Innovation vs. Efficiency

The blog Knowledge Jolt with Jack recently posted on potential conflict between innovation vs. efficiency. Jack cites the example of the recent experience of the highly innovative 3M company, following CEO turnover. At 3M, the latest CEO is now rolling back the process efficiency initiatives introduced by the previous CEO. As the new CEO notes, “You can’t put a Six Sigma process into [an] area and say, well, I’m getting behind on invention, so I’m going to schedule myself for three good ideas on Wednesday and two on Friday. That’s not how creativity works.”

Jack raises the question of whether there is a fundamental conflict between process improvement activities along the lines of Six Sigma, and the kind of creativity and innovation that are fundamental to 3M’s corporate identity. Jack considers some research on Six Sigma and innovation suggesting that Six Sigma tends to lead to more incremental innovation at the expense of more breakthrough ‘blue sky’ innovation work and then suggests that “The innovation literature makes it clear that the job of innovation has to be allowed to be separate from the job of operations management.”

But this last claim may be difficult to sustain, depending on what is meant by “operations management.” If “operations management” really means management of operations taking ownership of process improvements in a way that may include bottom-up input from employees and customers, I don’t believe there is any inherent incompatibility between operations management and innovation. For example, it is a well recognised fact that Japanese approaches to process and quality improvement and cost reductions using approaches based on Kaizen lead also to programs of sustained and accumulative innovation. Japanese mass market cars are regarded as both cheap and of good quality, and Japanese car makers as reasonably innovative. There is no inherent conflict or trade-off.

If “operations management” is on the other hand interpreted as top-down management dictating specific process improvements and operating standards and pushing them onto employees, I would agree with Jack’s statement – but then I would question if such a top-down approach uninformed by employee and customer experience is the best approach anyway.

There are at least two significant differences between Six Sigma and approaches such as Kaizen.

First, in Six Sigma the focus is predominantly on cost reduction, process improvement and increased quality in specific focus areas that are predetermined to be important by management or by consultants. Process improvement work in this case is often ‘top-down.’ In Kaizen, by contrast, both process improvement and innovation are largely ‘bottom-up,’ driven by people at the coalface. People are exposed to problems, and generate ideas for solutions. Fixing processes and facilitating incremental innovation go hand in hand.

Second, there may be significant issues with the cultural presumptions underlying the two approaches and how the approaches impact on developing the culture – Six Sigma when applied to people processes tends to be focused around a performance culture rather than an innovation culture, while 3M’s culture or a Kaizen culture may favour quite different values such as allowing risk taking and tolerating failures, or allowing time for experimenting with ideas.

The issue, I believe, is not so much that process improvement and cost reduction are somehow inherently in conflict with innovation – the issue is that combining a top-down executive managed process improvement process with one set of cultural presumptions with a bottom-up innovation process with another set of cultural presumptions might not be such a good fit. The key message is that when selecting your box of tools, it is important to understand the assumptions inherent in the tool and select a compatible set of tools to achieve the desired outcomes.

It may well have been better to try to marry 3Ms innovation with Lean Six Sigma with more of the accompanying Kaizen culture to build on 3Ms existing culture of innovation, to achieve innovation as well as efficiency rather than cannibalising creativity to try to achieve efficiency.