On this blog we’ve already talked about examples of Product Innovation and Workplace Innovation. Now, it's time to turn our attention to “the least sexy form of innovation” – Process Innovation, and look at a few examples of process innovation that seriously changed the game.
“Process” means the technologies, skills, labour, supply chains, and facilities that go into the production, delivery and support of a good or service. Process Innovation can mean updates to the technology and equipment used in manufacturing. It can mean improvements to the tools, techniques and software used in the supply chain and delivery system. It can also mean changing the way you sell your product to customers, to make that process more streamlined and effective. Process is the engine under the hood of your value-adding vehicle. And Process Innovation means tuning that engine, replacing parts to make it run faster and smoother.
While we’re on the subject of engines and vehicles, it feels like a good time to mention the “father” of process innovation – Henry Ford. In the 1910s, Ford had the goal of bringing the automobile to the multitudes. He achieved this through a combination of Product and Process Innovation. First, he made his product, the Model T, robust and affordable. Then, Mr Ford was inspired by conveyor belt systems used in grain warehouses. He implemented a gradual series of innovations that culminated in the assembly line.
The new assembly line cut production time for each car from about 12 hours to 1 ½ hours. It also allowed Ford’s workers to work shorter shifts for more pay. This became the central paradigm of industrial manufacture. As ThoughtCo observe, “this 100-year old innovation by a car manufacturer in Michigan changed the way we live and work forever.”
This is the classical example of Process Innovation, and it is a good one. Ford utterly transformed the production element of his business process. This in turn had dramatic effects on the whole of society.
How about a more modern example of a car company with a charismatic tycoon at the helm? Each Tesla electric vehicle requires huge EV batteries, made of thousands of lithium-ion cells. When electric cars were new on the market, the manufacturing capacity for these batteries was limited. Companies had not invested in battery technology development, and the high cost of batteries was making the final Tesla product expensive. To reduce costs and meet their projected demand, Tesla began construction of the Gigafactory in 2014. Already, it is the highest- volume battery plant in the world. The Gigafactory is proving so effective due to economies of scale, innovative manufacturing processes, reduction of waste, and the simple optimization of locating most manufacturing processes under one roof.
This is a great example of process innovation within the supply chain – by taking control of battery production and concentrating it in one place, Tesla is able to work towards affordable vehicles, a transition to sustainable energy, and profit.
In an ideal world, once a product has reached the end of it’s lifespan, valuable raw materials used in its construction are extracted and used in the creation of something new, with minimal waste and emissions. This is easily done with metals, as its simple to separate copper from steel from magnesium – they have different densities. Plastic presents a much greater challenge, as polymers have very similar densities, and very similar electrical and magnetic properties. This makes separating them difficult. So, used plastics end up in landfills and heaps in third world countries, and more fossil fuels are used to create more new plastic.
But, by applying technological recycling innovations, Mike Biddle and MBA polymers are challenging the Procurement and Processing steps of the plastic production paradigm. (that’s a lot of Ps!).
Currently, procurement involves large scale oil extraction, and as we all know, that has to go. So MBA mine from landfills instead, where there is a plentiful and growing supply of raw materials. Their processing plants involve lower capital outlay, use 80-90% less energy, and can produce whatever type of plastic they are fed, in contrast with traditional plants that only produce one or two polymers. At an MBA plant, waste is shredded into very small bits, non-plastic waste is extracted, the remainder is sieved, magnets are used, air classification is applied. Biddle likens this stage of the process to “Willy Wonka’s factory”. This produces a mixed plastic composite of many different types and grades. Then comes the more sophisticated part. Plastic is ground down to the size of a small fingernail. Then a highly complex process sorts the plastic into flakes. This process is the innovation that supports the larger paradigmatic shift. Optical sorting is used, its blended in 50,000 lb blending silos, melted and extruded into plastic spaghetti strands, and cut into small pellets. These pellets are the same material that you would get from oil.
By innovating to improve the efficacy of the plastic recycling process, MBA polymers have been able to move towards a circular economy. This is a superlative example of process innovation because it challenges the wider processes of which it is a part.
Process Innovation does not have to mean changing the way a product is manufactured, as in those examples. It can also mean changing the way a product is delivered to the consumer, or innovating market processes:
· AliExpress: One of the world’s largest eCommerce sites, AliExpress along with others applied a disruptive innovation to the process of online selling – dropshipping. Vendors are able to set up their own online storefront and sell the products of a manufacturer. The manufacturer sends the product to the customer. The product never goes through the hands of the vendor.
· Amazon: Way back, a new company called Amazon introduced an innovation to the process of buying books. Instead of visiting a bricks-and-mortar retailer, the consumer could buy literature from the comfort of their home. A few more process innovations later, Amazon became the dystopian behemoth we know and love today.
· eBay: eBay did not invent the auctioneering process. Their innovation was to present the auction in an intuitive online marketplace. This attracted buyers and sellers to the platform. And eBay introduced a new several-day purchasing process dynamic to millions of consumers.