Businesses that are still operating in the same manner they did 3 to 5 years ago against a backdrop of the world trying to recover from the financial crisis, an ageing population, slow consumer spending, Australia on the brink of signing its fourth free trade agreement and 11 other countries proposing joining it in the Trans-Pacific partnership, plus the dominance of social and digital media, could have a problem, a serious problem.
If your business is not continually exploring ways to capitalise on emerging opportunities or changing business processes in line with the new world order we now operate in, you need to hurry up or risk getting left behind. However, if you are actively capitalising on identified opportunities, you are to be congratulated as you probably have your competitors on the back foot.
While all this is happening, the word ‘innovate’ has crept into the business lexicon. Innovation is about creating and installing new ideas into your organisation. It could be new products or services, new internal processes or simply better ways of working.
Consider on one hand where former world market leaders Kodak and IBM, who failed to innovate, are today and on the other hand where younger innovative companies Apple and Microsoft now rank. Apple, now the world’s largest company, was close to broke until Steve Jobs returned and reincarnated it through innovation.
A structured innovation program has the potential to place an organisation at the forefront in the market place, with staff, shareholders and the bank.
Innovation is a creative process. Developing its culture in today’s environment is vital to success. A recent Boston Consulting Group survey found that companies applying innovative strategies outperformed those that did not.
Traditionally strategy and innovation have been treated as separate activities. Strategy was about things you could plan and innovation was about what you could not plan. But with the speed of change and dynamics in the business world, strategy and innovation are converging. Innovation is now a critical element in strategy.
Those who identify and implement innovative ideas, like Apple and Microsoft, will return a far better bottom line. These companies differentiate themselves through innovation.
It is senior management’s responsibility to drive innovation or live with the consequences. They must ensure the dynamic is driven, falls within the organisation’s core financial targets, and does not get bogged down in detail.
The driver is easy – the establishment of a ‘think tank’, a commitment to meet regularly forever and most important, acting on and measuring the agreed initiatives.
When introducing innovation, the temptation is to say ‘we need to think outside the square’. However, by attempting to innovate without guidelines, the risk can be losing efficiency by opening the door to too many wild ideas. Innovation think tanks are more productive if a set of simple guidelines are established that fit within the organisation’s vision, corporate strategy and financial criteria.
Worthwhile innovative ideas are more likely to emerge through the team brainstorming ideas than solely from an individual. While innovative strategy is the responsibility of management, the returns from the ‘think tank’ will be greater if key staff are on the team.
There is no proven formula for successful innovative ideas. Human nature being what it is usually ensures most ideas will relate to the market place, new products or services, but with good stewardship, ideas can be generated that can improve internal performance.
The skill is to challenge what you and others do, then identify possibilities and cost effective ways of doing things better.
Resist the temptation to ignore a possibility because ” it ain’t broke so why fix it?” With the speed of change, someone may just challenge the status quo and beat you to it.
Is innovation just a buzz word or a critical element? No contest!
The author of this article is Ken Meek, a BCD and Bottom Line mentor and Principal of M2 Strategic Management.