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The latest round of quick automation and exponential change is being dubbed the Fourth Industrial Revolution. According to Tuff, though, that’s a misnomer—it sounds like something that’s happening to us, when really it’s something we need to shape and react to. The problem is that the pace of change is so rapid, businesses can’t react like they have in the past; they need new models for innovation and growth.
The Golden Ratio of Innovation, established by his team just five years ago, already seems outdated, Tuff says. The rule states that to stay competitive, companies should allocate 70 percent of their resources to innovating within their core business, 20 percent to the space adjacent to their core business, and just 10 percent to the transformational space, which means discovering brand new customer needs.
A 2012 study of companies in the industrial, technology, and consumer goods sectors showed that companies that allocated their resources according to this ratio outperformed their competitors.
But sticking to this model now yields surprising returns. In fact, it yields something close to inverse returns, with 10 percent coming from core business investments and up to 70 percent from the transformational space. What companies need to do, today more than ever, is invest even greater resources in non-core areas, working across a wide spectrum of innovation.
But what does that mean, and how can companies adapt?
Tuff recommends starting by dividing your business into known or knowable opportunities, which can be planned for and tackled, and unknown opportunities, which must be discovered or developed.
New outcomes and improved efficiency aren’t possible without people changing their behavior. Choosing your technology first won’t get you very far if no one wants to use that technology. The trick is to identify behavioral shifts that will create value, then use data to track those shifts. The insights you gain from that process should then be a guidepost to decide what technologies you want to use.
We can look to three large manufacturing companies to see how they looked at behaviors they wanted to target first and then found the right tech for the job.
1. Drive different outcomes in your own operations
At Nissan, a rapidly aging workforce compelled management to ask, “How do we stop our employees from doing the repetitive tasks that are harder for them as they age and may even harm them?” The answer was to stop them from having to do difficult physical maneuvers without taking them out of the production process entirely. The company came up with ‘cobots,’ or collaborative robots, which work in tandem with people by taking over some of the physical tasks. The company saw higher output levels and improved efficiency in both time and cost.
2. Change outcomes for your immediate downstream customers
Caterpillar just completed the acquisition of Yard Club, a market-making app that connects people who own construction machines with potential renters. Caterpillar wants people to be able to rent their machines instead of having to buy them, letting the company derive value from selling tools, attachments, and parts in addition to large machines. To drive usage of their machines, they need to create an efficient market for those machines.
3. Change outcomes in the end market
UTC Aerospace Systems understood that they could drive better use of their systems in airline customers if they could get users to work more efficiently, increase on-time performance, and get more information into the hands of pilots and crew. They created an app called OpsInsight that gives pilots access to live data, allowing them to adjust aircraft operations in real time. The app’s creation was driven by a desired behavior in the end market; giving customers tools to improve their own outcomes will improve company outcomes too—double win.
It’s all about adaptation
It’s a complex time to be a manufacturer—the landscape is changing so fast it’s hard to keep up, and traditional business models and systems aren’t yielding the same results they used to.
In closing, Tuff acknowledged that while it’s not certain Charles Darwin actually said this, the words certainly do apply to doing business in the 21st century: “It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.”
Avoiding or delaying a difficult conversation can hurt your relationships and create other negative outcomes. It may not feel natural at first, especially if you dread discord, but you can learn to dive into these tough talks by reframing your thoughts.
Begin from a place of curiosity and respect, and stop worrying about being liked. Conflict avoiders are often worried about their likability. While it’s natural to want to be liked, that’s not always the most important thing. Lean into the conversation with an open attitude and a genuine desire to learn.
Focus on what you’re hearing, not what you’re saying. People who shy away from conflict often spend a huge amount of time mentally rewording their thoughts. Although it might feel like useful preparation, ruminating over what to say can hijack your mind for the entire workday and sometimes even late into the night. And tough conversations rarely go as planned anyway. So take the pressure off yourself.
Listening is most important in any case. Your genuine attention and neutrality encourage people to elaborate. For every statement the other person makes, mirror back what they’ve said, to validate that you understand them correctly.
Be direct. Address uncomfortable situations head-on by getting right to the point. Have a frank, respectful discussion where both parties speak frankly about the details of an issue.
Don’t put it off. How often is your response to conflict something like, “I don’t want to talk about it” or “It’s not that big a deal” or “It’s not worth arguing about”? If you’re always promising yourself that you’ll “bring it up next time it happens,” well, now’s the time.
Expect a positive outcome. You’ll struggle to follow this advice if you continue to go into a conflict telling yourself, “This is going to be a disaster.” Instead, tell yourself, “This will result in an improved relationship.”
Don’t ignore the tough situations you are aware of today. When the opportunity presents itself to provide unsolicited negative feedback to a difficult colleague or give a less-than-positive performance evaluation, summon the courage to address the conflict head-on.
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At Kaiser Permanente, we are working to improve the cost of time to the paient. But to do so, we have had to upend traditional paradigms and make saving our patients’ time a part of our standard quality measures.
Because of Kaiser Permanente’s integrated model of care, which combines care and coverage, we were able to study a broad cross-section of our hip replacement patients’ experiences. Amazingly, we concluded that up to half of our patients could safely go home the same day as their surgeries — but only if the entire care team worked according to a set of coordinated procedures, many of which would have to take place outside the hospital.
Every workflow is created for, and with, patients in mind. After all, what is the hospital-acquired infection rate for a zero-day hospital stay? Surely a lot closer to zero than for a multiday stay. What are the visiting hours at home? Generous. How about the quality of the food? We hope it’s better than at the hospital. The satisfaction scores patients give their experience in their own homes? Outstanding. And how much quality time do we give back to patients, so they can recover in the comfort of their own homes, surrounded by family, far from the constant din of the hospital? More than three days.
In Southern California, where we practice, Kaiser Permanente physicians perform about 8,000 elective hip surgeries and 15,000 elective knee surgeries each year. Recently, 11% of our hip and knee patients have recovered at home with no hospital stay. By the end of this year, we hope to grow that number to 25%. By the end of 2018 it will be 50%. And in the metric that matters so much to so many of our patients — saving time — most of the time in a zero-day stay is spent treating the patient.
The approach might sound appealing, but what about the results? Our data shows that the readmission rate for our patients who go home immediately after surgery is about 2% — exactly what it is for patients who recover in the hospital.
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