My previous business insight was about process innovation, with more to follow on product innovation. However, some readers commented that many Western economies are now largely service-based, so what has process innovation got to do with that?
Be assured, process innovation is not confined to the manufacturing sector. It’s just as relevant to any business, or indeed life itself.
The service is unchanged – the profit gain is enormous
Consider three stunning examples of business processes undertaken with insightful observations that achieve outcomes out of all proportion to the simple changes made.
Trains: In one case a rail company was looking to update its fleet of suburban commuter trains, which ran every seven minutes stopping at 30 stations along the route. In considering the design for new carriages a review was made of the process involved in people getting on and off the trains.
It was observed, not surprisingly, that the “hang time” (how long a train spends at a platform) when passengers are boarding and alighting related to the number of people using the service, with peak times of course showing the longest interval.
In considering ways of reducing hang time, experiments were conducted with different seating configurations to allow better people movement and door openings also increased from 1.9m to 2.3m. The investigation concluded that optimal seating arrangement and door openings of 2.2m would considerably reduce average hang time by an average of 14 seconds per stop. This may seem insignificant, but across 30 stations this amounted to seven minutes.
With a seven-minute train frequency, this tiny saving per station allowed the company to operate with the same service, but with one less complete train. The saving in capital outlay ran to tens of millions of dollars.
Airlines: The second case involved a major USA based airline looking to improve profits by training staff to be more vigilant for opportunities.
An alert flight attendant observed that on meal-services where a salad was provided, most people chose not to eat the olive in the salad. Further, the company providing the prepacked salads had a pricing scheme that allowed three ingredients for a low standard price. Any fourth ingredient, in this case, the olive, was supplied at a much higher marginal cost. When the flight attendant observed the wastage of the olive the suggestion was made to dispense with it as a normal salad ingredient. Instead, olives could be offered from a jar kept in the galley to any customer who requested one. The effect on customers was practically nil, but the cost-saving ran to more than $500,000 a year – just for withholding a seemingly insignificant olive.
Couriers: Another well-documented example is for courier drivers in the USA that, in city deliveries, will drive further rather than make a left turn into traffic. The time saved by this simple rule is said to run into millions of dollars annually in time and wages saved.
What’s the message?
It doesn’t matter what you do, there are almost always hidden ways to make improvements. Even the smallest change can sometimes deliver huge profits.
Have you taught your people the art of “observation”, it’s fun and it’s easy. The most potent example is that of a blind person that can detect all sorts of things by sound alone. Sighted people can as well, but they are “blinded” by their ability to see. A simple experiment easily proves the point and opens the way to much-heightened alertness and observation.
Roger La Salle, www.innovationtraining.com.au