Business Innovation: Not Just A Buzz Word

“Innovation distinguishes between a leader and a follower” Steve Jobs

In business today consumers are spoiled for choice and have nearly unlimited access to alternative vendors due to internet. In this era it is no longer good enough to just be one of the multitude, in order to prosper, succeed and lead business owners must look to the future. The future is accessed not by surviving but by identifying problems and innovating to solve them. As Steve Job’s said in a business market that desperately needs leaders innovation can be the distinguishing factor.

While many of you may be saying “my company constantly has to innovate due to factor X” or “we ARE innovators within our industry because of Y” there will be some who say “We don’t need to…” or “We don’t have time” or even “We can’t afford to…”. Innovation like Job’s also said isn’t about how much time or money you can pump into solving a problem it’s about creating the environment and having people thinking about the problem in a creative way. With that being said here are four ways you can help to foster an innovative environment:

Establish a Formalised Innovation Process 

The first barrier to fostering an environment of innovation in any business is creating a process or means for ideas and solutions to be communicated, examined and tested. What this basically means is that if an employee or manager was to come up with a great idea for solving a problem or innovating an old process what would they do with their idea? The first step for fostering innovation in this case would be to have a clear line of communication for the idea. The process for communicating ideas and solutions can take the form of a informal ‘innovation’ manager who documents and presents the ideas to upper management, innovation roundtables at staff meetings, suggestion boxes or office hours for managers, allowing free communication. The important point is that there is a formal means of communicating ideas for staff and managers in a way that will be healthy and productive.

That being said arguably the best means of formalising innovation is to add a “P&S Discussion” (Problem & Solution) to staff meetings. You can present to the group 2-3 problems that are being faced by your company whether it is adding value, refining/improving redundant processes or fixing operational efficiency, provide some easy problems and then supply a more difficult problem. Small successes will help foster a positive and creative thinking environment while the larger problem will provide a challenge. Using this method it is almost always a good idea to split your meeting into micro groups and give staff time to brainstorm solutions. Allowing staff to work together in groups can help foster creativity and will allow multiple levels of expertise, experience and prior knowledge to look for solutions together, as the old saying goes “two (or more!) heads are better than one”.

To help foster the critical and creative environment during these discussions try offering small incentives for participation or the best/most ideas. These reward don’t have to be large or monetary but can be anything your employees might view was a motivator such as a provided lunch or extra break time. A tally or displayed points board and the nature of giving incentives should help to motivate your employees not only through the reward but by a desire to compete against their peers. Creating competition in a healthy manner (observed) can often drive employees to think outside the box and can provide real value when it comes to innovation.

Innovating To Appropriate Scale

What this step really means is that business owners have to carefully choose how large of a idea or innovative project to implement. An innovative idea and its planning should target either a well known problem or provide a new way to add value to your business. The reason this is important is because business is driven by consumers and unfortunately consumers wants and needs change over time, stability is a lie. If your company comes up with a great new process or idea but it will take 12-18 months to implement, will it still be relevant and what if it doesn’t add as much value as you thought at a later date? Investing time and resources into designing, planning and implementing a new process or idea can be costly so owners and managers should think about what their desired outcome for that particular innovation will be and how long it will convey a competitive advantage. In today’s rapidly evolving business environment where the average life for some of the largest companies on the S&P 500 has declined from 61 years in 1958 to 25 years in 1980 to only 18 years in 2011 (Reuters) it is clear that competitive advantages erode quickly. What these statistics show is that change is constant and fast in big business so it is undoubtedly doubly so for small to medium enterprises. An evolving, transient business environment needs quick cycle innovation in order to convey an advantage however short term. It is this “Transient Advantage” created through quick cycle innovation rather than slow cycle innovation that Rita Gunther McGrath would argue in her book The End of Competitive Advantage: How to Keep your Strategy Moving as Fast as Your Business that drives business profitability and success.

In industries where competitive advantages quickly erode such as fast-moving consumer goods, travel agents, electronics vendors, publishers or service industries any change that provides a competitive edge can mean the difference between profit and loss. That being said larger scale innovation and planning can be successful but more often than not the safer option is to innovate your business through quick cycle innovations as they still provide benefits but for less potential loss. Any company looking to grow their business in these industries should be looking at innovation as a driving force for growth and due to the transient nature of those industries their mantra to borrow from the US Marines should be “Improvise, Adapt and Overcome (in a timely manner)” through innovation.

For more specific information regarding creating a transient advantage see next month’s article.

Collaborate With A Partner 

This step’s value for fostering innovation cannot be underestimated. While making your employees think about creative solutions for problems is a good start to innovating processes and business models there is something that is even better. Having your company and employees work collaboratively with other employees or businesses. Collaborating with a partner for innovation may take the form of having an annual meeting of multiple store owners or managers where solving problems and innovating is the focus or it may also be a partnership with another business that can provide a service or expertise that your business currently lacks. Resurg would be an example of a potential business that could help foster innovation and collaboration through our Performance Workgroups Program where we gather non-competing businesses in the same industry to discuss problems and solutions. These Workgroups are content rich and ideas focused and look to provide tangible goals and targets for members to work on over the year.  Even attending industry conferences or networking meetings can provide worthwhile opportunities for collaboration. Don’t be afraid to seek expertise from your industry just choose your partner well.

Understanding Failure and Using It

While this tip may seem very self explanatory and common sense it is integral to the success of any company looking to innovate. Companies that understand failure is an inevitability are better prepared to deal with that fact when it happens. Failure is just the opportunity to re-examine the problem or plan and strengthen it. Failing during the innovation process should not be seen as the end but just the beginning of the process as the best solutions often come from trial, error and thorough testing. Having an environment where an idea’s failure isn’t viewed as a negative will encourage staff and managers to experiment and improve their ideas. Failure shouldn’t be the killer of creativity and innovation but the impetus for it.