Innovation and efficiency – can they co-exist?

5 September 2016 •

In many companies innovation and efficiency aren’t just at odds; they are at war. Take procurement companies, for instance, which often find themselves caught between marketing departments and procurement heads. Marketing wants innovation; procurement is tasked with watching the bottom line. This is not only uncomfortable, especially in the current economic climate, but also unbalanced, because efficiency usually wins. Business models, processes and methods are simply more attuned to efficiency. There’s an understandable emphasis on reducing risk, variability and costs – while innovation introduces uncertainty and has indefinite outcomes. The dilemma is clear: Is success about creativity and speed? Or cost-cutting and risk avoidance? Or new ideas and opportunities?

But… It doesn’t have to be this way. There doesn’t have to be a choice.

Defining the terms

First, let’s look at what’s really meant by ‘innovation’ and ‘efficiency’. For the purposes of this commentary, we’re not dealing with ‘innovation’ and ‘efficiency’ in their traditional sense; in fact, we’re looking more at disruptive (radical/new) innovation vs operational (efficiency-related) innovation.

On this fine line is where the conflict sits – and where the solution is.

Alan Webber, co-founder of US Fast Company magazine, says, “It’s conventional to think of innovation as stemming from a certain set of circumstances or occurring in a certain place. But in tough times, you have to be more innovative about where you find it. Are there new…places to look?”

Look at Amazon, suggests Zach Murray, Point’s GM for Africa/Middle East. “Just when we thought their service offering was done and dusted, they’re developing drones to deliver products. That’s disruptive and operational.” Anthony Swart, MD of Point, agrees, “What’s required is organisations mature enough to adopt a holistic approach that delivers on both fronts.”

How does this approach unfold in practice – and in procurement?

Practical examples

In one of our Middle Eastern territories Point is in the process of changing the way point-of-sale material is designed, manufactured and implemented.

The development of modular, size-adjustable units is a Point innovation that eliminates the costly, time-consuming ‘individual site survey’ requirement from the design, site survey, manufacture process. In the context of the privately owned retail stores that prevail in the Middle East, this shortens time to market, improves quality and brand consistency, and reduces cost.

In this example, the ability to be agile and to fine-tune processes in challenging emerging markets can be defined as disruptive, as long as the desired outcome – namely efficiency – is achieved. And it has been.

Collin Kupczyk, Point’s Head of Structural Engineering, points out that a big part of being ‘holistic’ is having in-depth knowledge of the client and of the market in which they operate because this enables innovative thinking about how to address clients’ frustrations and barriers to success.

So which is ‘better’: efficiency or innovation?

Should we encourage our people to use existing resources and experience to run a business as efficiently as possible? Or, should we drive them to invest the time and effort in developing innovative solutions? The answer? Both. And the challenge? The ability to identify where the big opportunities might be.