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Developing a collaborative innovation model

Innovation is a critical element in the supply chain. As such, it is important that companies assess the culture of innovation in their organisation.
By Victor Leftwick, director: Business Solutions and Innovation, CHEP South Africa

Assessing innovation would begin by asking questions like:
  • Does the company obsessively focus on developing new products that make competitors’ old ones obsolete?
  • Are employees constantly being developed, for performance and competitive advantage?
  • Is the work environment conducive to innovation and experimentation?
  • Is the company as innovative as Google or any of the icons of innovation?
If the company can answer yes to all these questions, then it has the main ingredients for success. If not, then it joins the long list of companies that are still trying to get the mix right. Successful companies embrace innovation, and make sure an innovation culture and the tools for implementation are in place.

In reality, innovation management is a form of looking into the future, encouraging creativity and adopting an imaginative approach to enable a business to carve out new opportunities ahead of its competitors.

It is not just large companies that need to do this.

Businesses of all sizes must innovate to compete and survive. They must create new products and services for new and existing markets. They need to be creative and come up with, evaluate and implement innovative products and services faster than ever before.

The result is that every activity in the company will speed up: processes, functions, data, inventory turns and speed to market, which will force employees to learn the new language of innovation. A business-asusual approach is not sufficient in a fiercely competitive environment. The challenges require a new approach to innovation management – a new management paradigm.

Proven management tools, techniques and clichés are being challenged and shelved for a new set of rules and a new way of doing business. The management style of the future is no longer command and control.

Open leadership styles and trust in technology are sweeping boardrooms, the C-suite, office suites and cubicles everywhere.

Innovation management

According to Idris Mootee who wrote the book ‘Design Thinking for Strategic Innovation’, Innovation Management is about more than just planning new products, services, brand extensions, or technology inventions. It’s about imagining, mobilising, and competing in new ways. This may sound like it’s just another day in the office; however, it is clear that imagining new ideas and competing in new ways is extremely challenging, even for the biggest and best of companies.

Those of you involved in moving products from manufacturer to the consumer, may be familiar with CHEP pallets, reusable produce crates, auto containers and, perhaps, agricultural bins. Globally, CHEP owns hundreds of millions of pallets, crates and containers, which make billions of journeys each year, throughout complex supply chains in multiple industries across more than 50 countries.

However, CHEP in South Africa is not yet universally known for world-class Track and Trace solutions, Last Mile Solutions such as Floor Ready Displays or even SMART Phone apps to help record and trace product movements and drivers via GPS. To seize the opportunities that come from harnessing worldclass technologies, CHEP in South Africa is radically changing the way it thinks and acts.

CHEP begins by becoming deeply familiar with everything happening within the existing and potential customer environments and applying this knowledge to come up with new solutions, new technologies and new products, together with customers. For this reason CHEP has launched a company-wide innovation programme aimed at encouraging its employees to focus more closely on innovative thinking.

Building on several years of innovation programmes, CHEP South Africa will be rolling-out a host of new tools and techniques to cover the spectrum of innovation management ranging from running campaigns that stimulate idea generation to evaluating funding, mockups and delivery platforms. The initial driver of this renewed focus is to embed a strong innovative culture within the organisation.

An innovation culture can be challenging to the status quo. CHEP recognised the importance of the business being unafraid of failure, unafraid of moving into uncharted markets and channels, bold, willing to learn from mistakes and to utilise the global scale of CHEP to take advantage of new opportunities. The company’s DNA can be summarised in the words of Winston Churchill, “Success is not final, failure is not fatal. It is the courage to continue that counts”.

This is only the beginning, as the energy generated from the determination to be bold needs to be backed by a vision, strategy, leadership, communications, resources and funding.

Key preparation elements

Alongside the building block of culture, are four key elements to prepare an organisation to steadily drive growth:

  • New products and services: The key measure of innovation is the percentage of revenue derived from new products.
  • Process: Innovation cannot be random, accidental or ad hoc to be sustainable. It requires robust innovation processes to move potential solutions from rough concepts to the point where they deliver value to both internal and external customers.
  • Environment: Organisations do not exist in a vacuum, so it is critical to energise and sustain an environment of constant learning and experimentation. This context consists of the physical environment, the organisational climate, and the culture of the business.
  • People: At its most fundamental level, innovation is driven by people, and their ability to think creatively and use creativity to collaborate and innovate.
As a business builds an organisation that sustains innovation, it is necessary to develop strategies focused on three levels:

  • Individual: The building block of a large enterprise is the individual human being. If an individual doesn’t initiate, by sharing a creative thought or taking a small specific action, nothing happens. In turn, while big ideas can come from individuals, moving things forward requires the involvement of others.

  • Group/team: At the group/team level, change begins happening which usually is more meaningful (value-creating) for the enterprise. Whether it is the group’s process, the offering they’re responsible for, or the environment in which they work, teams bring the many skills that are required to go from ‘brilliant idea’ to ‘successful launch’. At its essence, innovation is a team sport.

  • Organisation/enterprise: When many teams are creatively and productively working towards similar growth goals, the result is an organisation that supports them.

By looking at each of the four key elements and looking at them at the three levels, it can be seen how the drivers of innovation and continuous improvement fit together. Customer-led innovation is also important, but we should not always expect customers to provide magic solutions. This is best illustrated by another story from that innovative genius Steve Jobs.

When he launched the iPod, consumers were not asking for the product as their needs were met by existing products such as the Walkman and early MP3 players. What Apple did was to create a better, more compact and efficient way of listening and getting music wrapped up in a fun and easy-to-use gadget. So the lesson here is to listen to your customers and observe their challenges, and opportunities will emerge.

Some examples from CHEP

Floor ready displays (FRDs) – When studying global retail trends CHEP realised the importance of developing retail ready packaging. FRDs were found to be a necessary and effective tool for the creation of instore brand awareness. The problem was lack of affordable, standardised, sustainable and easy to execute FRDs.

A global working group was set up by CHEP to better understand current pricing, end-to-end supply chain map and the cost model to utilise the displays. The outputs of this group led to recommendations for 13 standards for the use of reusable FRDs.

Utilisation of these standards led to CHEP identifying an innovative portable product that reduces end-toend costs for promotional displays by replacing the traditional disposable cardboard assembly with a reusable modular unit.

Concept summary – What resulted was an innovative product that can be pooled and reduce end-to-end costs for promotional displays by replacing the traditionaldisposable cardboard assembly with a reusable modular unit.

Innovation in sales – In South Africa, CHEP has adopted a consultative sales approach or Value Chain Analysis process that is leading to the development of new projects. These are joint collaboration projects with customers and potential customers to find opportunities of mutual value. In a value chain analysis, value chain managers work with the customer’s selected project team to get a robust understanding of the merits and challenges of the current processes and practices in place in the customer’s value chain.

The objective of the analysis is to gain a detailed understanding of how the customer’s value chain operates, and to uncover all the associated costs, waste and inefficiencies specific to the current system in place. A six sigma tool for identifying waste adds value to this process.

The robust understanding of the as-is situation that the joint team develops, enables an insight into areas of opportunity for mutual value to be created. CHEP then provides the customer with a proposal that quantifies the value and the key drivers needed to unlock the value. The beauty of the process is that it is relatively simple.

The way ahead

In summary the future is upon us. The speed of disruption that permeates business models is causing businesses and industries to rethink how they operate, and re-purpose what they have. Welcome to innovation management, a new business paradigm and a more sustainable future.
Date: 02 Feb 2015

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