This is an article that references the importance of incremental innovation, and how small improvements can make a huge change to a companies overall success. At the end of this article Jeremy mentioned one of my favorite quotes, referencing the value of constantly improving the way things are done to make your company stand out among the competition.
Original article written by: Jeremy Suisted (http://www.creativate.co.nz/99-problems-and-a-solution-aint-one/)
I’ve just finished reading John Kao’s The Entrepreneurial Organization, which is an excellent collection of readings and cases around change management, creativity and entrepreneurship. One of the case’s that stood out to me was that of Scandinavian Airline Systems (SAS), and the incredible change brought about by their CEO Jan Carlzon.
In 1980, had an operating loss of $17 million. Carlzon was made CEO in 1981, and by the end of 1982, SAS had an operating profit of $48.9 million. This was in the middle of an economic downturn in air travel, which saw the industry as a whole net a loss of $1.7 billion.
To simplify this stunning turn around into a few actions of Carlzon would be short-sighted, but there were a couple of key insights that occurred that resonated with me and my research into innovation. These revolved around changing perspectives and sourcing for employee ideas.
Firstly, Carlzon redefined SAS as a service industry, not as an airline provider. Instead of wanting his employees – pilots, baggage handlers, air hostesses and middle managers – thinking that they worked for an airline, he wanted them to see themselves as providing a helpful service to the customer.
This may sound like empty semantics, but Carlzon was passionate about this change in perspective. In one speech to his staff, he said, “SAS consists of 50 million annual moments of truth when a customer makes a contact with an SAS employee.” This change of perspective was crucial to SAS’s success.
For this to happen, it required more than just words. SAS changed their structure to empower all employees to make decisions that would improve their customer service. Instead of waiting for managers to authorise every decision, baggage handlers could trial new processes that they believed would benefit the service to their clients, resulting in incremental innovation improvements. Similarly, this gave the employees a more meaningful role, reduced turnover, and encouraged them to continue making decisions.
In his first couple of years as CEO, Carlzon encouraged company-wide brainstorming as to how they could become a better service provider and meeting their passenger’s preferences. Carlzon searched for ideas from all areas of SAS – not just from the corporate executives – and ended up implementing over 160 new approaches to air travel.
These ideas – no matter how small – helped transform the culture at SAS and improve their profitability. This was a deliberate decision of Carlzon’s, who said, “We want to be 1 percent better than the competition in a hundred ways, rather than 100 percent better in only one way.”
These concepts are applicable for any small and medium organisation as well, and by practicing the art of re-framing your roles and repositioning your organisation, as well as creating a culture of idea-generation and incrementally improve the organization, you can see growth and transformation in your business as well.
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