make it simpler for your employees to
understand how to perform their tasks.

3. Pinpoint operational deficiencies to improve productivity. There will always be

room for improvement when it comes to workplace productivity. However, the process
of enhancing it can be quite tedious. More often than not, businesses have a reactive
approach to this by changing workflows only to address specific situations or problems.
Those who want to be more proactive sometimes rely on trial and error wherein they
simply add or subtract tasks from their process to see what works. By implementing
BPM, you can take the guesswork out process improvement. It lets you evaluate your
workflows to see your key deficiencies. This way, you can come up with more targeted
and efficient remedies to bottlenecks in your process.

4. Make better business decisions to remain competitive. Business process

management can be used to streamline your processes from the get-go. This means
you can simply map out your workflows and set it aside until you have to reevaluate it.
You can eliminate the need to manage it every second of every day, allowing you to
free up time for more attention-demanding tasks as well as headspace for better
decision making.
5. Fine-tunes workflows to increase operational agility. Lastly, business process
management is great for helping companies increase operational agility. The practice’s
methodical approach to operations allows businesses to gain a deeper understanding of
their workflow. It helps them get a good look at the interdependency of their resources
and processes. This way, it is easier to strike a balance between them once market
trends, customer demands, and industry regulations shift.

Business processes have always played a vital role in the proper functioning of an
organization and in its structure. A well planned and strategized business process will
help a business in the following ways:

Reduced expenditure and risk: a business process reduce expenditure and risk by
already laying out the most efficient ways of doing the jobs considering the potential
future shortcomings.

Reduce human error: it reduces the human error by distributing tasks to people who
are specialised in it.

Improving efficiency: it enhances the productivity of a department by mapping out

moves and relevant steps which are best for the business.

More customer focused: a business process is a customer-oriented move. It

continuously updates the company about the customer wants and reviews about the
product/service.

Bridging communication gaps: It bridges the communication gap between the

company and its customers through reviews and market research.

Better time management: business process improves time efficiency by developing

strategies and flowcharts to minimize the time taken to do certain activities.

Adaption of new technology: business process often keeps changing and improves
over time. The company adopts new technologies to keep their feet on the ground by
improving business process according to the latest technologies.
Above benefits can only be achieved if all the principles and methods are mapped out in
an optimized and standardized way. The company which failed to do so will face the
following problems:

Failure to recognize any problem: a company which doesn’t focus on its business
processes will often fail to recognize the exact problem that prevented it to achieve the
goals due to its inability to set standardized processes.

Low motivation in employees: due to the absence of a competent business process,

the employees of the company will get demotivated as they might get placed in the
departments for which they do not hold enough knowledge.

Lack of change implementation: companies will often repeat the same errors over
and over again as there will be no system to recognize the problem and to implement
change in the process.

Time-consuming efforts: without proper flowcharts and workflow, specific work will
take more time to be done than normal.

Lower efficiency: if there is no proper business process a company cannot be

productive and its efficiency will be lower than a company with a proper business
process. A business process increases efficiency by laying out steps and possible
ways to do a task.

High risk and increased expenditure: companies which do not have an adequate
business process they often failed to see the future risks and they are also incompetent
to find a cost-effective way to do a task

Business process management is vital for every organization. It helps to eliminate

errors, inefficiencies and improve business processes. Business process management
allows managers the ability to look inside their company and understand how each
business process works. This greater understanding can lead to savings in costs,
increases in revenues and improvements in company efficiency.
Exam 36013 – Business Process Management (Part-1)

Managing people and performance is a discipline and skill which

requires a careful, integrated approach to managing all issues and
aspects – from communications to behavioral consequences, from
feedback to trust.
Explain the key elements of process performance.

Ans 3
Managing people and performance is a discipline and skill which requires a careful,
integrated approach to managing all issues and aspects – from communications to
behavioral consequences, from feedback to trust. From a process perspective the
following key elements of process performance are identified:

• Business and people process performance measures (targets) must be

established, agreed, documented, communicated and implemented.

• The organization must have a clear understanding of which of the organizations’

key business processes they wish to measure. It needs to have these business
processes modeled (documented) and clearly defined an agreed process metrics.

• There needs to be mechanisms in place to monitor the actual performance of the

key business processes, managers, staff and teams against the agreed targets.

• There needs to be recognition of good performance with matching and

appropriate rewards.

• A continuous improvement program in place to contribute towards sustainability.

• A detailed, audience specific communications program that will be sticky to the

recipients. That is, the audience will pay attention to it and remember, enjoy and learn
from the communication.

Key Elements of Process Performance

The steps in the process performance can be broken down into four broad categories:
Planning, coaching, reviewing and rewarding. Each step is equally important, and
together form the backbone of a company’s process performance
1. Planning
The first step of the process performance is Planning.
1.1 The defining stage
The process performance begins with the planning stage.
HR and management need to define the job itself, including a comprehensive
description, long and short-term goals, identify key objectives and develop a clear
metric for how those objectives and goals will be assessed.
Goals should be clear, done in the SMART format (specific, measurable, attainable,
relevant, time-based) and clear performance standards should be set.
1.2 The feedback stage
Once management has completed the defining stage, employees should have the
opportunity to give input on this material. They are the one doing their job and will have
a key insight into what skills, competencies and goals will best assist the company to
achieve organizational goals.
1.3 The approval stage
Management and employees both agree to the definition of the role, goals and
objectives.
By making this first step of the process performance collaborative, management sets
the stage for the process as a whole to be collaborative, and the employee feels that
they are involved in goal setting - an important thing, as evidenced by the Gallup study.
“The way your employees feel is the way your customers will feel. And if
your employees don’t feel valued, neither will your customers.” – Sybil F. Stershic

2. Coaching
2.1 Organize meetings on a timely, regular basis
Once the parameters of the job and objectives for the future have been set, the next
step of the process performance begins.
The coaching process is extremely important and must be done on a regular basis.
Meetings should be at least quarterly, although monthly meetings are the ideal.
2.2 Provide necessary training, coaching and solutions
These meetings should focus on solutions and coaching opportunities, rather than
punitive measures for lackluster performance.
If accountability is made into a negative, then employees will avoid it rather than being
honest about where they are struggling.
In some cases, management training in this area can be very helpful to an organization.

2.3 Solicit feedback on both sides

Management should be able to give - and receive - honest feedback and work with
employees rather than adopting a combative stance. The ability to give actionable
feedback is important here.
2.4 Revisit objectives as necessary
As the process performance continues, management should revisit objectives to see if
adjustments should be made, as well as pay attention to career development
opportunities for their employees.
This step involves reviewing the overall performance of the employee, how well the
process itself worked, and it also includes the reward - which is an extremely important
part of the overall process.
3. Reviewing
3.1 Reviewing employee performance
At the end of the yearly process performance cycle, there should be an employee
review, which is sometimes also called a performance appraisal. Typically, these are
held once a year, to look at how well the employee performed over that span of time.
There should be a clear record from previous check-ins to show the employee’s
progress throughout the year. The monthly check-ins are to help the employee with
problem-solving, adjusting goals and other future-looking tasks. This performance
review is the only step that looks backward, to assess the behavior of the past year.
3.2 Reviewing the process performance
At this stage, it is important for both management and employees to look over the
previous year and see how well the process performance worked.
Questions that can be asked are:
Were personal and organizational objectives met? If not, why?
What challenges did the employee face?
What training would help the employee perform better?
How did management feedback help? If not, why?
How could the process be made better?
Was the time spent on this process effectively?
3.3 Reviewing overall goal completion
Of course, one of the main questions to answer is ‘did the employee reach their goals?’
How well did the employee succeed at the tasks given to them throughout the year?
It is important to look at both smaller and larger goals, as this can give an indication to
problem areas where training or interventions can be applied.
3.4 Giving actionable feedback
A key part of the review is to give and receive feedback.
Management should give actionable feedback for the employee so that they know areas
where they can improve future performance.
The employee should also be invited to give feedback on the process, and how
management can do better on their end.
4. Action
The last step in process performance is Action.
4.1 Reward and recognition
The last step of the process performance is the reward and recognition.
This step is absolutely key - employees will not stay motivated if they are given no
reason to. This does not necessarily have to be monetary, although it likely will include
monetary compensation. Other rewards could be new projects, company-wide
recognition, time off, or leadership opportunities.
4.2 Setting the stage for next year’s process performance cycle
The end of the process performance cycle gives management and employees one last
chance to offer feedback on the process as a whole and asks for thoughts and feedback
for the planning stage for the next year’s cycle.

The following are some guidelines that can improve the quality of process performance
system.

1. The system must be accurate and fair. A manager does not always see an
employee’s performance accurately or comprehensively. Only by obtaining multiple
perspectives can the system achieve fairness and accuracy. Individual performance is
always a combination of the skills and capabilities of an individual put in the context of a
job. Some jobs are easy and others are difficult.

2. The system must be efficient. In some cases, systems can take an inordinate
amount of time. They end up detracting from performance instead of elevating it. The
program must be more than a “box checking “ process or a flurry of paperwork. Bottom
line, it should improve the way that people perform.
3. The system should elevate performance; not just measure against lower
limits. Traditional process performance practices have focused on insuring that
subordinates were meeting minimal performance expectations, rather than looking at
the potential upper limits. An effective system should clearly link the individual’s
performance to the organization’s strategic objectives and current initiatives. It should
emphasize a culture of taking responsibility, which goes beyond making people merely
feeling accountable.

4. Compensation decisions should be a by product of performance management.

Compensation decisions should not be the main reasons for its existence, nor should
compensation be in the driver’s seat. We would argue that only one discussion each
year should deal with compensation. Furthermore, the reality is that the great bulk of
salary increases are driven by the changes in cost of living. The differences in increases
for the great bulk of people in the middle of the curve are miniscule. Yes, there are a
few people at the extremes whose compensation will be strongly influenced by the
process performance system. A few poorer performers will get minimal or no raises. At
the other end, a few top performers will get large raises. Organizations are beginning to
realize that many groups of people inside their firm are not neatly distributed on a
normal curve.

5. The system should use multiple data sources. Every system should use some
form of multi-rater feedback. Managers who rely solely on their perceptions of a
person’s performance will introduce a certain amount of “rater bias.” The manager can
informally collect multiple inputs. The manager can also use some instruments to collect
this data. When the manager’s view is augmented with two peers and two subordinates,
rater bias is erased, allowing the system to evaluate performance accurately.

6. The process should include formal development on coaching skills. The

common element in the great majority of recently implemented performance
management systems is frequent coaching conversations. However, coaching and
providing feedback to others are skills that don’t come naturally to everyone.

• Clarifying the outcomes being sought from coaching conversations.

• Understanding the specific action steps required.

• Observing others coaching correctly (live or on video). Nothing compares to watching

someone do it right.

• Practicing and rehearsing those skills until you gain competence and confidence in
using them in real situations.
Exam 36013 – Business Process Management (Part-1)

Process governance is arguably the most important dimension for

the continued sustainability and long-term success in creating a
process focused high performance management organization.
Explain.

Ans 4

What is Process Governance?

Let’s assume that you have a brilliant idea in mind about how to improve the cycle time
of a business process. You contact your peers and supervisors and discuss the idea
with them. Your idea is appreciated and you get a nod from your team for implementing
your proposed solution.
Although you are pretty excited about leading this performance improvement initiative,
you don’t really have a clue about how to take it forward. You do not have answers to
questions such as:-
 Which are the different businesses/departments that will be affected by this
proposed change?
 Will this process initiative impact the organization structure in some shape, form or
manner?
 Is this proposed change in sync with the organization’s future road-map?
 Who will own this initiative?
 Who will be the business sponsor?
 There needs to be a business case created to implement this initiative. Where will
you get the budget from?

That’s where Process Governance comes to rescue. Process Governance addresses

how you manage a business process improvement initiative in your organization. It
includes the set of rules, standards, roles and strategies that you deploy to implement
Process governance initiatives.
Process Governance ensures that all process improvement initiatives are fully aligned
with the business objectives as well as the organization’s overall business strategy. It
also keeps a tab on the success as well as failures of any process initiative within the
organization.

Defining process governance

“It is a framework that organizes and defines these elements: roles and responsibilities,
standards, tasks, organizational structure, goals, mechanisms of control and evaluation
mechanisms; in order to facilitate management processes as an everyday management
element in organizations in order to improve the performance of their processes. “

Certainly, what is most challenging for organizations about process management is how
to encourage performance improvement and then to ensure that these improvements
are workable and maintained over the short, medium and long term. Even more difficult,
however, is the task of assuring that such actions are fully aligned with business
objectives. Given that need, it can be seen how important it is for a Process
Governance Model to exist within the organization. Governance, when well defined, well
managed and fully aligned with organizational strategy, acts to orient and facilitate
Process Management, in that it defines goals, roles, responsibilities and instruments. As
a result, efforts to improve process management are directed to a common goal,
avoiding the usual duplication of effort and converging to achieve the goals.

Process Governance may include the activities of formulating, introducing, controlling

and reviewing policies, guidelines, rules, procedures, instruments and technologies that
guide process management practices within the organization. It also includes the forms
of organization, integration, collaboration and communication among the various
different process management initiatives within the firm. The objects of Process
Governance are the organization’s value chain, the process management methodology
and the rules, roles and responsibilities that structure and organize how process
management functions. To sumarize, Process Governance can be said to enable and
steer the execution of Process Management, involving the whole organization and
clarifying what should be done, who should do it and how.
Process Governance fills the gap between an organization’s strategy and execution.
Without Process Governance, there are high chances that your process improvement
initiative will not find any takers. Initially, you may be able to woo the higher
management to implement the new process improvement initiative but without a proper
process governance framework, their interest will start dwindling with the passage of
time and there will be a high risk of your initiative going down the drains.

An efficient process governance framework ensures that the organization’s success is

based on a set of standardized processes and not on bunch of skillful employees.

The ultimate outcome of effective Process governance is the proactive, efficient

management and continuous improvement of the set of processes (and their sub--
processes) by which an organization delivers value to its customers and other
stakeholders.
Here are five key elements to BPM governance:

 measurement
 ownership
 accountability
 control
 support

1. Measurement
Measuring process performance is fundamental. Whatever else we are doing, if we are
not doing effective process performance measurement, and responding to those
measurements, then we certainly aren’t doing process management, and how would we
know if we are doing process improvement? Without agreed process measures (and
measurement methods), the concept of Process governance is meaningless.

2. Ownership

A Process Owner should be appointed to every process in an organization. Yes, every

one of them. Assign Process Owners starting from the top, i.e., from the highest level of
process or value chain. A Process Owner always “owns” all of the sub processes of that
process as well. There may be specific other people who are the Process Owners for
the sub processes, but there doesn't have to be, and, in any case, that doesn't change
the higher level ownership. Processes at any level are assigned specific Process
Owners when some aspect of that process requires closer management and control.
Ownership of sub processes might only be required for a time and then ownership at
that level is dissolved (higher level ownership remaining).
So although every process needs to be owned, we want to have as few Process
Owners as is reasonable to cover the higher levels of a process architecture.
Remember Einstien’s advice to make things as simple as possible, but not simpler.

As we move down through a hierarchy of processes (subprocesses), we eventually

reach a point where processes are bounded by a single functional area. These intra-
functional processes still need to be managed, but this becomes indistinguishable from
functional management. Process ownership is materially different to functional
management only when the process is cross- functional.

3. Accountability

The role of Process Owner is about leadership not administration. It is not a clerical
position. Accountability for a process essentially means being tasked to respond
appropriately to the current and forecast performance measurement data. Being
accountable for a process does not mean you are the one who is taken out and shot
when the performance deteriorates. It does mean though that you are the one who
needs to care about and understand the cause of cross- functional process
performance variation and propose a corrective course of action.
The owner of a cross-functional process is unlikely to be the functional manager for all
parts of the process, perhaps for none. Because of the cross-functional aspects, the
Process Owner role is more about influence than authority. Process Owners should not
be asked to influence “up” in the organization; their active targets of influence should be
peers or subordinates. Especially for higher level processes, therefore, Process Owners
need to be senior staff. Not only does this give them more chance of exercising
influence, it means that they are people with authority, capability, and resources.

4. Control

This can be the most difficult bit. How much control should a Process Owner be
required to exercise? There is a balance to be struck between being the “process
police” and a collaborative leader. The key things that need to be controlled are these:

1. the “process of process.” i.e., the framework for process management and
improvement
2. modeling conventions
3. process model change control

For an organization to have a consistent approach to process-based management there

needs to be a consistent framework and methodology. Like all other processes, this
should be subject to continuous review – but in a controlled way. Building organization-
wide process governance capability requires a consistent approach.
All process modeling activity throughout an organization should be contributing material
to a central repository of process. This provides a valuable resource for use and reuse
by all. It builds breadth and depth of understanding about the mosaic of processes that
form the organization. Consistent modeling is mandatory to achieve these ends. Implicit
in this requirement is that a detailed enterprise process architecture shapes the
repository.
5. Support

Process Owners must be supported. It is very likely that people newly appointed to
Process Owner roles will need training and coaching. Process management requires a
different mindset, and we should not assume that Process Owners arrive fully formed.
The organization must make the mandate of process ownership clear, and support the
practical exercise of that mandate. Undermining the authority of a Process Owner
with inconsistent support will kill Process governance.

Process Owners need performance data about their processes. They need this in an
appropriate format and delivered in a timely manner. Whether this is a real time
dashboard or a monthly report will depend on the nature of the process. Process
business intelligence is the lifeblood of BPM governance.

Having a Process Office is a necessary, but not sufficient, condition for process
governance. The Process Office should be the main source of support for Process
Owners, providing advice and guidance as well as data and logistics assistance.

Objectives of process governance

We can summarize the role of process governance in a company with 10 major goals:

1. Standardize process initiatives.

2. Encourage the alignment of these initiatives.
3. As a result, encourage continuous improvement of business processes.
4. Define roles and responsibilities of the processes.
5. Determine who has the power to decide the procedures.
6. Become a more agile organization in response to the emergence of changes.
7. Promote the quality of process initiatives.
8. Change management processes on a daily application of culture.
9. Align management processes with the strategic objectives of the company.
10. Ensure that the processes office coordinates these initiatives and gives the
necessary support to all areas involved.
In short, process governance should be able to promote the guidance and direction of
process management to create synergy between initiatives and continuous
improvement. For this purpose, it can make use of some initiatives.

How to implement Process Governance?

Companies build their own CoE (Center of Excellence) for Process Governance that
comprises of a team of process consultants and analysts who provide leadership,
support and training for any BPM initiative across the organization. The core team
members of the CoE are responsible to get in touch with business operation teams,
understand their pain areas and come up with performance improvement ideas.

As a part of the Process Governance CoE, you not only provide your expert services on
niche areas such as process consulting, process modelling using specific tools etc. but
you also need to have the business acumen to walk the talk with the business operation
teams and understand their business value chain.

The most important factor in implementing a successful Process Governance

framework or a CoE is getting the buy-in from the business leads and the executive
team. The business leads and executives need to be engaged at the very first stage
when you are shaping up your ideas to implement a new process improvement
initiative. They need to be involved in building the roadmap for the initiative.
Exam 36013 – Business Process Management (Part-1)

Process – focused leaders will create an environment where

innovation is part of what the organization does. Explain the three
types of innovation according to Dundon, 2002..

Ans 5

Innovate or stagnate or, put another way, innovate or stand helplessly and watch your
competitors eat your lunch. Wise leaders stimulate, encourage, reinforce, and reward
innovation. Dundon makes it clear that "innovation" is not the same thing as creativity.
Importantly, the work of innovation requires discipline with an explicit focus on results.

Dundon focuses on three major types of innovations: Efficiency Innovation, Evolutionary

Innovation and Revolutionary Innovation. All new innovations within an organization can
fall into these three categories. The type of these three innovations the organization
chooses is dependent on what goals the organization seeks.

Efficiency Innovations
Efficiency Innovations deals with making a product or service faster or more efficient,
such as extending service hours of a fast food chain
Efficiency innovation often assumes the form of a process improvement or a more
efficient business model. It enables businesses to:
 simplify and streamline their existing processes
 produce their existing products at a lower cost
 sell their products or services to their existing customers at lower prices
This type of innovation can have a major impact on a business. It can raise its
productivity and competitiveness, optimize its resource allocation and increase bottom-
line savings and profits.
Efficiency innovation examples
Many innovative solutions could help you increase efficiency in your business. For
example:
 waste minimization technologies and processes could help reduce costs
  business process improvements could help increase productivity
 standardization in supply chain (eg through lean processes) could increase your
competitiveness or add value to existing products or services
 finding cheaper materials to make existing products could boost your savings

Improve efficiency through innovation

The inspiration for innovative ideas can come from both within your business and
externally - from customers, suppliers, technological advances, etc. The key is to filter
the ideas, so that you end up investing in those ideas which are most likely to deliver
the best returns.
The following are some suggestions to help encourage an innovative atmosphere within
your business:
 Share knowledge - Businesses are more innovative when staff know and
understand what's happening in other areas. Someone may have an idea that
could also benefit another department.

 Encourage ideas - Make sure people feel able to share their ideas without risk of
them being criticized or ridiculed. You could also capture ideas using
brainstorms, workshops and/or suggestion boxes.

 Involve everyone - Recognize that the winning idea could come from anywhere or
anyone within your business. Encourage everyone to contribute their
suggestions.

 Reward success - Offer incentives to staff for coming up with ideas that increase
your bottom line.

 Accept risks - It's impossible to innovate without taking risks. If an idea fails, don't
blame the person who made the original suggestion or this may discourage staff
from contributing ideas in the future.
deals with making a product or service faster or more efficient, such as extending
service hours of a fast food chain.
Evolutionary innovation

Evolutionary innovation deals with making an already existing service or product

"distinctly new and better," such as the ATM for 24 hour banking.

Evolutionary innovation tends to be slow and focused on adaption rather than

disruption. When innovating in an evolutionary manner, the focus is on incremental and
linear improvements, not on creating new markets. Evolutionary innovation is the
backbone of most businesses, and what makes products valuable for consumers.

The example of evolutionary innovation is both the iPhone, iPod, and iPad. These three
products were not the first in their respective markets. Instead, Apple took already
existing products and enhanced them to markets that already existed

Toyota is another great example of evolutionary innovation in practice. At the focus on

Toyota’s brand and development is the Japanese word kaizen. Kaizen translates as
continuous improvement, which is an evolutionary innovation by another name. This
focus is expressed by Toyota’s focus on long-term solutions that customers of today are
interested in. They are not attempting to reinvent the car or create a product that will
disrupt the entire car market. Instead, Toyota focuses on building better cars for already
existing markets.

Revolutionary Innovation

Revolutionary Innovation focuses on introducing a radical new change to the

marketplace, such as McDonald's did with fast food.

Revolutionary innovation explores new-to-the-world opportunities and creates new

business potential evolution strongly depends on customer insight capabilities;
revolution is mainly fed by visionary foresight. Revolutionary innovation is closely
connected with high uncertainty as it addresses a future that does not exist yet, but is
going to emerge through the innovation itself.

“Revolutionary ideas rely on evolution to survive”, This important interplay also

becomes obvious upon considering the innovation adoption cycle, as discussed
by Greg Satell. He writes:
When an early innovation comes to market, there will undoubtedly be a small amount of
people who are excited about it. After all, it can do things nothing else has been able to
do before. That’s cool and the “cool crowd” gets it immediately. They are enchanted by
their new toy and start advocating it to friends. Adoption increases.
There is, however, a problem. The new product doesn’t work very well, it’s hard to use
and it’s expensive as many disruptive innovations tend to be. Many people can’t see the
point in shelling out big money to buy a product that confuses them, makes them feel
stupid and the final product experience doesn’t seem worth the effort.
That’s when a change in the basis of competition happens. Success begins to become
less a matter of features and functions and depends more on the interaction with the
user. In other words, less on engineering (in the classical sense of the word) and more
on design.

Conclusion:-
Organizations need to understand that innovation of its operational areas, especially if
revolutionary, is by nature disruptive. In selecting the approach and the business
processes to innovate, leaders should concentrate on those with the greatest impact on
an organization’s strategic objectives.

A critical change in attitude is required, namely the engagement by managers of the

staff and a willingness to take risks, which opens the possibility of failure. However, as
Einstein is purported to have said: ‘anyone who has never made a mistake has never
made anything new’. Over controlling managers need to be assisted and coached so
that they themselves can guide and coach their staff. Innovation will only come when
staff feel safe that their suggestions will be taken seriously.

However, innovation within an organization just does not suddenly arrive by itself. Nor
does it arrive by the sudden generation and use of slogans or the recruitment of ‘clever’
people. Innovation needs to be nurtured and facilitated, and sufficient time needs to be
allocated to allow it to emerge.

Google is an innovative organization and requires all of its employees to spend 20% of
their time working on any project or idea of their choosing (Google, 2007). Google
services such as Gmail and Google News started as one of these 20% ideas. The ideas
that people generate during this ‘20% time’ will often have nothing to do with Google’s
current core business.This provides and environment in which fundamentally different
services and products may be generated.

Not all organizations need to allocate 20% of their staff time to innovation. It all depends
on how the organization wants to position itself. The more innovative it wants to be, the
more time it needs to allocate and provide the necessary facilitation and support to use
this time effectively.

Other ways of being innovative include:

 Joint study programs – a popular approach is for a group of subject matter

experts, leaders or potential leaders to complete a management course together,
promote teamwork among the participants. Either in-house or at a university. The
assignments should be complete group and relate to the specific circumstances
within the organization.
 Award programs, idea campaigns and contests – triggers employees to provide
ideas and concepts. The challenge is to have people think outside-the- box and
come up with ground-breaking innovations and ideas.
 Job rotation and internships – provides employees with the chance to experience
different views and aspects of an organization. This can be especially powerful
when people are brought into a business unit which has a track record for
innovation and/or process improvements.