Deep and fundamental Change: How Operational innovation can transform your company

Deep and fundamental Change: How Operational innovation can transform your company According to bonno van der Putten, Tilburg, operational innovation should not be confused with operational improvement or operational excellence. Those terms refer to achieving high performance via existing modes of operation: ensuring that work is done as it ought to be to reduce errors, costs, and delays but without fundamentally changing how that work gets accomplished. Bonno says that operational innovation means coming up with entirely new ways of filling orders, developing products, approaching customers, providing customer service, online business development or doing any other activity that a company performs.

Operational innovation has been key to some of the greatest success stories in recent business history, including Wal-Mart, Amazon, Apple and Dell, van der Putten says. Wal-Mart is now the largest organization in the world, bonno says, and it owns one of the world’s strongest brands. Between 1972 and 1992, Wal-Mart went from $44 million in sales to $44 billion, powering past Sears and Kmart with faster growth, higher profits, and lower prices. How did it score that hat trick? Wal-Mart pioneered a great many innovations in how it purchased and distributed goods. One of the best known of these is cross-docking, in which goods trucked to a distribution center from suppliers are immediately transferred to trucks bound for stores—without ever being placed into storage. Cross-docking and companion innovations led to lower inventory levels and lower operating costs, which Wal-Mart translated into lower prices. The rest is history. Although operational innovation wasn’t the sole ingredient in Wal-Mart’s success—its culture, strategy, human resource policies, and a host of other elements (including operational excellence) were also critical—it was the foundation on which the company was built. Bonno van der Putten