Kenco’s Innovation Lab: managing innovation without internal disruption

In the modern business landscape, companies sell innovation, but they are typically even more dedicated to maintaining the existing infrastructure. The reason for the reliance on the status quo is structural and pragmatic. To be truly innovative, you need to have the freedom to fail, and failure is very inefficient.

Larger scale operations have internal structures in place to avoid failure, and for good reason: failure is costly. Companies, especially ones with large operations like you see in transportation, have a list of standard procedures to ensure the most efficient activity possible. Attempting to improve daily processes or implement new procedures ca be very disruptive. Making the attempt to solve a long-range problem takes time and resources. Failure to solve the issue means the time and resource allocation is lost, and now another part of the organization must pick up the slack or margins are lost. But one logistics company has figured a way to innovate without being too disruptive, at least to itself.

Kenco is a logistics service provider based in the middle of Freight Alley in Chattanooga, Tennessee. It was founded over 60 years ago as a warehouse management service. Today, Kenco offers a wide variety of services such as transportation management and distribution and fulfillment. They employ more than 4,000 people across North America. In other words, they have a lot to manage over a large area. Managing a company this size requires a lot of resources.

Three years ago, Kenco decided to increase its focus on supply-chain innovation by creating a department solely dedicated to this purpose. They reached into the leadership team and tasked IT veteran Kristi Montgomery with setting up and controlling the lab. Kristi, at the time, had spent 24 years with the company, so she was intimately familiar with the day-to-day operations and structure. Her experience is a key to the department’s success.

Along with Kristi, there is a team of “top-performing” individuals who have been selected to contribute to the innovation process. There is a healthy mix of experience and young talent that allows the process to flow in balance with the company’s main goals.

They also collaborate with outside sources, regularly having even worked with the local STEM school on projects. The outside collaboration combined with the constant search for individuals who show a propensity for creative problem solving keeps the team exposed to new perspectives, a key part of the innovation process.  

This type of department is not a new concept in the business world. In Silicon Valley entire companies are created based on the concept of technology-created efficiency. The uniqueness comes from its origin in an established long-standing company in good health. Most newly formed companies are naturally innovative as they are attempting to solve a problem or fill a need in a manner that has not been done before. Older companies become more dedicated to process as they mature.

All larger companies have some level of disconnection between the ground level employee and executive. The daily problems get pushed aside for the executive level’s higher-level projects. You have all heard the 30,000-foot view analogy. Most bigger companies form steering committees, groups of people who decide the priority of the project list. They tend to place priority on the projects that sound like the biggest splash or the ones that move their individual agendas the most.

The focus of the Innovation Lab team is to solve the daily problems that arise from the day to day operation. They are not swayed by departmental agendas nor do they try to outkick their coverage with large scale projects. They listen to the complaints of the customers and employees and derive the main problems from everyday interactions. They are practitioners of thinking big and acting small.  

An example of their work is the Rocket Turn project. Rocket Turn is a result of the team attempting to solve the problem of detention, a common issue in transportation. Being a supply chain management company that runs several warehouses, they are aware of the problems detention creates. Their solution was a highly visible dock door management tool that makes it easier for dock managers to see which doors need attention. They put monitors above every door with a color coding feature that makes it very easy to see which trailers have been sitting the longest. This relatively simple solution to an ongoing problem resulted in approximately $500,000 in savings in one customer’s distribution network over the course of a year.

By placing the outside-the-box thinkers outside the box of the company structure, Kenco has found a way to incorporate innovation into a procedure-laden industry. 

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.