What it takes to innovate

Innovation—new products and services, new business models, new solutions to old problems—has evolved from a comparatively rare competitive advantage to a basic requirement for survival. We tend to equate innovation with tech-based companies, but almost every industry now must innovate or risk becoming irrelevant. That includes even old-school industries like chemical processing, mining, and paper manufacturing, as an article we published last year, "How process industries can improve supply chain performance," observed.

Now that innovation has become a mandate, supply chain leaders are under pressure to generate fresh thinking. The common wisdom is that it requires hiring brilliant technologists and throwing a lot of money into research and development. That does help, but more important, in the view of supply chain thought leader Shekar Natarajan, is an organization's culture. "You can bring in the smartest experts, people who are extremely savvy with technology and have the know-how to bring about change," he explained in a recent interview, "but if they're not enabled to explore and implement change, then they will be limited, and even great talent will lead to mediocre results."

In Natarajan's experience, a supply chain organization benefits by breaking through the commonly held belief that "operators cannot be innovators." Innovation is everyone's business, he believes, and "the more innovators who are operators and operators who are innovators, the more adaptive the organization becomes, and the more the barriers to acceptance of change will be reduced." Setting up the right metrics and incentives can help to drive this behavior. At the same time, it's important to allow a cadre of talented people to concentrate on change and innovation rather than be constrained by having to also manage day-to-day operations.

Innovators will perform best when the organization's culture not only allows them but also encourages them to take risks and test new ideas. Leaders must accept, though, that some of those experiments may not lead to anything, he said. Yet there is value even in failure, Natarajan continued, as the lessons learned will inform future efforts and/or find other use cases to help guide them to success. He cites the example of drone delivery technology, which may still be five to seven years out due to the need for a regulatory framework and the time it will take to gain social acceptance. But one of its key enabling technologies, "lidar," which uses laser light to measure the distance to an object, can already be used to make highway trucks safer.

Natarajan's words were very timely; I had just attended the Massachusetts Institute of Technology (MIT) Global SCALE Network's annual student Research Expo hosted by MIT's Center for Transportation and Logistics. Over 200 master's program students from the network's six graduate education and research centers, in Spain, Malaysia, China, Colombia, and Luxembourg as well as MIT's Center for Transportation & Logistics here in the United States, showcased their thesis projects to a crowd of supply chain professionals. The projects were grouped into 10 categories, including such functional areas as transportation, logistics, procurement, and manufacturing; analytical areas like inventory management, forecasting, demand planning, and network design; and broader areas such as health care, humanitarian and social responsibility, and security and risk.

These enthusiastic young people work under the guidance of seasoned supply chain professionals at manufacturers, distributors, retailers, carriers, and third-party logistics providers. By inviting the students in and giving them a specific supply chain problem to tackle, those forward-thinking companies are doing exactly what Natarajan advocates: allowing people with a fresh perspective to focus their creative energies and analytical skills on addressing a problem outside the day-to-day details of running an operation.

Several of the students I spoke with acknowledged that their ideas would not necessarily be implemented. Whether their ideas come to fruition or not, though, the opportunity they were given to experiment and try new approaches will serve them, their sponsors, and their future employers well.