Innovation Process for Production Development An empirical approach Andras Augustin FEHER National Railway Company CNCF ”CFR” – SA 38, Dinicu Golescu Street, Bucharest, RO-010873, Romania

Innovation Process for Production Development An empirical approach What is Innovation Process? In studies of business innovation, the term of Innovation Process: is used to describe the array of sources and objectives that culminate in the act of innovation is used to describe the set of market effects that results from innovation and the obstacles that companies encounter when pursuing invasion strategies. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach is the engine of social and economical growth and development 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Innovation process comprises several elements like a set of objectives. New products, processes or bussines routines are designed to adress with the array of sources to internal and external environment of the company, to contribute to company development. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Benefits of Innovation Process speeding up production process decreasing costs increasing the quality of the final product new creations a change or a deny regarding conservative value and achievement 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Structure of Presentation Innovation for Production Development Innovation Process and Production Development Case Study – Restructuring Romanian National Railway System Conclusion Andras Augustin Feher 03/05/2007

Innovation Process for Production Development An empirical approach Innovation for Production Development 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Companies are using innovation process in order to achieve their objectives: Reaching a new market Maintaining existing market Reduce unit cost Competitive price for final product Efficient and Effective management Increase productivity 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach makes economical engine to work! Andras Augustin Feher 03/05/2007

Innovation Process for Production Development An empirical approach Company resources for Innovation Process: Internal resources External resources 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Internal resources for Innovation Process: Research & Development Units Production Units Management department Marketing department 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach External resources for Innovation Process: Consumers Suppliers Competitors All company contacts & connections 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Other triggers for Innovation Process: technologies and supplied products research institutes governmental agencies others structures that make information widely available 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Innovation strategies are Risky! 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Risks of implementing innovation: Financial barriers and limitations Technical risks Market risks Legal aspects Non-financial risks – people resist on change, people are not willing to take risks, existing skills may not be sufficient 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Decision of implementation: YES – it is mandatory to establish a simple, logical and rational guideline to follow during the entire process of innovation NO – many companies choose not to develop innovation processes and strategies, even if the management understood the benefits of innovation 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach General Guideline for implementing an Innovation: Choose the type of innovation process that fits to the company Fundamental questions: Where and how the innovation process should be started? Companies culture will support the process of innovation? Organisational structure support selected innovation process? Tolerance level for risk is correctly assessed? Management team is a conservative or an innovative one? 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach General Guideline for implementing an Innovation: Scheduling innovation process Measures for stimulating your team creativity: team building, brainstorming, smart bombing logical analysis, mapping your competition, others 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach and Production Development 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach There are two ways for innovation process: Creating new production units Reengineering the existing one 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Creating a new production unit it is not easy but it is not difficult also. Everything is NEW! 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Reengineering existing production units is a challenge and the most difficult job to do. Before making changes it must be observed the total picture: current situation analysis business requirement definitions legal frame and market all the elements that can influence new objectives and goals of the company 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Designing the total picture of the system will let us the possibility to create and adapt individual elements of the system. Together, under a proper supervision, this individual elements will give us the instruments to achieve proposed objectives and goals in an efficient manner. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Innovation process can be a continuous change or a dynamic jump What is Kaizen? continuous improvement on the production line and company's activity continuous challenge for quality and productivity voluntary activity and sharing ideas company's culture and philosophy for management and every employee What is Kaikaku? total business model reform restructure existing management schema denying our past jump to a new business model another gear for our actions total disconnection of the past from the future dynamic jump 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach When it has to be redesigned economical, social, political and administrative structures it is better to start with a radical reform, to disconnect totally the past from the future, and after the success of reform to start appling kaizen for a continuous improvement. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Case Study – Restructuring Romanian National Railway System 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach EU Directive 91/440 Infrastructure and Operation Business separation Open access for all railway operators Privatisation of railway activities Management independence Financial independence 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach SNCFR Romanian National Railway Infrastructure Company CNCF “CFR” SA Romanian National Railway Freight Company SNTFM “CFR Marfă” SA Romanian National Railway Passenger Company SNTFC “CFR Călători” SA Romanian National Railway Management Company “SMF” SA Romanian National Railway Assets Administration Company “SAAF” SA 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Dividing railway system on activity basis opened a door to performance and generated a massive personnel reduction. Infrastructure Company is no longer dependent only on National Railway Passenger Company, National Railway Freight Company and state budget money. There are also private railway operators that are using national railway infrastructure. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach CFR SA started to improve the quality of services provided to railway operators by rehabilitation of main transport corridors: IV-th transportation corridor crosses Romania from west (Romanian – Hungarian border) to east (Constanţa harbour) IX – th transportation corridor crosses Romania from south to north 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach The rehabilitation process of railway infrastructure on this corridor is financed by: non-refundable EU funds (ISPA, PHARE) grants and loans from international organisations (JBIC, EBRD, WB, others) own resources from state budget 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach One type of activity International grand's Non-refundable EU funds Massive personnel reduction Determined changes in organisational structures of Romanian National Railway Infrastructure Company – CNCF “CFR” SA and a new management approach 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach What are the benefits of innovation in “CFR” SA? On certain sections of the railway, operational speed of trains increased Safety measures on rehabilitated sections are now more reliable Maintenance is less expensive on rehabilitated lines Traffic control is almost entirely coordinated with computers and powerful software's People started to understand that without changing mentality no progress will be made People started to understand that accepting no challenge, will no attend a higher level of welfare for themselves 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Conclusion 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Innovation process is the engine of social and economical growth and development. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach It includes benefits but in the same time economical, social, political or administrative structures are taking risks in order to implement innovations. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Benefits of innovation process? Speeding up processes Decreasing costs Increasing the quality of the final output New creations A change or a deny regarding conservative value and achievement 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Risks of innovation process? Financial barriers and limitations Technical risks Market risks Legal aspects Non-financial risks – people resist on change, people are not willing to take risks, existing skills may not be sufficient 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Risks of innovation process? Financial barriers and limitations Technical risks Market risks Legal aspects Non-financial risks – people resist on change, people are not willing to take risks, existing skills may not be sufficient 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach The biggest and a continuous challenge is changing people mentality. Innovation is instinctively regarded like an enemy, like a potential danger to loose jobs. But people started to understand that without this, no progress will be made. People started to understand that accepting no challenge, will no attend a higher level of welfare for themselves. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach We have to decide if we are taking a decision for innovation 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach There still are many things to improve. There still are many processes to innovate. Innovation process in economical, social, political or administrative structures is not happening over the night. Small benefits are already visible and bigger part of benefits can be seen only in time. 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach To implement innovation process we need: Determination Commitment Political will Effort Patience and Kokorozashi management 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach can not be done without people 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Innovation process must be done with people and for the people 03/05/2007 Andras Augustin Feher

Innovation Process for Production Development An empirical approach Thank You! Andras Augustin FEHER National Railway Company CNCF ”CFR” – SA Internal Audit Unit for Foreign Projects – ISPA 38, Dinicu Golescu Street, Bucharest, RO-010873, Romania email: andras.feher@cfr.ro ambasador0941@yahoo.com 03/05/2007 Andras Augustin Feher