Deep Change: How Operational Innovation Can Transform Your Company
An article “Deep Change: How Operational Innovation Can Transform Your Company” in the Harvard Business Review, by Michael Hammer speaks about operational innovations that take on the simple changes in everyday operations results to lower prices and better services than competitors. It basically talks about how operation innovation transformed the progressive insurance, an automobile insurance company.
In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales and by 2002, that figure had grown to $9.5 billion. Progressive Insurance has seen an extraordinary growth and not with any acquisitions or clever marketing schemes, but through substantial innovations in their everyday operations. Progressive didn’t went global, didn’t unveil new product not did it grow at the expense of its margins though Progressive insurance employ to achieve sevenfold growth in just over a decade because of the innovation in their operations.
The secret of Progressive’s success is maddeningly simple: It out operated its competitors. By offering lower prices and better service than its rivals, it simply took their customers away. And what enabled Progressive to have better prices and service was operational innovation, the invention and deployment of new ways of doing work.
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 those work gets accomplished. Operational innovation means coming up with entirely new ways of filling orders, developing products, providing customer service, or doing any other activity that an enterprise performs.
Progressive did innovation on their operation by simply introducing Immediate Response Claim Handling. Suppose if a client had an
In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales and by 2002, that figure had grown to $9.5 billion. Progressive Insurance has seen an extraordinary growth and not with any acquisitions or clever marketing schemes, but through substantial innovations in their everyday operations. Progressive didn’t went global, didn’t unveil new product not did it grow at the expense of its margins though Progressive insurance employ to achieve sevenfold growth in just over a decade because of the innovation in their operations.
The secret of Progressive’s success is maddeningly simple: It out operated its competitors. By offering lower prices and better service than its rivals, it simply took their customers away. And what enabled Progressive to have better prices and service was operational innovation, the invention and deployment of new ways of doing work.
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 those work gets accomplished. Operational innovation means coming up with entirely new ways of filling orders, developing products, providing customer service, or doing any other activity that an enterprise performs.
Progressive did innovation on their operation by simply introducing Immediate Response Claim Handling. Suppose if a client had an