How can innovation and lean be combined to improve the economic performance of a company?

Abstract

Companies are always looking for new ways to improve, in order to grow and outmaneuver their competition. There are many strategies that can be implemented to achieve this, but two popular tools used in order to gain competitive advantage are innovation and lean.

This research contains a case study of the Norwegian company Malm Orstad, located on Voll, south of Stavanger. Malm Orstad is an industry company, delivering equipment and components to the oil industry. The company was on the brink of bankruptcy in 2015, and has performed a remarkable turnaround in order to become profitable again. A lot of credit for this turnaround goes to their new lean strategy and focus on innovation and improvements. Our aim was to answer the question: “How can innovation and lean be combined to improve the economic performance of a company”. Our overall goal was to see if a company that combine innovation and lean can experience improved economic performance. To answer this question we have studied theories about innovation, knowledge and lean. We also look at employee driven innovation and discuss if this has developed as a side-effect of a lean strategy.

To answer our research question, we have performed qualitative interviews, as well as a quantitative survey, in order to gather data and reach a conclusion. We have also reviewed the accounting data of Malm Orstad from the last ten years to see if we could find evidence of improvements in economic performance as a result of their new strategy.

During our research we discovered several similar characteristics between lean and employee driven innovation, and wanted to research the connection between these. Our findings display that Malm Orstad possess a lot of the values you often find in a company that succeed in employee driven innovation. We have also seen that Malm Orstad is an organization that to a high degree can be counted as innovative, and we present arguments for this. Our conclusion from this research is that companies that combine innovation and lean will experience an increase in incremental process innovation, which can be observed in the accounting through reduction of costs. When lean is implemented the way it is at Malm Orstad, it can become the source of innovation, through increased involvement from the employees.