Writing in the Harvard Business Review, Michael Hammer once defined operations innovation as “truly deep change” in core activities and processes. However, he added, this entails more than mere operational improvement or excellence—it necessitates “a departure from familiar norms and requires major changes in how departments conduct their work and relate to one another.” More than a decade later, well into the era of digital operations, such deep change is more essential than ever.
A new industrial revolution is upon us—one in which digital technologies redefine business strategy and operational execution. Executives are pressured to innovate and make intelligent investments in game-changing technological advances such as the Internet of Things (IoT), mobility, cloud computing and analytics. With digital technology powering this operations revolution, technological change is at the forefront of operations executives’ awareness.
Take a survey of today’s most successful companies, and chances are good that they’ll describe operational innovation as a significant driver of their exceptional performance. Not only are they doing things better—they are doing things differently. More than ever before, rethinking and remaking fundamental activities can give innovators a decisive competitive advantage, even allowing them to transform their entire industry.
And this isn’t just speculation. When we surveyed such companies ourselves, we found that more than 40 percent of our respondents were using cognitive computing in their day-to-day operations. What’s more, 71 percent were using advanced analytics in three or more areas of their business—up 10 percent from the year before.
Yes, times are changing, and digital technology is driving the changes that are bringing in the operations revolution. Surveying 750 operations executives from around the globe, we found that technological change was a top priority for our respondents—behind only economic conditions as the trend most expected to affect their companies in the near term.
Technology affects operations in two primary ways. As executives use digital tools to enhance their operations, the push for operational innovation grows, allowing them to work quickly and efficiently behind the scenes. At the same time, operations are driven by the need to support new generations of technology-enabled products and services in the marketplace. Accordingly, as new competitive models remake industries and blur traditional sector boundaries, innovation and process optimization are of primary importance.
Capitalizing on changes of such magnitude requires a great deal of planning. But even though more and more companies have outlined digital operations strategies, substantial opportunity remains for businesses to gain the competitive advantage through operational innovation. Conversely, companies that shirk the investments and process changes essential to operational innovation are in danger of being left behind in their industry, not least because keeping pace with the digital operations revolution requires an understanding of the following:
Want to learn more? Read the special IBM report Thinking Out of the Toolbox for a discussion of the imperatives and implications of the digital operations revolution, and learn how you can make operations innovation an integral part of your organization. If you have any further questions, contact us today.
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