Innovation is imperative if you want to establish and maintain a competitive advantage.
To maintain this advantage requires a continuous commitment to innovation, not only from you as the owner, but from everyone in your business.
According to recent research, companies that make a large commitment to innovation, where it penetrates through the organisation, are exceptional performers in their respective industries.
The precursor to innovation is creativity, so infusing a creative environment where people are allowed to break the rules and push the limits is vital.
Strategies capable of producing innovation require resources and energy; it is therefore necessary to discuss in your business plan the organisational structures and practises you will put in place to encourage and support innovation. Each of the following topics needs elaboration in your business plan.
Creating a culture of innovation
To find the few good ideas that will create value for your organisation you need to generate possibly hundreds of ideas. It should be the responsibility of every individual in the organisation to come up with ideas, not just the founder or key staff. Here are some suggestions to encourage the flow of ideas:
- Encourage creativity
Encouraging creativity helps keep staff happy; if they think something is important and has the potential to have financial pay-offs for the company, let them follow their heart. People perform best when they are driven by inspiration and encouraged to extend the boundaries.
- Encourage everyone to participate
Teamwork enhances people’s greatest strengths and lessens their individual weaknesses.
Effective teamwork also promotes the awareness that it’s in everyone’s best interests that the business keeps improving and growing.
- Provide recognition and rewards
One of the most powerful tools to get people to be creative and to innovate is recognition.
People want to be recognised and rewarded for their ideas and initiative, which can have tremendous pay-offs for the organisation. Sometimes the recognition required may be as simple as mentioning a person’s effort in a newsletter.
- Accept mistakes as part of the process
Being receptive to new business ideas means being receptive to the idea that mistakes are a necessary part of the process. Management guru Tom Peters insists, “Mistakes are not to be tolerated. They are to be encouraged.”
It was while a Minnesota Mining & Manufacturing (3M) researcher was looking for ways to improve the adhesives used in 3M tapes that he discovered an adhesive that formed itself into tiny spheres. At first it seemed as if his work was a failure. However the new adhesive was later used on Post-it notes—a great innovation and business success for the company.
- Keep an open mind and think laterally
Innovative possibilities exist all the time. To realise them, everyone in the business needs to keep an open mind and the capacity to look at things with fresh eyes.
The classic example of a company completely transforming itself as a result of some lateral thinking is the Finnish company Nokia, whose original core business was wood pulp and logging.
When the collapse of communism opened the Russian market to the west, Nokia’s core business was seriously threatened by cheaper imports from Russia’s seemingly limitless forests. In the deep recession of the early 1990s, Nokia management concluded that the only real competitive advantage they retained was a very efficient communications system developed since the 1970s that helped them keep in touch with their remote logging operations.
That realisation transformed the company into one of the world’s most successful vendors of communications equipment.
- Innovation through serendipity
If you implement many of the above initiatives, it’s likely that some successful innovations will result from serendipity, that is, chance discovery.
For example, one day a Swiss amateur mountaineer and inventor, George de Mestral, went for a walk with his dog, and both came back covered in burrs. Curious about how tenaciously the burrs stuck to his woollen pants, de Mestral inspected a burr under his microscope. What he discovered was that the burr had small hooks that enabled it to cling to the tiny loops in the fabric of his pants. This led de Mestral to design a fastener which had one side with stiff hooks like the burrs and the other side with soft loops. That invention was Velcro.
Ultimately, in developing a culture of innovation you want employees to feel comfortable in experimenting and offering suggestions, without fear of criticism or punishment for mistakes.
Encouraging employee innovation
You may have an innovative culture in your organisation, but you also need to familiarise staff with some of the hallmarks of continuing innovation.
For example, you could try educating employees at fortnightly training sessions on topics such as creativity, entrepreneurship and teamwork. Each session might conclude with the assignment of an exercise to be performed any time over the next few working weeks, which builds on lessons learnt.
Your aim here is to give employees a taste for innovation so they will embrace the process. In addition, incentives can generate great ideas.
- Recognise the efforts of employees
If a staff member comes up with a really creative idea, even if can’t be implemented immediately, mention their efforts in a company newsletter or on a news board.
- Give a profit share or offer bonuses
Some people are motivated by money and the thought of a profit share or bonus (perhaps linked to the value that the idea adds to the business) can be a powerful driver. However, it is often recognition that is more important than anything else.
Remember too that many excellent ideas can lead to genuine improvements in the business, but are very difficult to quantify in terms of dollars. For example, an administrative person may come up with a simplification that eliminates some unnecessary paperwork and significantly speeds up a business process.
- Days off
For providing solutions to what has been an expensive problem facing the organisation, try rewarding the innovator with a few additional days off, perhaps a long weekend.
- Trips away
Try advertising a problem facing the company that needs a solution. As a prize for the best solution, offer a weekend away, all expenses paid.
- A fair evaluation process
It’s important that all employees, whether key staff or otherwise, know that their suggestions will be fairly evaluated on their merits, not on the person’s status in the company.
For this reason it’s sound policy to form a team of people from all parts of the business to assess suggestions. This leads to more informed decisions about the merits of suggestions. The input from those who might be involved in implementing a suggestion will also help to avoid possible problems.
Building innovation into your business practices
Your aim in developing an innovation culture in your business is to make it as inclusive as possible. Consider inserting an innovation clause into employment agreements so that all your employees are aware from the start that they share a common responsibility for improving the business.
Make it clear to your staff that everyone is capable of generating innovative ideas. The process of innovation is not just confined to those with technical knowledge and skill, or limited to the alteration or invention of new products or services. Innovation is equally valuable for streamlining and speeding up daily business processes.
For example, many businesses have achieved substantial cost savings through streamlining operational processes to reduce waste and the use of resources. Other businesses have achieved significant cost advantages by using the internet to sell their goods and speed up business processes such as communications.
Encourage employees to take advantage of coffee breaks, lunch breaks, and taxi rides. Often great ideas which can lead to growth, happen outside the places where we expect them to happen, in what Dr. Seuss has called the ‘waiting place’.
If it’s hard to get staff together for common informal breaks, consider taking them out for an informal meal where you can encourage creative discussion about work. Also be sure to include a good dose of laughter at meetings because laughter is an effective measure of how comfortable people feel about expressing themselves.
Experience shows that innovation is more likely to occur in a low debt business. With debt hanging over a business, it is more likely to stick to proven methods that result in cash flow, as opposed to less conservative methods that might be capable equally of failing or of producing tremendous success. So effective financial management also helps you to sustain creative direction.
Innovation and staff skills
If you want to succeed as an innovator in an increasingly competitive business environment then you should assist all the staff in your business to acquire basic skills in creativity, entrepreneurship and teamwork.
Brainstorming sessions can be a useful tool in coaxing ideas to come to the surface. But all employees need to learn how to brainstorm most effectively. Such meetings often work best in the morning, with three to ten participants and plenty of biscuits or muffins to sustain the brain work. Some suggestions:
Start with a clear, predefined statement of the problem. Statements that focus on the customers’ needs are usually better than ones that focus on internal issues. For example, if the problem is that the manufacture of product takes too long, restate the problem as the customers having to wait too long for a product.
- Preparation is vital for effective brainstorming. All participants need a bit of background knowledge on the industry or greater environment in which the problem exists.
- Background research might also include possibly visiting competitors, or collecting samples, brochures and ideas for a brainstorming session.
- Make up some creative rules to keep the session and participants focused. For example, only one person is to speak at a time, points should be demonstrated if possible with pictures as well as words and criticism should be delayed because every idea is allowed at this stage.
- Try and cover a range of issues that affect your business, as your staff will also have a range of interests. These could include potential environmental and social initiatives such as product improvement, manufacturing changes, energy saving, waste reduction and community sponsorship activities.
- Keep a record of ideas. Numbering them allows people to refer back to them and can also be a measure of how much work or ‘idea generation’ took place in a brainstorming session.
- Learn how to manage staff, particularly in the midst of brainstorming sessions. Often these meetings start off slowly, rapidly gather pace and then enthusiasm wanes. The best managers are able to encourage participation and the flow of ideas at the start, then step back when the pace quickens, and bring the meeting to a close before the quality of ideas diminishes.
Research has shown that less innovative business owners had fewer skills in managing projects and managing people than innovative business owners.
To ensure you and your staff acquire these skills, investigate the free, nationwide Enterprise Training workshops programme before investigating other sources of training. The skills you acquire may well make the difference between whether an idea or concept is developed or not.
Innovation and your customers, clients and suppliers
Make sure you include your customers, clients and suppliers in the innovative process.
Encouraging all your employees to listen carefully to customer or client feedback can lead to some very productive developments of products and services, or changes to your business procedures.
Trusted suppliers can also often offer very constructive advice on ways to make your relationship more profitable for both sides through innovative changes or efficiencies. Often they just need to be asked, or to be made aware that their contributions to your on-going innovative process will be valued.
Think of ways in which you can encourage this in a more systematic manner so that the flow of ideas is steady rather than spasmodic. For example:
- Create a ‘brains trust’, made up of selected customers or clients. By meeting regularly with this panel you can get feedback on your present products and services and also their
reaction to proposed new products and services.
- Explain to your sales staff that market research is an on-going process. Train them always to ask for feedback from customers or clients. The feedback should cover the whole business relationship you have, not just their reaction to your products and services.
It makes good business sense to thank all contributors since this simple form of recognition encourages further contributions.
Researching innovation elsewhere
Business is becoming increasingly fast paced. To keep up you need to know what the competition is doing. Here are some ideas:
- On the web
Competitors’ websites should be one of your first stops. Home pages often show companies in an overly optimistic light, but can help you understand the company culture and their market focus. Are there any ideas you can borrow or improve upon? What do you like about the site, and what could you do better?
If you find a particularly keen or proficient internet surfer among your staff, encourage that person to continue surfing at home by subsidising an ‘unlimited hours’ internet access plan for his or her home computer. Encourage that staff member to research innovative ideas from the huge resources of the internet.
- In print
Subscribe to key magazines, newsletters and industry journals and circulate these around the office. The more knowledgeable your staff become, the bigger the contribution they are likely to make.
- The people factor
Supplement what you learn from the internet or conventional print sources by widening your business contacts. You can find out a lot of accurate information by talking and listening to people. In addition:
- Try going to industry conferences; most companies send their best people to speak at conferences and they will often share useful information and insights.
- Keep an eye on employment vacancies; they are a great source of business intelligence in identifying the future direction or interest of a competitor.
- Ask your customers what they think are the strengths and weaknesses of your competitors. Why do they prefer doing business with you? In what ways could you improve?
- Join your local Chamber of Commerce and industry group to meet more people and gain some ideas about innovations in your industry or in business in general. For example, find people at these meetings who are making successful use of the internet or other technology. You might gain ideas from them on how you can apply their successful strategies in your business
Implementing innovative ideas
The best ideas should be worked on as soon as possible—not just by the idea generator, but also by others who have a different viewpoint. It is imperative that refinement of an idea starts very quickly following a brainstorming session, while ideas are still fresh and enthusiasm is high.
For example, if the innovation involves a new product, encourage the construction of a crude model, made from polystyrene, foam or cardboard.
- Project selection and management
Project selection is critical; this is essentially the skill of aligning innovation with your business strategy. It’s often necessary to select between competing projects at an early stage of development so the most promising receive funding and the potential failures are killed off.
Project selection needs to be driven by customer needs and wants, plus anticipated or emerging environmental and social market trends. Establish a team of representatives from each part of your business to implement innovative ideas in your business.
Armed with their knowledge of the company’s business strategy, their own unique fields of expertise and customer or client feedback, informed decisions are more likely to be made.
Once a project is chosen the team needs to meet regularly throughout the project duration, co-opting the assistance of other staff as the need arises. Each innovative idea needs a project manager who is responsible for drawing an overall plan for the project, showing stages, a timeframe for each stage, who is responsible for the various parts of the project, the resources needed, and how much it will all cost.
Monitoring the level and success of internal innovation
As with all business systems, you must monitor the progress to ensure that the innovation is producing results and improving the business’s competitive advantage.
Try also to keep track of the number of ideas generated from each division of the business, the number that are produced and implemented as a result of brainstorming session, and those useful ideas generated by customers, clients and suppliers.
Some interesting trends may arise that need to be addressed. For example, some parts of the business may not be contributing ideas because the workers might feel like they won’t be taken seriously, or they haven’t been sufficiently trained in the need for innovation.
It is also important that employees feel able to comment on the good and bad of the innovation culture and process in the business, as well as make suggestions on how to encourage more innovation.
Protecting your intellectual property (IP)
There is little point in innovating or developing a new product or service only to have your idea stolen or copied by competitors taking advantage of your success. If the IP is crucial to your competitive advantage then take steps to protect it.
Think broadly about your intellectual property (IP). It can include a wider variety than you may at first imagine.
- Your business name, logo and branding. Many business owners forget • to get trademark protection for a company name or logo. Visit the Intellectual Property Office of New Zealand’s website at www.iponz.govt.nz for details.
- Your inventions and innovations.
- Articles, books or software coding and programs. These are automatically protected by international copyright convention, but it is important to assert your ownership rights in the form of copyright notices.
- Sound recordings, films and broadcasts, and a new service concept (this might need both copyright and trademark protection).
- The combined knowledge base of yourself and your staff which can be extensive. Make sure staff clearly understand who owns the intellectual property developed in the course
of your business.
- If you are in business, or going into business with a partner, then clarify the ownership of any IP , since it could have considerable commercial value. The same applies to joint ventures and strategic alliances. If IP is created as a result of the venture or alliance, who owns it? Clarify this before you commit to the venture.
- Patent protection
Only a small minority of businesses will ever need patent protection. Get specialist advice on:
- How much the protection will cost in New Zealand and elsewhere and how effective it is likely to be. Can you realistically defend it?
- What value and competitive advantage will be added to your business. Will patent protection increase the value of your business in the eyes of lenders or buyers?
- Design protection
You can also register the design of an article but this protects only the appearance of something (for example, an ornament or book cover), not the materials used to make the object.
Part of innovating is being aware of new trends and developments that will affect the way we live, work and do business. Here are some glimpses:
- Web 2.0
Web 2.0 is not a new version of the internet, but instead describes a different way of thinking that is transforming the way the internet is used. Examples include websites where customers collaborate to create their own solutions or product. Two very successful websites illustrate this process.
- TradeMe basically provided the engine and vehicle for the public to actually do the business amongst themselves, with the website charging for entries and taking a commission on sales.
- Under the banner ‘Broadcast yourself’, YouTube allows people to place their own videos online – YouTube sells the advertising traffic.
Of course the secret is to work out what Web 3.0 and 4.0 will bring!
- New business models
Some of the growing business models include:
- Selling information, products and services online. For example, buying software or e-books online rather than in packaged or printed form.
- Finding ways to support businesses that are growing very fast.
- Selling traffic, such as website traffic. If you can attract ‘eyes’ to your website you are in a strong bargaining position to sell links to other businesses.
- Thinking up new and more creative alliances with other businesses.
- Some thoughts to ponder
- Traditional advertising will continue to fall; online advertising will increase.
- Young people are all connected – they will get jobs and have disposable income so the means to reach them may well be through their connectivity: the internet (relevant Web 2.0
websites like YouTube), cell phones, PDA s and Pocket PCs through technology such as RSS syndication.
- Innovation doesn’t have to be product. It could be the way it is delivered, packaged or presented. For example, people are still making money out of bottled water.
- The information explosion is intensifying: you can spend all day searching online, and never get all of it. People don’t want endless information – just the most relevant, opening up new possibilities for how content is delivered.
What can you do?
- Diarise to search online regularly for any trends that might impact on your business or delegate this task to an employee who is particularly interested in new or disruptive
technology and ask for monthly reports on interesting information.
- Subscribe to future trends computing and technology publications.
- Hold ‘future’ meetings with your staff to discuss emerging trends and the impact
on your business.
- Attend technology conferences.
- Innovation is the responsibility of everyone connected with the business. All employees should participate in the process and make suggestions.
- To encourage innovation, you must accept mistakes and a little deviance.
- Rewarding great ideas is important. Nothing motivates like recognition and benefits.
- Start organised brainstorming sessions to encourage innovative ideas.
- Encourage feedback and ideas from customers, clients and suppliers.
- Brainstorm a range of business relevant topics to make best use of the knowledge and interests of your staff, including business environmental and work safety and health performance, and community interaction.
- Research what your competitors are doing and how you can differentiate yourself from them through innovation.
- Monitor the whole process of innovation from idea to results, and then assess its success.
- Identify the factors that keep enthusiasm, drive and excitement levels high in your business and support these factors.