Standardization of Improvements & Innovations: Importance & Process

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

Innovation is great, but it isn't enough to transform a great idea into a sustainable business process. This lesson details the ways standardization can ensure that innovation and improvement is captured and maximized.

It Takes More Than a Great Idea

Few things compare to the feelings of satisfaction and accomplishment that come when an innovative idea is transformed from some notes scribbled on a napkin into a real, sustainable product or process. The journey is usually long, and there are usually many setbacks along the way. If the innovative idea was yours, seeing your idea become wildly successful is euphoric. But don't count your chickens before they're hatched. Until your great, innovative idea is standardized, there's no guarantee that your innovation will still be going strong in the future.

Standardization Can Be a Game-Changer

In the months and years after the terrorist attacks on the World Trade Center, commercial airlines took an enormous blow financially. US Airways and United Airlines both declared bankruptcy shortly after the attack, and American Airlines was forced to lay off more than 7,000 employees in order to avoid the same fate.

One amazing organization, however, did not sustain heavy losses like its competitors. Southwest Airlines remained financially stable and had no layoffs in the difficult times following 9/11. If you're wondering how Southwest was able to do this, the answer is standardization.

The profitability of Southwest Airlines is closely tied to their standardized fleet.
SouthwestJet

Defining Standardization

Standardization is the process of minimizing risk and uncertainty by ensuring that a process will produce the expected benefits. Although there are a number of reasons why standardization is a great business practice, one of the most important is that standardization helps organizations ensure that their innovations and ideas will continue producing the benefits that brought the idea to fruition in the first place.

Southwest was already standardizing before 9/11. While nearly all the other major carriers flew smaller and less expensive turboprop planes on short routes, Southwest's fleet consisted of only the Boeing 737. Many scoffed at Southwest's standardization strategy because the 737 was so much more expensive to maintain and operate than smaller planes. These critics, however, stopped laughing at Southwest when the company survived and thrived during incredibly hostile business conditions.

Benefits of Standardizing

When innovative ideas are born, they are very hard to standardize because, by definition, an innovative idea will be new and will lack comparisons with others doing the same thing. Standardization therefore helps companies discover if their innovative ideas can return even more benefits to them by reducing costs associated with variance.

When a process is not standardized, chances are great that the process will be constantly changing, thus leading to increased costs and waste. And, because you cannot improve upon a process that is not consistent, continuous quality improvement (CQI), the ability to make something increasingly efficient and effective, cannot happen. By standardizing, CQI can then be used to carefully examine and enhance each step in the process to bring about even greater benefit. These enhancements and improvements then become the new standard, which can then be improved upon again.

Reduced Labor Costs

Although the 737 was more expensive in some aspects, Southwest's standardized fleet saved hundreds of millions of dollars. These reduced costs included things like eliminating the need to train pilots and mechanics on multiple aircraft. And, the ability of the company to utilize any pilot or mechanic on any plane, anywhere, and at any time, made customer loyalty skyrocket because Southwest was able to offer better-than-average performance by decreasing delays and cancellations associated with variances in the availability of qualified personnel.

The standardization of the fleet means any pilot can fly any aircraft at any time.
Pilots

Reduced Waste

Waste is the enemy of an efficient process. When new or innovative ideas are rolled out, it is not necessarily clear which specific parts of the process are most responsible for the favorable results. Without a standardized process, a company cannot know if they are wasting resources on the improvement or idea since they don't yet know for sure which parts of the process are responsible for good outcomes.

By having a standardized fleet, Southwest was able to reduce the number of parts that had to be kept in inventory and reduce the amount of lag time from ordering the part until it's arrival where it was needed. The standardization of the fleet also reduced waste in the form of aircraft downtime since mechanics had their parts available immediately, and they were always able to work on the job in front of them quickly and efficiently. Because mechanics had to deal with only one kind of aircraft, they required far less time to diagnose and fix problems.

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