Innovation can be disruptive; but it can also be tremendously productive, especially when it comes to process innovation.
When people think of innovation, they often think of creative endeavors that actually disrupt an entire sector of business. Airbnb turned the hotel industry on its head; Uber disrupted taxi and car service companies; and the iPod made CDs practically obsolete. But there’s also a form of innovation that may not be the next shiny object you’ve just got to possess; rather, it’s an innovation that enables companies to improve efficiency and productivity while reducing costs and increasing profitability. That is process innovation; implementing a new or different and better production, process, or delivery method.
Process innovation, unlike disruptive innovation, provides speed, accuracy, agility, and a better bottom line. When it comes to business functions, process innovation can mean a solution that transforms and streamlines the invoice approval and payment processes or one that simplifies the supply chain and logistics. In these instances, innovation’s goal is to substantially improve the way that a company conducts its business.
So how does process innovation differ from process improvement? Aren’t they really one and the same? Not really. Think of process improvement as a way of handling an existing process better. In a sense, that’s what CDs (which I mentioned in the first paragraph) are on the product end…an improvement on the cassette tape which was itself an improvement on vinyl. These improvements still enabled music production companies to sell their product, just in a different format…it didn’t disrupt the industry itself like the iPod and streaming music did.
So process innovation means an existing process is handled differently rather than simply improved upon. Take, as an example, accounts payable and accounts receivable automation. Invoice approvals and payment processing have been transformed from lumbering, paper- and labor-intensive finance functions into streamlined processes that provide not only faster and more accurate payments to suppliers, but also greater visibility into invoice and payment status, as well as insight into transactional history. Purchase orders still exist; invoices still exist; matching is still a necessity; yet by using an AP or AR automated solution, the departments are handling an age-old process in a totally different manner, and the result for the company is more efficiency, savings, accuracy, and knowledge.
Technology has been the great enabler when it comes to all different types of process innovation. And the cloud has democratized this technology, so every company, regardless of size, is able to avail itself of some form of process innovation. In a global economy, where businesses need to be more agile to survive and thrive, taking advantage of and implementing process innovation is an ultimately smart and affordable necessity.