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A R T I C L E
Deep Change
How Operational Innovation Can Transform
Your Company
by Michael Hammer
Included with this full-text
Harvard Business Review
article:
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
1
Article Summary
2
Deep Change: How Operational Innovation Can Transform Your
Company
A list of related materials, with annotations to guide further
exploration of the article’s ideas and applications
11
Further Reading
Product 6573
Deep Change
How Operational Innovation Can Transform Your Company
page 1
The Idea in Brief
The Idea in Practice
COPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
When struggling with stagnant growth—as
many of us are today—do you look to ac-
quisitions, aggressive marketing, or new
technologies to rev up your revenues? If so,
you may be missing a much more reliable
way to outperform your competition—
operational innovation
.
Creating new ways, not just better ways, of
working has been central to some of busi-
ness’s greatest success stories: think Wal-
Mart’s cross-docking distribution system, or
Dell’s build-to-order model. But since oper-
ations aren’t sexy, most companies over-
look them.
To set the stage for operational innovation
in your company, first convince managers
that it will work—show them successes at
other companies or pockets of innovation
in your own business. Concentrate on rein-
venting work processes that will have the
greatest strategic impact. And, to ensure
that your processes are truly innovative in-
stead of just improved, set performance tar-
gets unreachable by standard operating
procedures.
Operational innovations fuel extraordinary
results. Progressive Insurance completely
reinvented claims processing—slashing the
waiting time for vehicle repair estimates
from ten days to nine hours and catapult-
ing sales from $1.3 billion in 1991 to
$9.5 billion in 2002. Companies that bake
operational innovation int