Operational innovators act earlier, aim higher, and get better results than poorer performing competitors, reveals Economist Intelligence Unit survey

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2007-12-06 08:24

Hong Kong--(뉴스와이어)--The traditional view of business operations is one of cost containment and incremental improvement·not exactly the most glamorous part of business management. But a new report by the Economist Intelligence Unit shows that, in fact, a substantial number of companies are using operational strategy as a tool for attaining their performance goals and searching for ways to innovate their operations to achieve these ends.

This shift is detailed in Operational innovation: Fortune favours the brave, a briefing paper by the Economist Intelligence Unit and sponsored by PRTM Management Consultants. A global survey of 585 senior executives and managers shows that more than half (56%) of the respondents are aiming to make significant changes in their operational strategy to achieve their performance goals.

The high performers, as measured by their reported revenue growth in the survey, appear to approach operational innovations differently. Half of these high performers introduce operational innovations pre-emptively, rather than in reaction to external forces such as a regulatory change. In contrast, less than 30% of the poorer performers say they do this.

The survey also shows a correlation between radical innovation and superior revenue growth. Eighteen percent of survey respondents said that over the past two years their firms had undertaken operational changes involving practices that were new to their industry or, on occasion, new to the world. Of that group, more than half (54%) had revenue growth higher than that of their main competitors, while just 17% had revenue growth below that of their main competitors.

In addition, the survey suggests that companies which expect to get the most from their operational strategy are, in fact, the most successful at doing so. More than three-quarters of the best performers were attempting to achieve “significant” or “radical” improvement in their operations, whereas less than two-thirds of the poorest performers had set similarly ambitious goals·implying that when organisations aim high, they tend to do better.

“These firms want a jump on their competitors,” says Winter Wright, a senior editor at the Economist Intelligence Unit. “They seem to be adept at sensing changes in the marketplace and responding to them operationally to create a position of strength.” The laggards, by contrast, tend not to produce such good results, a shortcoming they attribute to poor execution, too little emphasis on operational innovation, and a propensity to underestimate the amount of change required.

Some operational innovators have been iconic·Dell, Toyota, and Wal-Mart come immediately to mind·and their focus on how to do things right has become almost as well known as their products and services. Even so, many view them as being in a minority, a small and select group blessed with more creativity and foresight than the average firm.

“This survey shows that many firms today are striving to use operational innovation as a competitive weapon,” says Mark Deck, Director, PRTM Management Consultants’ Operational Strategy Practice. “These findings applied equally across both large and small companies, as well as products and services firms globally regardless of industry. The conclusion we draw is that firms ought to be bold in the way they approach operational strategy. Successful firms aim for significant and innovative operational change, and they do it without waiting to be forced to do so.”

Notes for Editor

About the Economist Intelligence Unit

The Economist Intelligence Unit is the business information arm of The Economist Group, publisher of The Economist. Through our global network of more than 650 analysts and contributors, we continuously assess and forecast political, economic and business conditions in 200 countries. As the world's leading provider of country intelligence, we help executives make better business decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies.

About PRTM

Since 1976, PRTM has created a competitive advantage for its clients by changing the way companies operate. PRTM management consultants work with senior executives to develop and implement innovative operational strategies that deliver breakthrough results. The firm is a leader in operational strategy, supply chain, product development, and customer value management. PRTM has 16 offices worldwide and serves major industry and global public sectors. For more information, visit www.prtm.com.

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