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A Referee Report

The document summarizes an article about operational innovation and how it can transform companies. It discusses how operational innovation focuses on finding new ways to do tasks more efficiently and reduce costs. It outlines some of the key dimensions companies should examine when pursuing operational innovation, including who should do the work and when. It also notes that operational innovation is difficult for companies and must be carefully planned.

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Sandesh Shah
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Download as PDF, TXT or read online on Scribd
27 views

A Referee Report

The document summarizes an article about operational innovation and how it can transform companies. It discusses how operational innovation focuses on finding new ways to do tasks more efficiently and reduce costs. It outlines some of the key dimensions companies should examine when pursuing operational innovation, including who should do the work and when. It also notes that operational innovation is difficult for companies and must be carefully planned.

Uploaded by

Sandesh Shah
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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A Referee Report

On

“Deep Change-How Operational Innovation Can Transform


Your Company”

Submitted By:
Sandesh Kumar Shah
MBA IV, Section “A”
Ace Institute of Management

Submitted To:
Mr. Rabindra Silwal
Instructor
Operations and Service Management
Ace Institute of Management

Date of Submission: July 25, 2022


In the age of fierce competition, cutting back on the price of the product being offered is quite
difficult to attain sustainable profits. So, to minimize losses and compete with ever-increasing
business rivals, an operation is critical. Keeping all other variables constant, it is operations
that generate the most profit for any business in the long run. It is also a place where you can
create innovative ideas. Marketing may be a sector for some, but marketing schemes fade so
quickly that it is difficult for businesses to keep track of them. For-profits, it is all but
operations. Cutting costs at the operational level, combined with innovations, has repeatedly
opened the way for profit at various levels. Large corporations have drawn parallels to this to
stay competitive and move ahead of others. Toyota, Walmart, and others have reengineered
their entire systems, reduced operational costs, and innovated in operations, making them the
most valuable companies that have thrived for so long. Hence. In the long run, operations
management is the key to business success.

Michael Hammer defined the importance of operation management in the article by referring
to Progressive Insurance, an automobile insurer whose growth came "nor through acquisition
or mergers." However, through:
 Substantial innovations in everyday operation,
 Revealing their potential to produce a significant reduction in cost
 Increase in productivity, and
 Improved customer satisfaction
Through these improvements, Progressive was able to see significant growth in sales in 2004
compared to 1991.

Michael Hammer's definition of Operational Innovation is the process of innovating


operational activities and using unconventional methods to help businesses reduce operating
costs, which make up a significant portion of total costs. The terms operation improvement and
operational excellence are sometimes used interchangeably with the term operation innovation.
However, I t is important to note that operation innovation implies finding new ways to do the
same things in better ways. The way Hammer explains operational innovation in this article
will undoubtedly have an impact on business. Observing companies like Progressive, Wal-
Mart, and Toyota as examples, this article explains how a company can implement operational
innovation, which ultimately proves to be much more valuable than the loud and exciting short-
term changes that many companies engage in today.

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According to the author, operational innovation is still a task shared by many departments, with
no single group responsible for supervising and tracking it. Because all of the line managers
are focused on their departments, operational innovation is lagging. To stay ahead of the curve
in today's globalized and competitive business world, operational excellence and operational
improvement are insufficient. Executives who understand operational innovation and the
barriers to it can effectively use such innovation to gain a competitive advantage. However,
looking at it from a different angle, many businesses are not in the right place or at the right
time to embark on a sudden innovation and abandon previous methods. This sudden change
may cost them more than just the small changes.

Michael mentions in the report that most companies have been successful by focusing on
specific areas for innovation and working on those programs and creating a specific goal and
focusing on only that. However, these apply to well-structured companies. Many companies
are not properly structured and a lot of them could be in their early years or facing internal
issues. Having one specific goal is equal to having a myopic vision and not looking at the entire
company from a bird's eye.

Hammer lists four ways that help us discover new ways, not just better ways, of operating:
1. Benchmark with companies outside your industry
2. Identify the assumptions that constrain how you think about your work
3. Turn special cases into everyday actions
4. Rethink critical dimensions of work

It is necessary to understand that the list does not provide definitive results, but rather leaves a
company wondering whether to continue or give up the change. Operational innovation is a
lasting basis for superior performance. If we understand how operational innovation happens
and understands the barriers that prevent it from happening, it can add to the competitive edge
of the company.

According to the author, any successful operational innovation should examine the following
seven key dimensions of work:
1. What results are required to be delivered?
2. Who should do the work?
3. Where the work should be done?

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4. When should the work be done?
5. Does the work or all aspects of it need to be done at all?
6. What information should be provided to the performers?
7. How thoroughly does each aspect of the work need to be performed?

Operational innovations have the potential to destroy competitors, disrupt entire industries, or
even destroy the company itself. The author cited some success stories from Dell, Toyota, and
Wal-Mart. However, less than 10% of large corporations have made serious efforts to achieve
operational innovation. The company's success cannot be attributed solely to operational
innovation. Organizational culture, business strategy, human resource policy, operational
excellence, and operational improvement are all important factors in the company's success.
Luck and time can also play a significant role in success. This emphasizes that it is not an easy
process or decision to make. The grass is always greener on the other side, and companies must
first understand and plan before embarking on the organizational innovation journey. As a
result, the company should strive for consistent continuous operational excellence while also
considering market demand and the need for innovation.

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