OI/361 – Organizational Impact
The impact on the strategies of organizations that implement successful innovation, design, and creative thinking can be tremendous. Many different types of organizations can benefit from innovation, including manufacturing and the service industries.
The car company Lotus is one such manufacturer whose design team discovered a new and different approach while producing the Lotus Elise sports car. In some cases it is a single individual that impacts an entire service industry, like Craig Corn and the shared appreciation mortgage approach he implemented with the Bank of Scotland.
The Lotus car manufacturer had faced failure in June of 1992 when it ceased production of the Lotus Elan sports car and let go of 200 workers (Von Stamm, 2008). The troubles stemmed from a manufacturing process that was overly complex, and over budgeted.
Instead of continuing to make the same mistakes, the company took an innovative approach and for the first time decided to combine their engineering manufacturing departments when designing and creating the Lotus Elise.
The leadership team at Lotus recognized the need for teamwork, so that the processes that were ultimately implemented would be derived from the most imaginative thinking.
A new strategy of using existing parts from other models that would not benefit from any new innovation were used in order to lower production costs. This new process enabled the teams to focus money and energy on the research and development of the parts of the Lotus Elise that would truly benefit from a new unique innovative design (Von Stamm, 2008).
The company also broke from tradition by starting with the design specifications, rather than beginning the project by creating the engineering specifications. The team at Lotus faced many challenges along the way, but continued their internal creative collaboration to overcome external obstacles, such as new legislation regarding the height of a car step from the ground which resulted in a redesign and a loss of half a million pounds.
The Lotus was a success, as other processes or approaches were improved through creative thinking, such as the decision to strip away any non-essentials and to make parts of the car multifunctional (Von Stamm, 2008).
Craig Corn was working in the financial industry when he saw a need for people to tap into the housing market in the UK, which substantiated a large asset pool for investors. Most of the homes at the time were owned, and owners had no solution for properly diversifying their assets in order to lower financial risk.
According to Von Stamm (2008), “This meant that for many households, a large proportion – in some cases well over 100% – of their net wealth was tied up in a single illiquid asset.” Craig wondered how he could attach an investment vehicle to a mortgage, and his creative thinking resulted a solution in the form of the Shared Appreciation Mortgage (Von Stamm, 2008).
Craig was not deterred when the company he worked for did not share his vision. He found a company who liked his idea, and once there he searched for like-minded people to build his team. David Gardner fit the bill, and soon began working closely with Craig. The process they undertook had not been done before, so every step required an innovative approach.
They realized they could offer a low interest fixed mortgage in exchange for a share in the appreciation of the property. This solution presented another challenge, which was that addition to the investment bank the two already worked at, they would also need a mortgage lender. The Bank of Scotland was a mortgage lender who had already built a reputation in the industry as an innovator when it came to financial services, and they were a perfect fit.
In September of 1996, the investment product was approved, and the team soon began implementing the marketing campaign (Von Stamm, 2008). Since this was a new product, Craig realized the marketing campaign was very important to making sure the public understood the investment.
Three months before the investment product was launched, the company had been receiving 2000 phone calls a day asking about the new Shared Appreciation Mortgage investment (Von Stamm, 2008). Craig’s approach to designing innovative and creative solutions to the challenges he faced along the way led to his success.
Although the manufacturing industry and the service industry are very different, both benefit from creative approaches to new and existing challenges. Decision makers need to be flexible with regard to considering new processes and strategies, such as combining teams that had previously only worked independently.
Recognizing the need to build a team who shares the same vision is key for many individuals who see a need for innovation and pioneer the solution.
Von Stamm, B. (2008). Managing Innovation, Design and Creativity by Wiley
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