The Startup
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Improve or Innovate? (Hint: Wrong Question)

What’s the difference between continuous improvement and “disruptive” innovation?

I get this question all the time, especially from organizations who have significant investment in some process improvement program — like lean, six sigma, or kaizen — and have picked clean all the low-hanging fruit, squeezed as much inefficiency from their work as is humanly feasible, and are now realizing that their beloved program wasn’t all that customer-focused. All the internal scrutiny left the customer without any truly new and useful value. So the leaders decide that what they need to focus on now is innovation, as if it’s something different entirely.

The question comes in different forms, but irrespective of form, I believe it’s the wrong kind of question. It’s indicative of the wrong mindset. I hear it in the language: “We’re doing lean,” and “We’ve been doing lean for three years.”

Pardon me, but you don’t “do lean”! Do you “do innovation”? When’s the last time you heard someone say, “we’ve been doing innovation for three years”? Geez, what did you do before?

Why do we view activities with an efficiency or productivity focus as a bolt-on, but innovation as a necessary embedded competency every business must have? And why is there even a debate between what is and isn’t improvement or innovation? I don’t get it.

Here’s the thing. As humans we all solve problems in essentially the same conscious way: we pose a question, hypothesize an answer, test it out, and then reflect on whether the cause and effect we were anticipating came true.

It’s a learning loop. A never-ending cycle. It’s at the heart of everything. And from that perspective, improvement and innovation — however you wish to define them — do not differ. If there is a distinction, it is in the aspiration.

Continuous improvement efforts are generally focused on and aspire to enhancing an existing process, product, service, or system. Think of it as a “work pie,” in which about 25% is true value — stuff a customer cares about and pays for. The rest is stupid stuff: non value-adding things like bureacracy, regulations, overload, inconsistency, and all flavors of waste. Your improvements are aimed at increasing existing value by decreasing those burdens and value-detractors.

So-called radical or “disruptive” efforts are generally focused on and aspire to creating an altogether new pie, often eliminating one or more barriers to value entirely.

Let’s look at the seven basic forms of waste…the traditional continuous improvement targets. Except, let’s look at them through the lens of what the entire commercial word defines as “disruptive” innovation.

Overproduction. Anything done without regard to demand counts as overproduction. That includes something as simple as processing an order before it’s actually needed. Uber owes much if not all of its success to excising this waste when it pioneered on-demand car service…without cars. Likewise, Air BnB has become a wildly successful lodging service without producing a single property.

Overprocessing. When there are too many non-value-added steps to achieve a given outcome, you’ve got overprocessing. Examples include too many operations to complete a phase of work, the effort needed to inspect and fix defects arising from poor tool or product design, and redundant data entry due to a lack of integration between multiple systems. Amazon banished overprocessing with the “1-Click” innovation.

Conveyance. The very best you can hope for when transporting goods, material, and information from one place to another is that nothing goes wrong. Conveyance is a necessary evil to be reduced wherever possible. The decline of the U.S. Postal Service began with one of the most radically innovative applications ever, now a generation old: Email.

Inventory. Any time inventory of any kind builds up, it creates pressure to manage, reduce or eliminate it. A visit to the average car dealership — an experience many consider more painful than a root canal — is a case in point: the buildup of cars is the, er, root cause of sales pressure and unfriendly consumer tactics. Innovative new subscription models focusing on mobility rather than ownership have been launched recently by automakers such a Ford’s Canvas program, and independent startups such as Fair.

Motion. Needless repetition of any process (even a lean one) sucks time, productivity and cost. Case in point: signing in to various mobile apps is a big burden. Enter fingerprint security, a genius bit of technology that eliminates the need to constantly reenter user names and passwords, which most of us can’t remember anyway.

Defects/Rework. Everyone has experienced a defect of some kind: errors, inaccurate or incomplete information, flawed products. It’s obviously important to reduce the probability of these things happening. Surprisingly, however, it’s not always a top priority. According to a recent study in the Journal of Patient Safety, an estimated 210,000 to 440,000 patients die each year from hospital errors and hospital care-caused harm. This would make medical errors the third-leading cause of death. New technology such as so-called “digital employee” software, RFID, bar coding, and iris/fingerprint scanning are focused intently on eliminating these critical errors.

Waiting. Tom Petty had it right: the waiting is the hardest part. Whether it’s an endless, unmoving queue, being stuck in idle while you wait for an approval to proceed, or simply a slow internet connection speed, we’ve all experienced waiting and the accompanying sense of helplessness and lost productivity. Netflix completely eliminated the need to wait 7 days to watch the next installment of a favorite show.

Still, all of these innovations are in a sense simply better versions of what was there before. It’s just that the scope, scale and magnitude of the improvements are so great that an altogether new value pie has been baked, and while the general shape looks comfortably familiar, it tastes completely different. The proof is observable: user or customer behavior is fundamentally different.

So, table the question, put the silly debate aside, and take a cue from Thomas Edison: “There’s a way to do it better. Find it.”

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Matthew E. May

Matthew E. May


Senior GTM advisor at Insight Partners. Co-author, What a Unicorn Knows: How Leading Entrepreneurs Use Lean Principles to Drive Sustainable Growth (Q1 2023).