Want to Innovate? Break the Rules

This is an excerpt of the original article. It was written for the January-February 2013 edition of Supply Chain Management Review. The full article is available to current subscribers.

January-February 2013

Supply chain management has a host of rules that most managers live by. But in certain cases, say authors Robert Sabath and Rich Sherman, true innovation comes only when those conventional rules are broken. By clearly understanding the nature of the rules and the details of your supply chain, you can know where and when rule-breaking makes sense.

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From college courses to on-the-job training to professional seminars, we’re taught that supply chain is a complex set of processes that follows specific rules to achieve the best results. Yet most supply chain innovations and breakthroughs evolve from situations where the basic rules were actually broken or changed. Is there a disconnect?

Breaking the rules has to do with knowing when it’s beneficial to make an exception to accepted practice or to challenge the conventional answer. It entails scanning the horizon for new technologies, best practices, or approaches that change the paradigm of how we do things. Winning companies often excel because they saw a situation differently and were willing to take the risk and the initiative to break with the accepted logic. Innovation is all about breaking the rules. If you don’t look outside the box, you will become imprisoned inside it.

The challenge for management is first to create a culture that looks outside the box. Once that’s in place, supply chain executives can identify which rules should be broken or challenged and how; when the timing is right; what specific actions need to be taken; what are the economics and operating levers; and how to harvest the benefits after the rules are broken. Breaking the conventional supply chain rules is not the right strategy in every instance. But when it does make sense, it can lead to truly breakthrough results.

The real secret to successfully breaking the rules is to know the rules intimately in the first place. When you understand the foundation of a rule, you better understand the logic and the strategy upon which the rule is based. That yields a much clearer sense of which rules restrict rather than support your supply chains.

Below we address five time-honored supply chain “rules” that need to be challenged—not necessarily broken, but at least carefully analyzed to see if a departure from the rule makes sense for your organization. Each segment concludes with a brief recommendation on how to approach the particular rule.

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