The document discusses various sources and types of innovation and change that companies can implement, including lean manufacturing, Kaizen, and Six Sigma. It defines customer-facing and business-facing processes and explains how focusing on both can improve business performance. Kaizen is described as a philosophy of continuous small improvements and quality circles to engage workers. Six Sigma aims to reduce defects through statistical analysis. The document stresses that companies must innovate continuously or risk decline.

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Innovation & Change

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• Business Process
– Customer Facing Process vs. Business Facing Process
– Process Improvement
• Sources of Innovation and Change
– Lean Manufacturing
– Kaizen
– Six Sigma
• Innovate or Decline
Overview

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Customer vs. Business-Facing
• Companies have business processes that are oriented toward making the business operate
efficiently and others that result in the delivery of a product or service to a customer.
– Business-facing processes include planning and budgeting, manufacturing & supply
chain.
– Customer-facing processes include sales and marketing.
• Businesses may have completely separate departments for these different kinds of activities
or there may be some overlap, especially in smaller organizations.
• Companies can improve their performance by making sure that even business-facing
processes are responsive to customer demands.

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Disruptive Innovation
• A disruptive innovation is an
innovation that creates a new
market and value network and
eventually disrupts an existing
market and value network,
displacing established market
leading firms, products and
alliances.
Product Category Innovation Market Impact
Academia Wikipedia
Traditional
encyclopedias
Communication Telephony Telegraphy
Computing
Hardware
Personal Computers
Smart Phones
Work Stations
Word Processors
Personal Computers
Laptops & PDA’s

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Sustaining Innovation
• Innovation that does not significantly affect existing
markets.
– Evolutionary … an innovation that improves a
product in an existing market in ways that customers
are expecting (e.g., fuel injection for gasoline
engines, which displaced carburetors.)
– Revolutionary … an innovation that is unexpected,
but nevertheless does not affect existing markets
(e.g., the first automobiles in the late 19th century,
which were expensive luxury items, and as such very
few were sold)

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Value Chain
• Adding value along the path
from raw material to finished
product.
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Lean Manufacturing
A systematic approach to identify and eliminate waste (non-value added activities)
through continuous improvement by flowing the product at the pull of the customer.

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 VALUE - what customers are willing to pay for
 VALUE STREAM - the steps that deliver value
 FLOW - organizing the Value Stream to be continuous
 PULL - responding to downstream customer demand
 PERFECTION - relentless continuous improvement (culture)
--- Lean Thinking, Womack and Jones, 1996
Key Principles of Lean Thinking

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•Improve Customer Satisfaction
•Increase Sales and Profits
•Insure Long-term Health of Company
•Create Sustainable Competitive Advantage
Why LEAN?

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Kaizen

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What is “Kaizen”?
• Kaizen means “continual improvement".
• It is a Japanese workplace philosophy which focuses on making continuous
small improvements which keep a business at the top of its field.
• The philosophy involves everyone in the organization – managers and
workers alike – and urges them to make never-ending efforts for
improvement.
– For example, in Japanese companies, such as Toyota and Canon, several suggestions
per employee are written down, shared and implemented.

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The Origin of Kaizen
• The foundation of Kaizen was laid in Japan after the Second World
War, when the country was attempting to rebuild infrastructure
and rethink many systems.
• Several American experts on workplace improvement including W.
Edwards Deming and Joseph Juran went to Japan to lecture and
teach.
• Using information from these individuals regarding the Training
Within Industry programs, the concept of Kaizen began to be
formed and it took off in the 1950s.

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Post War Japan

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Post War Japan

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Kaizen : Key principles
 The first is a heavy reliance on teamwork, in which everyone's opinion is valued
and considered.
 Workers also have strong personal discipline, and morale in factories must
improve under kaizen.
 Workers should also be confident about offering suggestions for
improvement, even when a system appears to be functioning adequately
 Kaizen recognizes that there is always room for improvement
 Finally, the system uses quality circles, worker groups who meet and work
together to solve problems and come up with innovative changes.

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Quality Circles
• A quality circle is a volunteer group composed of
employees, who are trained to identify, analyze and
solve work-related problems and present their
solutions to management.
• This improves the performance of the organization,
while also motivating and enriching the work of
employees.
• First established in Japan in 1962 in the Nippon
Wireless and Telegraph Company, it quickly became
popular and spread to more than 35 companies in the
first year.

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“5 S” in Kaizen
1. “Seiri” (Sort): Tidiness, keeping only essential
items.
2. “Seiton” (Set In Order): Orderliness,
eliminate extra motion.
3. “Seiso” (Shine): Cleanliness, keep the
workplace clean.
4. “Seiketsu” (Standardize): Standardize work
practices
5. “Shitsuke” (Self Discipline): Sustaining,
maintaining discipline and reviewing standards.

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Six Sigma
• Quality Management System.
• Set of techniques and tools for process improvement.
• Measure of quality that strives for near perfection.
• Disciplined, data-driven methodology focused on eliminating defects.
• Developed by Bill Smith at Motorola in 1986.
• Jack Welch made it central to his business strategy at General Electric in 1995.
• Today, it is used in many industrial sectors for minimizing errors, reduction of costs and
increase in profit.
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Six Sigma Meaning
Level # / Million % Defective %Yield
1 691,462 69% 31%
2 308,538 31% 69%
3 66,807 6.7% 93.3%
4 6,210 0.62% 99.38%
5 233 0.023% 99.977%
6 3.4 0.00034% 99.99966%
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Six Sigma Principles
• Six Sigma seeks to improve the quality of process outputs by
identifying and removing the causes of defects (errors) and
minimizing variability in manufacturing and business processes.
• It uses a set of quality management methods, including
statistical methods, and creates a special infrastructure of people
within the organization who are experts in these methods.
• Each Six Sigma project carried out within an organization follows
a defined sequence of steps, and has quantified value targets,
(for example: reduce process cycle time, reduce pollution, reduce
costs, increase customer satisfaction, and increase profits).
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Six Sigma Hierarchy
• Consider quality above everything else
• Worked on at least 10 to 15 High Impact Black Belt projects.
• Received Black Belt training, and has a detailed understanding
of Six Sigma concepts
• Received requisite training for quality improvement, with
support from Black Belts
• People with Basic Knowledge about quality.
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Innovate, or Decline
• WordPerfect
• Novell
• Blockbuster
• Eastman Kodak
• Blackberry
• Polaroid
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