Why your idea management programme is so helpful for strategic cost-cutting

As business models are being challenged, organisations need to be more adaptable and resilient, naturally also by becoming more efficient and cutting inadequate costs. This change must happen from the bottom up, with the right leadership and sponsorship, to define the areas of improvement clearly and separate the good costs from the bad at both micro and macro levels. Innovation managers can, and should, lend a hand to address this shared challenge.

A well-structured innovation management programme for strategic cost-cutting and improvement is useful to get employees identifying ground-level enhancements, with several additional advantages:

BUILD A COST-CONSCIOUS CULTURE
Involving employees and challenging the organisation’s cost and waste culture will help you develop a cost-conscious culture for a more sustainable business approach. Keep cost optimisation as a strategic priority, even when there is no immediate pressure on costs;

AN ONGOING AND RESILIENT PROCESS
Having your cost-cutting and improvement strategy embedded in your innovation management programme will bring you continuous results, building a sustainable process and putting more robust and flexible foundations in place before introducing transformational initiatives.

EASILY UNCOVER BAD COSTS AND INEFFICIENCIES
Engaging and empowering everyone in the organisation, from shop floor to top management, will expose inefficiencies that would not usually be identified in a typical consulting diagnosis project. Your employees know more about your everyday business than anyone else, so tapping into their knowledge and efficiently getting everyone involved in signalling cost improvements will deliver interesting results for your strategy;

MORE DIALOGUE AND ENGAGEMENT
With effective and transparent communication regarding cost cuts and improvements, companies can face less resistance from employees and more easily ensure business management support. It can also bring higher employee engagement, as more frequent interactions are needed between finance and the operating managers and between managers and teams to keep costs aligned with business and to track results.

Strategic cost-cutting is, however, never blind cutting. It is in fact a method to accelerate the discovery of new and more effective ways of doing business, at a lower cost, which is even more relevant in difficult times. On the whole, it should be seen as a way of questioning how we do things – even why we do them – , exploring new innovative routes and building the foundations of tomorrow’s growth.

 

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

Get to know the Five Steps to Introduce Cost-cutting in your Innovation Agenda here

How to introduce a cost-cutting strategy in your innovation initiative: Step 1

To introduce a cost-cutting strategy in your innovation management initiative, and ensure that your business remains relevant and able to maximise its potential under less favourable circumstances, you should take five major steps.

Get started with STEP 1: Define your strategic cost-cutting goals, which can be incorporated in your innovation agenda

In other words, you should first have a clear view of your company’s strategy and map out good and bad costs for programme intervention, at macro and micro levels, within your innovation agenda. The starting point for any strategic cost-cutting initiative is therefore a clear understanding of a company’s strategy – of where you want to go to and how you believe you can get there.

You will need to determine priority areas and find the right cost-cutting structure, given the strategy you want to pursue in the near future, but also in the mid to long term. Some cuts are fundamental and highly advantageous but more difficult to make, and imply structural change and preparation for that change physically, technically, and even mentally.

 

From strategy to specific cuts 

Having in mind your company’s vision and strategy, you can then set your programme’s specific goals. The cuts you may want to make and the ideas you may implement to meet those goals should position your organisation for growth, and can be done at both macro and micro level.

The nature of macro- and micro-level cuts

 

Innovation management platforms are particularly useful for companies to identify relevant cost-cutting or cost improvements at micro level. These tools give voice to employees from different departments and across borders. They leverage the cumulative business knowledge and allow voices and ideas to surface and reach management in an effortless and efficient way.

Nevertheless, let’s not oversimplify the subject – that’s exactly what you should avoid. Both macro- and micro-level-oriented strategies have value and they often make more sense combined.

Andreia Agostinho Dias, Sales Executive
Diana Neves de Carvalho, Exago’s CEO

You can access the full paper here

 

How to conquer your Daily Innovation Zone

Once you’ve understood the four quadrants of the innovation model – steady growth, productivity gain, industry leadership, game change -, you’ll need a plan to conquer your own Daily Innovation Zone. This means also learning how to create game changing innovation with minimum cost and risk.

To do it, consider the green zone at the bottom of the model. This is the daily innovation zone and spreads across from process to product innovation but in a narrow band on the boundary of incremental change.

Innovation Quadrant for Corporate Innovation

The theory is that a company that trains itself to constantly innovate in this zone – small changes and improvements on a daily basis – will most certainly position itself to deliver that big radical, game changing product or industry leading process in the long run. These baby steps would help the company start small, take lower risks, and make innovation a part of its DNA.

Daily innovation is more about building a culture of innovation. It is not about creating an “innovation committee” or “working group.” It is about motivating everyone in the organization to think like an innovator, celebrating daily improvements in the life of the organization. A zone where saving a sheet of paper is treated on par with reducing the cost of production, or adding a new feature to a product.

From janitor to CEO, everyone is involved in the process. Self-driven, motivated and eager to make a change – with a sense of pride at the changes they bring and a reward that may be as little as a pat on the back.

READ MORE:
Creativity, creative leadership and the value of innovation management

FROM THE START:
“Innovation is not for us”, they say

By Rumman Ahmad. An MSc in Creativity and Change Leadership from Buffalo State University, Rumman trains, teaches and facilitates groups of people to learn and apply the creative process to solve problems, energizing and motivating them to do their best. He is also the organizer of an annual conference on innovation in Pakistan. An Exago partner since 2016 in this key geography, Rumman has developed a Model for Daily Innovation which can be complemented by Exago’s innovation management software.

How to pick useful and feasible ‘fights’ for innovation challenges

Here’s a simple but essential tip when establishing your innovation challenges: pick ‘fights’ that are useful and bring attainable value to your organisation. This means you need to guarantee your programme is relevant both to your people and company, namely:

• Make sure challenges have business relevance: Don’t solve problems you don’t have. Key business challenges make the most relevant innovation challenges.

• Also, remember to have problem sponsors: International idea management programmes have triumphed by negotiating innovation challenges with particular business unit leaders. Take leaders’ challenges and label them innovation challenges. This way, you’ll have your own champions. Understand, as well, what your champions’ motives are for solving the problem, since this builds you a stronger base from which to negotiate.

• Engage fully your C-level and innovation team: Prioritise those challenges that are useful to your C-level and make sure these leaders approve and support your initiatives. Leadership’s active involvement is key for programme success. Also, make sure that your innovation team is truly dedicated, embracing the tasks at hand.

• Identify key problems that need solving and can be solved: Look for discrete barriers to progress or opportunities within your innovation portfolio of projects. These can be articulated in a way that others, even those from diverse areas of expertise, have a chance to make important contributions to your progress. Also, be sure that your problems can be realistically solved. You need to raise the stakes, but you can’t afford to misuse resources.

HERE’S WHAT OUR CLIENTS SAY ON THE SUBJECT:

‘Sponsorship’s impact is enormous, and we can clearly see this in the number of average market users. In years with higher sponsorship from the CEO and space in internal communication, as well as more attractive prizes, we have many more active users.

‘A staff of committed people must be present in the back-office. No leader can do things alone.’

‘The feasibility of an idea is mostly a function of one’s capability of elaborating, processing and developing it. Newborn ideas are neither good nor bad. They are just ideas (usually very raw). As a matter of fact, the final implementation is always very different from the original idea. Instead, good problem setting is very relevant.’

 

FINALLY, TRY THESE ACTIVATION QUESTIONS:
  • How relevant is this problem? How urgent?
  • Whose problem is this?
  • Who can sponsor and promote it?
  • Can this problem be solved?

Diana Neves de Carvalho, Exago’s CEO/ dnc@exago.com
Francisco Bernardes, Exago’s head of Innovation Services/ fmb@exago.com

READ MORE:
How to mobilise the right audiences for innovation challenges

FROM THE START:
Your ultimate innovation challenge – what works and what doesn’t

Decisions, decisions…

Be it through team idea contests or widespread programmes, we are enthusiasts of innovation’s number one rule: Give your teams a voice. Gather suggestions and insights and build on that knowledge together, as innovation becomes simply your way to do business.

One way or another, true employee engagement is more complicated than it seems, and it needs so much more than a carrot and stick philosophy. Millennial engagement? That raises the stakes even further. So, why not make participation more appealing, with fun challenges?

These days, we’re testing it for you!