This case study enables you to review your external and internal operating environments and will help you to manage activities to meet your customers’ needs. By selecting the right people and delegating to them, innovative solutions can be found.
Much has been written about business innovation in manufacturing, but relatively little on management innovation in service and retailing.
After 38 years in the motor industry, I have at last “seen the light”. Being involved in the Dti initiative of running innovation workshops throughout the UK, covering dealerships internal concerns as well as their marketplace problems, I found the secret of innovation almost by accident. It was, of course, using the combined brainpower of the whole dealership team to grow the company and close the gaps between average and best performance.
We are talking here about the process of developing new ideas effectively and profitably to satisfy customers. It is a process of continuous improvement involving the whole company, often referred to by the Japanese word “kaizen”, and it is an essential part of both business strategy and everyday practice.
Motor retailers are faced with intensifying competitive pressure. Demands from manufacturers, legislation, shareholders, even our own employees, mean that to be achievers we must meet these challenges by providing a constant stream of new and improved processes and services.
Often the owners or senior executives of companies believe that they alone know everything. So carved- in-stone policies stay in place, and employees leave their brains at home. Without doubt, this is the major cause of employee’s apathy towards innovation. It stifles entrepreneurial thinking. When senior executives do finally see the light, it is hard sometimes to get the employees to react in a positive manner, as they think there must be a catch.
Ingredients of successful innovation
Companies, which have become successful in bringing innovation to their dealerships have the following ingredients:
Company culture and leadership are the driving forces. Best practice companies demonstrate a clear sense of mission and purpose, thoroughly thought-out at board level and communicated throughout the dealership, and are prepared to listen to and use the brains of all employees.
Innovation is seen as an intrinsic part of successful companies business strategy, and involves continuous improvement within a total quality management and customer satisfaction programme.
The chief executives of successfully innovative companies show a strong personal commitment to innovation, have vision and enthusiasm. They encourage and manage risk-taking and change, setting challenging but realistic targets (although these may appear over-ambitious at the outset). They communicate with customers, suppliers, investors and most importantly, employees.
Senior management actively work to create a feeling of openness and demonstrate that they are receptive to change and criticism. They take on board the worrying aspects of change for employees with a positive and non-threatening approach.
Best practice dealerships ensure an open, cross-functional and multi-level team approach to projects and problem-solving, and give responsibility to employees at the lowest level.
How can your company become innovative and therefore more profitable?
Try the six steps below to establish how innovative and how responsive your business is:
Step one: form an assessment team
By including people from all departments you are more likely to identify current practice, and get a true picture of problems which are affecting the bottom line, and to take and be responsible for subsequent action. The team should be charged with:
Assessing your current practices and performance
Identifying gaps between current performance and best practice,
using composites, registrations, penetration, etc.
Developing and implementing action plans and setting performance targets.
Step two: initial assessment
The team should conduct an initial assessment of the concerns of the employees. This can be done by completing a scorecard to get a general profile of employee perceptions of the business, or by asking all the employees with a questionnaire what they think the problems are and what causes them.
Step three: choice of focus
Following the initial assessment, you may choose to start with items that are considered most critical – which cost the least but have the most impact on the bottom line, such as increasing showroom traffic, reducing time spent at parts back counter; it is strongly recommended, however, that all others areas are also examined in depth at a later stage.
Step four: in-depth operational analysis
Each area identified as important should now be reviewed in-depth by the team. Current practice and performance should be identified and documented. To ensure maximum benefit, the review should be grounded in reality and conducted honestly to reflect current practice, as distinct from statements of policy.
For example, analysing registrations, slow-moving stock, rectification, use of follow-up systems by all departments, credit control, staff attitudes, management attitudes, time wasted, use of composites, work in progress – will create stimulating discussions and will provide a realistic picture of performance. The result should be a better understanding of the company’s performance by non-managerial staff, and accurate identification of the gaps to be closed.
Are we doing what we need to do?
Are we doing it in all areas ?
Are we doing it well ?
Step five: benchmarking
This step must be used if you are to keep ahead in your own marketplace, and must be reviewed carefully.
We are mystery-shopped by our suppliers of vehicles, we do it ourselves on our competitors, and mystery shopping is a powerful way of gaining a fresh perspective on our gaps and identifying action areas through comparison with best practice. For example, using a telephone recorder, mystery shop all garages within five miles of your company; we need to establish how good our competitors really are, from the point of view of both prices and customer care.
Step six: take action to close the gaps
Having identified gaps and their causes through self-assessment and benchmarking, the prime task is identifying and implementing action to close them. The only way this can be done is through internal brainstorming groups where the findings are presented and reviewed by the assessment team and other interested parties.
There is action you can take right now: review how you involve your teams in decision-making and problem-solving. Answer the following questions:
Do you give high priority to solving today’s problems?
Are your counter-measures followed through to completion?
Are your actions ever based on impulse, not fact?
Do you evade deep discussion with employees?
Or consider the following:
Are problems clearly defined and counter-measures implemented as scheduled?
Are you achieving a return on investment sufficient to reinvest in growth?
Do you assure smooth, planned development of your personnel year by year?
Maybe a questionnaire to your team on these questions could surprise you.
Consider the following sequence of steps for embarking on an innovation programme:
Issue a simple questionnaire to all employees to identify problems or concerns affecting either internal or external aspects of your business.
List all concerns raised on the company’s notice boards.
Create an innovation team – preferably including one person from each department.
Invite the team to investigate the concerns – to find what is causing the problems, identify possible solutions, and report back the best solutions.
By using the brains of your whole team, they will “own the problem”.