Friday, February 14, 2014

Standardization vs. Innovation

Raise your consciousness of the balance, and that, in and of itself, makes a world of difference.

Modern organizations have many hidden paradoxes, for example, customer satisfaction or employee satisfaction, which one comes first? Analytics or intuition, how to make a better decision? Here is another interesting dot connection debate: Standardization vs. Innovation, which one is more important?

Standards vs. Innovation. Standards are a form of embodied technical knowledge accessible to all types of business that enable more effective product and process development. Innovation is how to transform novel ideas to achieve its business value, though innovation expands its horizon, to include soft innovations such as communication innovation or culture innovation; besides hard innovations such as product/service/business model/process innovations.

The strategy must take account both standardization and innovation. There could be diverse levels of standardization. Usually, companies want standardization of internal reasoning (capitalization of previous experience, cost control, convenience, etc.). Also, companies are obliged by the external environment to be flexible (customers, suppliers, competitors). Strategies must take into account these two main poles:
- Profit through standardization (volume);
- Profit through innovation and flexibility (diversification).

Strategic approach to standardization and innovation must be done on two levels:
(1) At the new product; (2) At the processes of existing products. To have gain in cost (low), then you need standardization. To have gain from the change (value perceived by customers), then you need innovation. However, the "dosage" of standardization and innovation in the new product is the key - meeting target costs (target costing process) in the product design phase (phase engineering) is the path worth following. Standardization 'versus' innovation can actually be standardization 'and' innovation. However, people in tactic or operational management usually face a hard time to understand that they actually can go hand-in-hand together in an appropriate way.

Standardization is inside-the-box (ITB); and Innovation is outside-the-box (OTB): Some may equate outside-the-box (OTB) thinking with innovation, and similarly equate inside-the-box (ITB) thinking with standardization. Hence, organizations indeed need both, and in fact, cannot realistically exist without a healthy balance of both. That balance, ought to actually be strongly in favor of standardization at the vast majority of the time! Think 80:20 rule here, although the golden ratio may vary based on the culture, capability and overall maturity of the organization. 

Consider the continuum between innovation and standardization. Business should always be open to, conscious of, and feel empowered to act upon-Out of box-OTB thinking. It is only when you reject the ability to "challenge conventional wisdom" (standardization) that ITB becomes problematic. It is very much a "consciousness" thing, imagine yourself rising above that continuum, and looking down upon the balance between the two. What you've just done is to raise your consciousness of that balance, and that, in and of itself, makes a world of difference.

High mature organizations indeed need both, standardization and innovation, the matter is to figure out how and when to apply them in the most effective way.


3 comments:

Excellent article Pearl! Thank you.

You describe an evolutionary process of the new eventually becoming standard, maturing, and then being replaced by another new, in a repeating process. The eternal dance of Yin and Yan.

“It is very much a “consciousness” thing… rising above that continuum, and looking down upon the balance between the two. What you’ve done is raise your consciousness of that balance, and that in and of itself, makes a world of difference.” I couldn’t agree more.

Become conscious of the balance between analytics and intuition, between thinking and feeling, between innovation and standardization. It’s not one versus the other, rather it’s both.

Change is constant, in the moment it may be incremental, or revolutionary, and over the long term it is both. The question is how to manage, or just survive, the big, rapid changes.

Consider; Every revolution is the result of pent up evolution and the result is the redistribution of power, or control, from the hands of a few, to the hands of more, sometimes many more.

Resisting change invites catastrophe, but working in harmony with it gives us a chance to guide it, and affect the outcome.

Innovation can be incremental or revolutionary. It usually brings a higher level of order to the chaos in the environment, empowering more of us to “raise our standards”. Then it yields once more to an even higher level of order, the scaffold gives way to the building it was made for, the building lives a lifetime and is razed to make way for what will come next.

When standardization becomes overly protective of out-dated innovation for the purpose of protecting the interests of those in control of the standards, the resistance to change, the thwarting of evolutionary forces will eventually lead to revolution, quite possibly rapid and catastrophic revolution. It happens. It may be inevitable, it is a force as natural as earthquakes, avalanches, tornadoes, hurricanes and tsunamis. Holding back makes it worse.

The solution is in the Tao, in nature, and it’s overarching intent, which is to continue to change, to evolve, sometimes incrementally, sometimes catastrophically. Mimic nature, adopt change as a constant, and raise your consciousness, recognize the balance between left and right brain, between head and heart, and cooperate with others to adapt and manage incremental, revolutionary, and catastrophic change that we all will face at times in our lives.

~ S

Thanks for the excellent comment, it does capture the essential of balance principle, which should become the guideline to solve many paradoxes facing in businesses and human society as well, especially now, we are moving forward with digital speed, standardization helps bridge digital divides, and innovation enables digital transformation and reaches the new digital height.
Thanks.

Thank you Pearl for your article,
I am an inventor with more inventions and innovations than any one inventor needs or want, unlicensed anyway. And, I like most inventors I always think I have the next BIG THING, ha...

From reading your article, I believe I have just got a glimpse at the way that most companies view the standardization (the what is now and current) and the innovation (the new and/or improvement).
Using your birds eye view of the 80:20 I can see that, with the ITB thinking (and the products and systems that are maintained by it), the companies know what to expect (profit/debt/troubleshooting). With OTB there are a lot of growing pains, so to speak.

Long story short, this will give me a thicker skin to endure when some of my ideas are passed over by companies.

Okay, I know that this may not be a standard comment to your article. But, I learn a lot from it and I wanted to thank you for it in an innovative way, ha....

Ray J.
Have a comment, question, and/or you just want to curse me out (Hey, please keep it light on the blaspheming, ha, ha) then email me at : ummm_whaaat@yahoo.com

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