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					                 BUILDING PROCESS INNOVATION TIMING
                                     Chih-Ming Luo,
      Department of Technology Management, Hsing Kuo University of Management,
                      89, Yuying St., Tainan City 709, Taiwan ROC
                               arthurluo@mail.hku.edu.tw

                                         ABSTRACT
     Process management and process innovation often cause confusion to managers. This
study aims to clarify the differences between process management and process innovation and
the proper timings for their respective applications. The study uses the S-Curve of the
technology development cycle to explain the roles that process management and process
innovation play during the cycle and to make suggestions on the future challenges and
research direction of process innovation. This study proposes four development periods of the
Process Change Cycle (PCC): (1) Process Innovation Ferment Period; (2) Process Innovation
Radical Period; (3) Process Management Standard Period; and (4) Process Management
Incremental Period. Through the applications of the PCC and the S-Curve, this study clarifies
the differences between process management and process innovation and their respective
application timings and illustrates why process management and process innovation can
coexist.

Keyword: Process Innovation, Process Management, Action Research

                                        Introduction
Process management (PM) and process innovation (PI) often cause confusion for managers
and researchers. Therefore, managers need to be very clear about the differences between PM
and PI in order to apply them properly and to provide accurate direction for the future
research. However, very few researchers worked on such a basic but important topic. This
study aims to explain the differences between PM and PI and their respective application
timings. This study uses the S-Curve of the technology development cycle to explain the roles
that process management and process innovation play during the cycle and to make
suggestions on the future challenges and research direction of process innovation.

This study agrees with the “coexistence” point of view of PI and TQM suggested by O’Neill
& Sohal (1999). But their research does not demystify the confusion between PM and PI.
Therefore, this study tries to clarify the confusion to illustrate the major differences of PM
and PI through the change and time levels. The next section will explain the roles and
positions of PM and PI through the S-Curves.

                                    Literature Review
A technology’s improvement of performance follows the S-Curve. When a technology
performance parameter (y axis) is plotted against time(x axis), the result resembles an
s-shaped diagram called the S-curve. Manager must be able to predict discontinuities, which
occur when one technology threatens to replace another. Organizations need to exploit current
capabilities while simultaneously developing new ones. This need for dynamic capabilities
has coincided with institutional pressures and a wave of managerial activity focused on
process management and control (Cole, 1998). Process management has emerged as a widely
adopted managerial innovation, and underlies many quality programs, including TQM, ISO
9000 certification (Harry & Schroeder, 2000). The ISO 9000 program has a strong explicit
focus on adherence to documented organizational processes. As part of ISO 9000 certification,

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third-party auditors ensure that an organization is following its documented practices.

At the center of TQM is the concept of the PM (Harry & Schroeder, 2000) (O’Neill & Sohal,
1999).In fact, PM tools are include TQM, ISO 9000, etc. Davenport (1993) and Chang (1994)
suggest that TQM and PI can and should form an integrated strategic management system
within organizations. O’Neill and Sohal argued PM and PI coexistence (O’Neill & Sohal,
1999). However, these researches can not clear explain how to coexistence between PM and
PI. The study aims to clarify the differences between PM and PI and their respective
application timings. It also uses the S-Curves of the technology development cycle to explain
the roles and positions of PM and PI.

                       Process Management versus Process Innovation
Tushman and O’Reilly proposed the TCC theory that describes the continuous technology
development cycle (Tushman & O’Reilly, 1997), as shown Figure 1. The four boxes in the top
left corner of Figure 1 represent the TCC. Box 1 is the technology discontinuity period; box 2
is the ferment period; box 3 is the dominant design period, while box 4 is the continuity
improvement period. Details are as follows:

At the starting stage of the TCC, when new technology has potential over old technology, the
old and new technologies coexist and form the period of technology discontinuity. At this
stage, new technology is starting to shine but it has not outperformed the old technology.

The next stage is the ferment period, in which the performance and commercialization of the
new technology is more obvious. Many companies rush investment into the research and
development of the new technology with the hope to dominate the specs of mainstream designs
and thus created a highly competitive phenomenon. It is a stage of competitiveness.

Then it goes into the third stage, the dominant design period, where the companies with
technology advantages integrate the standard specs for the new technology.

The last stage is the continuity improvement period. In this stage, all companies focus on the
improvement of processes, the increase of capacity and quality and the reduction of cost with
incremental technology innovations. This fourth stage is awaiting the next technology
breakthrough and the starting of the next technology discontinuity period for a new TCC.

Similar to the above-mentioned TCC, process change is closely tied with the TCC. Figure 1
explains the relationship and roles between process change and the TCC. With the S-Curve,
one can understand clearly about the various application timings for PI and PM.




                                               2
                           Technology                        Process
         Performance       change cycle                    change cycle
                              (TCC)                           (PCC)
                                                     S2
                                                                                                                                     4
                                                                                                                       3
                                                                                          4
                                          1
                                                                           3

                                4         S1     2
                                                                                                         S2
                                          3
                                                                                                   2

                                                     2
                                                                                                   Technology 2
                                                                               1

                                                         S1
                                1
                                               Technology 1



                          (1) S1 Tech.                 (2) S1               (3) S1           (4) S1
                                                                                                                                    Time
    Tech. Change Cycle    discontinuity               Ferment              Dominant        Continuity
          (TCC)              period                    period               design        improvement
                                                                            period           period
                                                                             (1) S2
                                                                                               (2) S2              (3) S2           (4) S2
                                                                              Tech.
                                                                                              Ferment             Dominant        Continuity
                                                                          discontinuity
                                                                                               period              design        improvement
                                                                             period
                                                                                                                   period           period
   Process Change Cycle      (1) S1                    (2) S1
                                                                            (3) S1                 (4) S1
           (PCC)           PI Ferment                PI Radical
                                                                          PM Standard          PM Incremental
                             period                   period
                                                                            period            innovation period
                                                                            (1) S2                (2) S2             (3) S2             (4) S1
                                                                          PI Ferment            PI Radical         PM Standard      PM Incremental
                                                                            period               period              period        innovation period


            Process Innovation: PI
           Process Management: PM
                                                              Figure 1 The TCC and PCC on S-Curve


The four boxes in the top left corner of Figure 1 represent the Process Change Cycle (PCC):
The position of process change cycle on S-Curve. The main difference between the TCC and
the PCC is that the TCC is from the technology development point of view while the PCC is
from the process change point of view. Box 1 in Figure 1 is the ferment period; Box 2 is the
radical period; Box 3 is the standard period; and Box 4 is the incremental period. Details are
as follows:

As the TCC gets into the discontinuity period (where the old S1 technology and new S2
technology overlap), the existing process management pattern is being influenced by the new
technology. Process innovation enters into its first stage: the ferment period. At this time,
there won’t be any process innovation because the new technology is not mature enough to
replace the old one yet. During this ferment period, the company should focus on innovation
training and the analysis of the current process.

The second stage of the PCC is the radical period for PI. At this point, the TCC’s new
technology is mature and companies with their own technology specs are fighting for
dominant designs. Hence, the process also needs to be innovated to go with the new
technology as indicated in (2) of Figure 2.

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When the TCC’s dominant design emerges, it enters the third stage of the PCC, the standard
period, as indicated in (3). During this time, modifications are needed for all the innovated
processes according to the new dominant designs. Process standardization also kicks in.

The fourth stage of the PCC is the incremental period for PM as shown in (4). The processes
are being improved by using PM tools like TQM and 6-Sigma for incremental innovation to
increase process efficiency and quality while cutting down cost. When the TCC enters into
another technology discontinuity period, it will then kick off another PCC.

The old S1 technology is the TCC’s dominant design period, and the PCC’s process
management standard period. During the process management standard period, ISO is being
used to obtain a dominant design standard and then to standardize process management to
increase process efficiency and quality. TQM is also being used to satisfy customers by
creating incremental innovation, such as new models, higher quality and lower cost.

At this time, the new S2 technology also enters into the process innovation stage. This is the
time for employees to receive education training and to develop talents for the new
technology and new process innovations. It will help employees cope with the resistance and
mal-adjustment from the coming drastic process innovation.

When the TCC enters into its ferment period, the process in turn reaches the radical period for
large-scale process innovation. The old S1 technology is the continuity improvement period
for the TCC, and the incremental period for the PCC. At this stage, TQM and 6-Sigma are
major management tools to increase process efficiency and customer satisfaction. This is the
period where the new S2 technology also enters its process innovation radical period and
starts to modify the process changes generated by new S2 technology.

From Figure 1, one can clearly understand how PI and TQM can coexist on the S-Curves of
the technology innovation process. The study of both the S-Curves of the TCC and the PCC,
and their different points of view can help managers to understand the innovation cycle of the
old S1 technology and the new S2 technology, and take proper process innovation or process
management actions during various technology development periods.

As Figure 1 indicates, when the TCC is at (3)S1, the dominant design period, the new
technology (1)S2 also slips into this technology discontinuity period and starts the new
technology S2 for the TCC. Contrary to the TCC (3)S1 dominant design period, the PCC at
this time is at its (3)S1 PM standard period. During this time, process management should go
with the dominant designs and standardize all processes. For example, this period would be a
good time to apply ISO 9000.

With the new technology (1)S2 entering the technology discontinuity period, the PCC also
starts its (1)S2 PI ferment period. Therefore, one can clearly observe the relationship between
the TCC and the PCC from Figure 2 when the old S1 technology is in stage three and new the
S2 technology is in stage one. One can also observe the obvious coexistence of process
innovation and process management when the old S1 technology of the PCC is at the 4th
stage while the new S2 technology is at the second stage at the same time.

                                 Discussion and Conclude
As the promotion of PI needs to be top-down and initiated by the executives, it is questionable

                                              4
if it is worthwhile to spend so much time and efforts on inter-department process innovations.
However, by not doing so, it might lose the motivation for employees to actively engage in
improvement and accordingly lose the mechanism to quickly respond to market service needs.
On the contrary, smaller inter-department PI may, as Christensen, Anthony and Roth
mentioned (Christensen, Anthony & Roth, 2004), apply to medical professionals and
treatment locations for medical treatment innovation in order to gain speedy, convenient and
cheaper medical services.

Although one cannot clearly indicate the timing for process innovation, it is a principle that
management innovation must follow process innovation as pointed out by Tushman and
O’Reilly (Tushman & O’Reilly, 1997). Managers must be equipped with the concepts of TCC
and PCC to be able to effectively activate the onset and management of technology
innovation.

The innovation content of the first stage of the process innovation ferment period depends
highly on the sensitivity of the company. To those companies lacking sensitivity, they may not
have noticed that their technology has already entered into the technology discontinuity
period. On the other hand, excellent leaders of a company would have already started their
education training and flow analysis to get ready for the process innovation, so as to help
employees cope with the resistance and mal-adjustment from the coming drastic process
innovation. By doing so, once the process innovation timing has matured, the company can
overcome the PI Gap easily and enjoy brand new competitive advantage and market.

Therefore, PI is needed immediately when a company’s technologies enter into the
discontinuity period where the old S1 technology emerging into new S2 technology. PI at
this time can help the company secure the results of the technology innovation and help the
company to overcome the process management gap required by the new technology
innovation. In the end, it will lead to the company’s competitive advantage through the full
integration of the innovations. This study illustrates the different roles that PI and PM play at
different S-Curve stages. It further explains the reasons for coexistence of PI and PM. The
study hopes to help managers and future researchers to understand the application timings and
the functions of PI and PM.

                                          Reference
Chang, R.Y., “Improve processes, reengineer them, or both?” Training and Development, 48,
     3, 54-58 (1994).
Cole, R. E., “Learning from the quality movement: what did and didn’t happen and why?”
     California Management Review, 41, 1, 43-73 (1998).
Christensen, C. M., S. D. Anthony and E. A. Roth, Seeing What’s Next: Using the Theories of
     Innovation to Predict Industry Change, Harvard Business School Press, Boston, MA
     (2004).
Davenport, T. H., Process Innovation: Reengineering Work through Information Technology,
     Harvard Business School Press, Boston, MA (1993).
Harry, M. and R. Schroeder, Six Sigma: The breakthrough management strategy
     revolutionizing the world’s top corporations. Currency: New York (2000).
O’Neill, P. and A. S. Sohal, “Business Process Reengineering: A review of recent literature,”
     Technovation, 19, 571-581 (1999).
Tushman, L. M. and C. A. O’Reilly, Winning Through Innovation: A Practical Guide to
     Leading Organizational Change and Renewal, Harvard Business School Press, Boston,
     MA (1997).

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