Innovation for quality improvement

The meaning of “innovation” is revealed by its Latin root, nova, or new. It is generally under­stood as the introduction of a new thing or method. Innovation is the embodiment, com­bination or synthesis of knowledge in original, relevant, valued new products, processes or services.

A convenient definition of innovation from an organizational perspective is given by Luecke and Katz4 who wrote, “Innovation is generally understood as the successful intro­duction of a new thing or method. Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services.”

Systematic innovation consists of purposeful and organized search for changes. Systematic innovation means monitoring the seven sources for innovative opportunities mentioned below:

  • The unexpected—unexpected success, unexpected failure, unexpected outside event.
  • The incongruity between reality as it actually is and reality as it is assumed to be or as it “ought to be.”
  • Innovation based on process need.
  • Changes in industry structure or market structure that catches everyone unawares.
  • Demographics (population changes).
  • Changes in perception, mood and meaning.
  • New knowledge—scientific and non-scientific innovation is all about value addition through changed products, processes and concepts, markets, organization, etc.

Box 10.2 discusses the innovation strategies practised at Birla White Cement.

Box 10.2 Innovation Drivers at Birla White Cement

Although India is the fourth-largest consumer of white cement in the world, it has no place in terms of per capita consumption because of its high population base. White cement applications also lost out on consumer acceptance because of the high levels of skill, effort and time required to finish floor and wall surfaces. This trend is reflected in the compounded annual growth rate (CAGR) of the white cement industry.

The CAGR in the block period of 1991 to 1995 and 1996 to 2000 was 5.86 per cent and 6.19 per cent, respectively. In the subsequent block period of 2000 to 2005, the CAGR almost halved to 3.67 per cent. The projection for 2005 to 2010 is 3.52 per cent notwithstanding the construction boom in India. To make matters worse, cheap imports started eating into the domestic market and manu­facturers’ share during 2000 to 2001. Birla White, a division of Grasim Industries held a brainstorm­ing session at its Kharia plant in 2001 in order to devise strategies to tackle the situation. A series of strategic decisions were made.

Innovation strategies: The business redefinition helped the team to innovate and develop new product concepts. Several concepts within the surface finishing definition were translated into tangible products in a couple of years, and trials were undertaken before formally launching these products into the market.

Birla White has been associated with architects for nearly two decades. It has succeeded in break­ing the conventional cement barrier and developing numerous designs and architectural applica­tions for walls and floors. Today, the company boasts a portfolio that ranges from the most basic wall finish to the most intricate of claddings. In addition to the wallcare putty, the company also

developed Textura, a ready-mix textured plaster, as well as Kool n Seal and GRC (glass fibre rein­forced concrete). Some of the major structures that were built using a mix of white cement and GRC include the Leela Palace in Bangalore; the Digamber Jain temple near Ajmer; the airports in Bhuj (Gujarat), Ranchi and Gaya (UP); the Kalyanprasad temple in Baroda and the Hotel Sonar Bangla (ITC) in Kolkata.

Looking into the future: It launched the Birla Yuva Ratna Award, a design competition for bud­ding architects as part of the latest step in its innovation strategy. The aim of this initiative is to encourage young architects to use white cement creatively. The entries have been both playful and eclectic, and creative use of digital technology has been at the forefront of many designs.

Source: Adapted from www.grasim.com, accessed April 2010.

1. Economic Concepts of Innovation

According to Joseph Schumpeter5, economic innovation can be defined as:

  • The introduction of a new good or of a new quality of an existing good that consumers are not yet familiar with.
  • The introduction of a new method of production that need not be founded upon a new sci­entific discovery and can also exist in a new way of handling a commodity commercially.
  • The opening of a new market, i.e. a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
  • The conquest of a new source of supply of raw materials or half-manufactured goods, irrespective of whether this source already exists or whether it has to be created first.
  • The carrying out of the new organization of any industry such as the creation of a monop­oly position or the breaking up of a monopoly position.

2. Types of Innovation

There are two major categories within which innovations fall:

  • Incremental (developmental)
  • Radical (breakthrough)

Incremental innovation exploits existing forms or technologies. It either improves some­thing that already exists, making it “new and improved,” or reconfigures an existing form or technology to serve some other purpose.

A radical innovation is something new to the world. Radical innovations are based on a new paradigm and typically lead to the discovery of new markets and applications. Radical and incremental innovations often operate hand in hand. Thus, the introduction of a suc­cessful radical innovation is often followed by a period of incremental innovations, which improves its performance or extends its application. Many radical innovations have the potential to displace established technologies as the transistor did when introduced into the world of vacuum tubes or to create entirely new markets, or both.

A dominant design for cooling a room for many years was the ceiling fan. Changes to its blade design, enabling it to displace more air mass, possess a more quiet motor operation and new colours to match room decor, may represent examples of incremental innovation. In contrast, development of central air conditioning represents a radical innovation as it required new components, and different technologies were introduced along with new technical disciplines and relationships. This new radical innovation renders the core competencies of the fan manufacturers obsolete and incapable of being leveraged for central air-conditioning systems. In the entire context stated above, the manufacturer or the service provider is seeking an increasingly higher value.

The first generation and the simplest definition of value is “to reliably provide the given function at the least cost,” to be represented as:

Value = Function/Cost

Over the years, many dimensions are added to these simple definitions, such as

The third generation, yet the simpler definition of value in the innovation context may be defined as:

Value = Benefits – (Cost + Harmful Effects)

The underlying philosophy of innovation is to enhance the value of a product, process or a strategy to create wealth and more wealth. We need ideas in order to innovate. Ideas themselves are not enough. History has shown us many great ideas. However, these have not been implemented, nor have they created wealth nor have they helped innovate something. These ideas need to be creative, backed by a strong strategy for implementation. In order to systematically innovate the value of a product, process or a strategy, it is proposed that one follows the five-step methodology:

  1. I (Identify the opportunity for innovation)
  2. D (Develop creative alternatives)
  3. E (Evaluate the alternatives and evolve the best alternative)
  4. A (Action)
  5. S (Satisfy the condition, customers and sell the idea)

These five steps are derived from PDCA (Plan, Do, Check, Act) cycle of innovation. Figure 10.2 is an innovation pentagon. This can be rotated to continuously enhance the value along the S curve. The concept of the S curve is discussed in detail in the following section.

3. Diffusion of Innovation-The S Curve

The lifecycle of innovation can be described with the help of the S curve. The S curve is derived from half of a normal distribution curve. There is an assumption that new products are likely to follow a product lifecycle, i.e. a start-up phase, a rapid increase in rev­enue and eventual decline. In fact, a great majority of innovations never get off the bottom of the curve and never produce normal returns.

Every product, process, service or a strategy follows a typical S curve. The course of successful technological innovation is often described through an S-shaped curve like the one shown in Figure 10.3. Here, the horizontal axis reflects the unfolding history of tech­nical innovations (time and investment), while the vertical axis indicates some particular dimension of product performance or cost competitiveness. At first, performance rises fast and from then on, once a decline in slope of the curve begins, the productivity is unlikely to increase much by heavy research and development expenses. More likely, a technologi­cal discontinuity will occur where an innovative technology is introduced and this rap­idly creates massive gains in productivity. At the start of the curve, a significant effort is needed to get an achievement. However, once this basic learning is complete, productiv­ity can advance significantly with little marginal effort. After a few years, further advances get more and more fractional. As technology generations change, few incumbents survive because they lack the features to adapt to new technologies.

S curves are a phenomenon showing the typical path of performance in relation to investment in research and development. The S curve method was introduced as a result of several studies on technologies and firms performance. An S curve describes how the performance or cost characteristics of a technology change with time and continued invest­ments. In the generalized model, a newly introduced technology is crude and not particu­larly competitive with established rivals, except in specialized niche markets. Performance or cost characteristics or both enjoy a period of rapid and steady improvement as techni­cal issues are solved. Eventually, the innovation’s performance or costs may equal and per­haps exceed those of the established rival. Eventually, the new technology enters a period of maturity in which improvements are small, infrequent and increasingly costly. At this point, it becomes vulnerable to attack by still newer technologies. The S curve concept pro­vides the following insights:

  • Defenders face difficult choices with respect to how they should react to the appearance of a new technology.
  • Leaders in one generation of technology are seldom leaders in the next.
  • The attackers enjoy important advantages over established rivals—an undivided focus, an ability to attract talent, little bureaucracy and no need to protect investments in unrelated skills or assets.
  • Managers should be able to track where their companies and their key technologies are on the S curve and do the same for their competitors. They should be able to determine which strategic option is most promising from this.

Box 10.3 Voltas Scores for “Best Innovation” Breakthrough with Freezer-on-wheels

In a survey conducted in April 2008 by BusinessWeek and the Boston Consulting Group, the Tata Group was ranked as the sixth most innovative group in the world. An Innovation Day event held under the aegis of the Tata North Regional Forum in June 2008 adjudged an entry from Voltas’ Unitary Products as the “Best Innovation” within the group. This was in the face of for­midable competition from group companies such as Tata Motors, Indian Hotels, TCS and Tata Teleservices.

The Voltas product innovation, developed at its Pantnagar plant, is a breakthrough improve­ment in the familiar freezer-on-wheels, which keeps ice cream frozen while being pushed through the streets by vendors. The new freezer developed lasts longer than the existing product due to the elimination of corrosion, which is rampant in other brands available in the market. It is more economical, lighter in weight and easier to pedal, and keeps ice cream frozen longer when discon­nected from the power source while in use on the streets.

Voltas has filed to patent the technology that has wide applications far beyond the freezer-on- wheels. Voltas’ Unitary Products business and Universal Comfort Products (Voltas’s manufactur­ing subsidiary) are developing a few more patentable products to build an asset base of intellectual property that will give Voltas a cutting edge in the marketplace.

Source: Adapted from www.voltas.com, accessed March 2010.

Innovative companies will typically be working on new innovations that will eventu­ally replace older ones. Box 10.3 discusses an innovative product developed by Voltas. Successive S curves will come along to replace older ones and continue to drive growth upwards. In Figure 10.3, the first curve shows a current technology. The second shows an emerging technology where the current technology yields lower growth but the former will eventually overtake the latter and lead the company to even greater levels of growth. The length of life will depend on many factors. S curves can be applied in the following areas:

  • Technology lifecycle assessment
  • Industry maturity
  • Assignment of the necessity of strategic refocusing

Source: Poornima M. Charantimath (2017), Total Quality Management, Pearson; 3rd edition.

One thought on “Innovation for quality improvement

  1. Arlen Winski says:

    It’s really a great and useful piece of information. I’m glad that you shared this useful info with us. Please keep us informed like this. Thanks for sharing.

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