Monthly Archives: April 2014

Scaling Local Food Revival with a Business Model Innovation

Business Model Innovation Taken for a Spin by Zaycon Foods

There is no doubt that people are becoming more interested in where their food came from and with meat prices rising (especially here in the United States with widespread drought in some areas) people are also becoming more concerned with the cost.

Like a blast from the past, when neighbors used to get together and buy a side of beef together and have a butcher carve it up so they could stash it in their respective freezers, Zaycon Foods has come along with a business model innovation and introduced a Farm->Truck->You food distribution system for some types of meat and produce, bypassing several layers of warehousing, truck shipment, and unnecessary waiting time.

Here is a video describing their business model innovation for a spin using chicken as an example:

But it is not just chicken that they offer at their buying events. They also offer 93/7 lean ground beef, premium bacon, ribs, hot dogs, ham, and even seasonal produce straight to the trunk of your car. The benefits of the business model innovation are numerous:

  • Lower prices
  • Fresher food (no waiting steps in the process)
  • No food waste (which is part of the reason retailer’s charge more)

Now operating in 48 states to 1,000+ locations here in the United Sates and a growing favorite of churches, and other group purchasers, neighbors are now banding together and doing a scaled down version of sharing a side of beef (or, um, chicken).

What do you think? Is this an innovation or not?

P.S. They did win the first annual Post Harvest Waste Innovation Award from The Post Harvest Project (TPHP), a nonprofit organization founded in 2012 through the support of The Clinton Global Initiative.

Source: The Seattle Times


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Announcing a New Lean Innovation Series

Announcing a New Lean Innovation SeriesI’ve started working with a local healthcare insurance company in a role focused on driving improvement and innovation in its membership and billing operations. The company has a big focus on LEAN throughout the company and always has some sort of value stream mapping (VSM) or rapid process improvement workshop (RPIW) going on through the Kaizen Promotion Office (KPO). Despite this only being my second week on the job, I have already been involved in the company’s LEAN efforts. Having gone through Six Sigma Green Belt training and with my focus on innovation, this of course has been very interesting so far.

Some of you may recall my popular DMAIC for Innovation article for iSixSigma magazine.

In the spirit of the linkage I made between Six Sigma and Innovation in this article, I thought I would create a series of articles looking at the relationship and connections between LEAN and Innovation.

To anchor us all in the same frame of mind about what innovation is, my definition of the word is:

“Innovation transforms the useful seeds of invention into widely adopted solutions valued above every existing alternative.”

One of the key intersection points between LEAN and Innovation is that both are focused on value. LEAN focuses on activities in a process that add value and removing those that introduce waste, while innovation is focused on value creation, value access, and value translation. This I introduced in my often referenced article – Innovation is All About Value.

Innovation = Value Creation (x) Value Access (x) Value Translation

Now you will notice that the components are multiplicative not additive. Do one or two well and one poorly and it doesn’t necessarily add up to a positive result. Doing one poorly and two well can still doom your innovation investment to failure. Let’s look at the three equation components in brief:

Value Creation is pretty self-explanatory. Your innovation investment must create incremental or completely new value large enough to overcome the switching costs of moving to your new solution from the old solution (including the ‘Do Nothing Solution’). New value can be created by making something more efficient, more effective, possible that wasn’t possible before, or create new psychological or emotional benefits.

Value Access could also be thought of as friction reduction. How easy do you make it for customers and consumers to access the value you’ve created. How well has the product or service been designed to allow people to access the value easily? How easy is it for the solution to be created? How easy is it for people to do business with you?

Value Translation is all about helping people understand the value you’ve created and how it fits into their lives. Value translation is also about understanding where on a continuum between the need for explanation and education that your solution falls. Incremental innovations can usually just be explained to people because they anchor to something they already understand, but radical or disruptive innovations inevitably require some level of education (often far in advance of the launch).

Done really well, value translation also helps to communicate how easy it will be for customers and consumers to exchange their old solution for the new solution. My favorite example of poor value translation and brilliant value translation come from the same company and the same product launch – The Apple iPad. It’s hard to believe, but Apple actually announced the iPad with the following statement:

“Our most advanced technology in a magical and revolutionary device at an unbelievable price.”

iPad BillboardThis set off a firestorm of criticism and put the launch at risk of failure. But amazingly Apple managed to come up with the Out of Home (OOH) advertisements with a person with their feet up on a couch and the iPad on their lap (see above) by the time the product shipping. If a picture is worth a thousand words, this particular picture will probably end up being worth billions of dollars to Apple.

Never Forget!

Value Creation is important, but you can’t succeed without equal attention being paid to both Value Access and Value Translation…

Because innovation is all about value…

Value Creation (x) Value Access (x) Value Translation = Success!

Lean versus Innovation

The graphic above highlights that LEAN and Innovation intersect on Value Access. Now let’s have a quick look at some of the key principles of LEAN from the web site of the Lean Enterprise Institute:

PRINCIPLES OF LEAN

The five-step thought process for guiding the implementation of lean techniques is easy to remember, but not always easy to achieve:

  • Specify value from the standpoint of the end customer by product family.
  • Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value.
  • Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer.
  • As flow is introduced, let customers pull value from the next upstream activity.
  • As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, begin the process again and continue it until a state of perfection is reached in which perfect value is created with no waste.

Key LEAN Principles

The second part of the above graphic highlights the seven sources of waste:

  • Inventory
  • Motion
  • Defects
  • Transportation
  • Processing
  • Overproduction
  • Time

While developed for the manufacturing context, LEAN can be (and is) used in service industries like health insurance as well. As you can see, LEAN is really focused on improvement and optimization of the status quo, while innovation in contrast is focused on the introduction of something new that disrupts the status quo. As a result, one is not better than the other, but instead both methodologies can be used side by side, and in future articles I will share more of my musings on how innovation and LEAN can be used together.

Stay tuned!


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Looking at Healthcare Innovation from the Inside Out

Taking a Swing at Healthcare InnovationAfter working for the last decade helping organizations from the OUTSIDE IN:

  • Build innovative marketing strategies
  • Manage multiple, simultaneous, cross-functional business projects
  • Optimize complex processes
  • Create an enterprise-wide innovation-focus

I thought it was time to flip things around and go native, and work with an outstanding organization to make some of these things happen from the INSIDE OUT.

I thought it was also time to dig deeper into an industry, get my hands dirty, and really come to know a particular vertical. And what could be more interesting in this time of rapidly escalating costs and innovation than the healthcare industry?

[Especially with the Affordable Care Act (ACA) going into force here in the USA]

It is with all of this in mind that I am happy to announce that I have taken an internal consulting position with Premera, one of the largest health plans in the Pacific Northwest.

Premera serves 1.5 million people—from individuals and families to Fortune 100 employer groups. Premera’s mission is to provide peace of mind to their customers about their healthcare.

As a result of joining up with Premera, I must also announce for this post and all future posts that the views here (and elsewhere) are mine and mine alone, and do not in any way represent the views of Premera.

This isn’t the end of my publishing here on BradenKelley.com or on Innovation Excellence (now Disruptor League) or the other places that I contribute. In my spare time I will still be writing, and doing the occasional innovation keynote or workshop in various places around the globe.

So, please keep in touch, and stay tuned for more to come!


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