RACO Investment founder Randall Castillo Ortega offers the keys to process innovation

Process innovation is given more by the needs of the market than by the impulse of technology. It is mainly due to the improvements that are made day by day in the known activities and the accumulation of experience in the company. However, process innovation can also be a conscious, directed and controlled effort that is focused on dramatically improving the performance of a process. Randall Castillo Ortega, a successful business expert and the founder of RACO Investment, provides insight into process innovation for new and seasoned businesses.

Process innovation includes methods, tools, and techniques that seek transcendent advances in the power and effectiveness of organizations. Achieving the aforementioned process innovation requires combining leadership, experience, vision, teamwork, state-of-the-art technology and best practices. Combining all these elements will achieve radical changes and profound results with minimal risk.

Closely linked to process innovation, we find continuous improvement, whose role is to work in the value chain suppliers-organization-client and in the processes that configure it. The objective of continuous process improvement is to optimize effectiveness and efficiency, improving controls and strengthening internal mechanisms to respond to contingencies and the demands of new and future customers.

For traditional companies, introducing process improvement can be challenging. In order to implement it, they must analyze workflows, set customer satisfaction objectives to be able to conduct the execution of the processes, develop improvement activities among the protagonists of the process and involve the actors of the process.

Process innovation and improvement are related, but should not be confused. Explains Castillo, “Innovation always pursues a level of radical change, while improvement aims to perform the process in the same way, but with a higher level of efficiency.”

The design and production of new products and services is an effort that requires the capabilities and experience of interdisciplinary teams to get the job done. However, as studies over half a century demonstrate, teamwork is difficult. Conflicting views that foster creative ideas and informed decision-making can also lead to conflicts that waste precious time and deteriorate relationships.

Studies of teams in different contexts show that their effectiveness is a function of which a well-designed task, the adequate composition of the team and the availability of information, resources and rewards are part. However, many of the studies to date have investigated the usual work of teams with relatively homogeneous members. Therefore it is necessary to re-examine what has been discovered about product development teams that do not have these attributes.

More recent studies have focused on more complex and dynamic tasks and point to the need to pay attention to the interpersonal conditions of teamwork. Team members must normally engage with learning – an activity vitally important to new product development – and act despite the discomfort of working in an uncertain environment with a high risk of failure.

Although the challenges of teamwork are very real, if skillfully overcome, they can actually contribute to developing resilience at the individual and team level. By dealing with the intrinsic challenges and conflicts they face, the teams and people who make them up can, in fact, develop capabilities that will be increasingly valued in a dynamic and uncertain environment.

Despite widespread acceptance of the potential of teams to optimize innovation and learning in organizations, the realization of these benefits has been contradictory. While some teams meet and even exceed what is required of them when it comes to developing new and better products, others falter, failing to provide the expected innovation or providing it at a higher cost. This variation in team performance takes place not only within organizations, but also within organizations.

If a company does not innovate constantly, it is very likely that its competitors will launch much more advanced products with differential features. In fact, many leading companies, being fully aware of the importance of innovation, have been threatened by other companies that have known how to use technology in a novel way and that have managed to snatch substantial parts of their customers.

“Evolutionary or incremental innovation is the one practiced by the vast majority of companies,” explains Castillo. “It consists of gradually improving their products to increase profits, without worrying too much about making big changes that involve breaking with their processes or creating new products.”

In addition, these companies do not take into account the new products or services offered by other companies because, a priori, they do not believe that they can pose any threat. It is precisely at this point that new organizations can take advantage of the carelessness of other companies. Although the newcomers play in inferior conditions, they offer their innovative products at better prices.

Little by little, they are getting followers and visibility, and this is how in the end the tables turn. It is these companies that achieve market leadership. This is how disruptive innovation occurs: a sharp change in the sector that breaks with the previous model and snatches power from companies that previously had it.

Customers also have a fundamental role in this process of disruption. There comes a time when they do not perceive any advantage in the evolutionary innovation that has been applied to the product.

They are looking, therefore, for other elements that offer new utilities, more modern technologies or that are at a better price. Innovation, in any of its modalities, is vital for any company to advance and adapt its business model to market demands and customer needs.

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