A lot of people like to use the performance improvement methods to measure efficiency.  So they will conduct six sigma audits or balanced scorecard type audits.  A balanced scorecard audit can help pull out any areas where the company is losing money by isolating specific departments, auditing the processes used in that department and notating where there seem to be problems in each process that can cause an inefficiency.  The ISO 14001 audit and Environmental Health and Safety audits programs also do this, but in regards to sustainability.  Since sustainability is up and coming, this has been considered a part of current day innovation.  There's also ISO 9001 used to test management practices to measure efficiency.  If you can create a data system in which you can collect data for each of these methods and then do a cross examination of the findings of each, then a full measure of efficiency could be discovered and then any productivity needs could be located and integrated asap.  Some people will even conduct a full interview/survey method of regular employees and cross examine with higher ups to find inefficiencies.  This is because the regular employees use the processes every day, and they can say where they are having problems at or what things slow them down or tend to cause an issue in productivity.  This is a great way to honestly locate inefficiencies from the bottom up.  This runs along with the Japanese concept of Jidoko, where these problems are located on the ground floor, by bottom level employees, as an occurrence happens.  With systems that are open, allowing for freely constant communications between ground level employees and higher management, encouraging high levels of employee engagement, this system of Jidoko is optimized and employees are encouraged to offer solutions when problems are found.  The thing is, management needs to be open with the employees, share with them these efficiency measuring techniques, allow them to participate in surveys and interviews, and encourage them to offer feedback about current processes as much as possible.  Having regular team meetings for employees, and even annual company wide meetings where employees engage in activities, workshops and banquet ceremonies that honor employees of some merit or another encourages creative solution processes as well.  I remember an employer that had a star program.  Employees would nominate another based on some service they provided to the company that seemed exemplary.  In order to nominate an employee, these employees had to also suggest a system improvement at the company.  This way both employees would get honored.  Most suggestions were closely considered in this box, and many times actually integrated, and once the integrated system was working well, the employee suggesting it would be honored for the suggestion.  It was quite encouraging.  There were also work bonuses offered for employees that had provided suggestions that really helped.

Thanks Bonnie and Shahab for your responses.

Measuring efficiency in departments that produce the same product each time is well documented, and Bonnie gives an excellent summary.

Innovation and new product design are much more difficult to measure. The best manufacturing methods would not have saved Thorntons, the slide rule makers from the electronic calculator. Balanced scorecard can help to some extent, by ensuring the correct finance is applied to innovation departments and can compare with simiar industries. However, new and disruptive technologies from a competitor can decimate sales.look at Blackberry and Nokia as recent examples where Apple and Samsung have taken market share.

In my view, one should not blindly apply metrics that work well in a manufacturing context to the design process. Manufacturing goal is to produce the same part every time. The design process has to produce a radically different product each time.

Whilst working for Rolls-Royce, we found that knowledge and understanding were key elements. I believe the SPEDE knowledge acquisition process we researched is still being used, but under a different name.

Let me know if you need more detail, and I will hunt out some presentations.

Best regards

Paul

Hello Paul,

Thanks for your response. I shall be grateful if you can provide details to help me have a deeper insight.

Also, do you feel that a company too hard wired to systems like the ISO and others may not be as innovative as others? Further, what are your thoughts regarding innovations in Indian companies? Thanks in advance for your help.

Regards,

Sumita

Having spent quite some time on the Indian sub-continent and sub-Saharan Africa, my view is that it is essential that both continents should quickly embrace ISO (etc.) standards if they wish to innovate. The reason for this is that innovation requires support from manufacturing type processes. No point in having a new product idea if you can't make the prototype in which to test the idea. Even radical innovations need existing parts or materials. If you have to wait months to buy it, someone else may get to the market first.

So the parts of the organisation that deliver standard parts should be made highly efficient first. Then an  innovation process should be developed that encourages fail fast learn fast. The ISO processes enable the fail fast.

The key is to recognise when to use innovative thinking and when to use standard process. Some years ago, (i think it was ) Xerox showed that one could not predict when a product would be successful just by looking at the product requirements. Successful innovative companies produced maybe 10 times more ideas at the beginning of the process. Each idea goes through a series of gates that reduced the number each time. The gates are based on good standard practice of business payback, market research etc.

If one product fails, another is close behind in the new product design process. So failure of an individual product does not severely affect the whole company; the risk of failure is minimised, and hence risky ideas can be pursued.

It is interesting to note that in the innovative process, perhaps 90% uses ISO process, to make rigs, prototypes, test equipment etc. So without the ISO processes innovation would take much longer. It is time from inception to volume (of a new product) that  wins.

Best

Paul

Thanks Paul

Dear Sumita,

reference as promised http://www.slidefinder.net/s/spede_overview_paul_riley/mig2001april-spede/9299503

Paul

Thanks again Paul!

Take a look at the work by Charles Sabel on "learning by monitoring" available on his working papers page: http://web.law.columbia.edu/law-economic-studies/working-papers/working-papers-number/working-papers-101-110