What a Mexican cement company can teach you about innovation

When business people claim to be seeking ‘best practice’ in their industry, that often means one of two things:

  1. they’re asking a focus group what they want from the business or
  2. they’re looking at what competitors in their industry are doing.

Either way, it’s doubtful that either of these will result in finding that magic ‘best practice’.

Take the first of these: focus groups. The worst way to design anything is to have ten clever people in a room drinking cappuccinos. It’s an unnatural setting in which people say what they think they should say rather than what they really mean. And focus groups tend to state their preferences what they think they need or want based on an existing model. Henry Ford, the legendary carmaker, summed it up nicely:

If I had asked people what they wanted, they would have said ‘faster horses’.

Focus groups don’t create groundbreaking new products and services.

So what about finding best practice by looking at what the others in your line of business are doing? The chances are that they’re doing exactly the same – looking at you too. The end result is that every business in your industry will probably end up providing an identical service. And what may have set out to be “best practice” soon becomes just average or, even worse, mediocre.

Here’s an example of a company that did it differently. Like in my first blog on Whiteboard, the example is taken from emerging market innovators.

Cemex, the Mexican cement producer. In becoming a market leader, firstly in its home country, it faced some huge obstacles (or should we say brick walls’?).

The cement industry is an industry not noted for its hi-tech approach, which was at the root of a lot of problems for the industry. Orders were placed over unreliable phone lines and often changed or cancelled at short notice. The chaos caused by the flood of incoming and outgoing messages led to late and incorrect deliveries. Of course, construction companies didn’t enjoy having to pay their workers to stand idly by waiting for the right grade of cement to be delivered.

So what did Cemex do? Unlike companies that measure ‘best practice’ by looking at what their competitors are doing, Cemex looked way beyond its own industry for inspiration…

To Fedex, the international courier company, whose very existence depends on fast and efficient delivery. And to the emergency services – police, fire, and ambulance in Houston (Texas), where coordinating logistics efficiently and rapidly really is a matter of life or death.

Cemex adapted what it learnt and applied it to its own situation. It fitted its trucks with computers and tracking devices linked to a central operational hub, so that the location and direction of every truck could be monitored. That way, it ensured that the most efficient way of meeting orders could be met, and last minute changes could be satisfied by redirecting trucks. For good measure, the system meant that traffic jams could be avoided too.

The result? Cemex now vastly undercuts its competitors’ delivery times and keeps its customers very happy – without the risk of expensive down time. Cemex also saves on its own fuel, maintenance and labour costs. And it’s rolling out this innovation across all its international operations.

The lessons of this second blog? Identifying current best practice within your own industry may not be the answer. Instead CREATE the best practice by adapting what works well in totally different kinds of business.

[Image: Aldenjewell, Flickr]

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About the author

Christophe Cherry

Christophe Cherry started his career at Atradius as a financial analyst, after a stint at CBC Banque as a credit analyst. Since 2009 Christophe is country director for Belgium and Luxemburg for Atradius. You can conntect to Christophe on LinkedIn, or follow the Atradius LinkedIn page.

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