Innovation - the journey to becoming a buzzword and back
Innovation and disruption are the buzzwords that are rocking modern business world. Innovative companies are the hits on stock exchanges around the world and the business community permanently seems to be in search for the next big thing. At least that’s what my Facebook and Twitter feed tell me.
But is it true for all businesses? How do small businesses deal with innovation, particularly in less techy industries? And more importantly – is innovation truly a necessity for all businesses or a resource waster for some?
A number of studies have investigated the effect of innovation on small businesses and a few focused on the non-tech sectors.
The conclusions speak for themselves – a vast majority of small businesses which engaged in innovation have outperformed their less innovative peers.
So why is the engagement in innovation in small business still relatively low and why do so many businesses fail to successfully implement innovative processes and products?
To answer these questions, we need to understand what innovation is.
Often words on their journey to becoming buzzwords lose a lot of their original meaning.In our modern hi-tech world, we often equate innovation with invention. This is a dangerous substitution of terms, because it creates unrealistic expectations and scares a lot of business owners away from innovating.
Innovation, is much more personal and is about implementing something that is new to you and your business, and not necessarily to the rest of the world. From this point, innovation is much closer in business terms to self-improvement. This also makes it a more perpetual process.
There is also a clear distinction between radical innovation and incremental innovation that is ignored most of the time.
Not all innovation is disruptive to overall business practices and most of the time, it doesn’t have to be in order for the owners to see the benefits.
Incremental innovation is much more suitable for a large portion of small businesses for many reasons.
Firstly, innovation is change and for many people change is uncomfortable.
While you can’t innovate without putting yourself out of your comfort zone, it is important to build the culture of innovation within yourself and your business.
As I said before, innovation is a continuous process of self-improvement for you and your business and you want to establish a habit of constantly looking to find and implement improvements.
Essential part of innovation process is making mistakes. Incremental innovation allows to keep the price of such mistakes to a minimum.
Because you are building on existing practices, you have something to fall back on in case your new process doesn’t work out.
Radical innovation approach can, of course, also be successfully adopted in small businesses. But my experience as well as the research into this topic show that incremental innovation produces better results on average and allows businesses to keep focus on innovation as part of their everyday strategy.
So what areas of your business should be the target for your innovation processes?
1. Product
Your product is your business. You need to have a process where you constantly review the product or service you’re offering to your clients. Is there a way to make your product better?
In the fast paced modern environment, the needs and wants of your clients are constantly evolving and changing – make sure your product responds to those changes.
A good start is looking at your competitors and checking out your industry media – magazines, associations reports and websites.
2. Sales methods and delivery
Your product is spot on, but is it easy for your customers to get? Physical delivery and completion of sales (payment) makes a huge point of difference. All things being equal, customers will always choose the product with faster and more convenient delivery and easier payment method.
The good news is – a lot of people made it their business to invent, so that you can innovate.
Great examples are services like Menulog and EatNow. They made it their business to organise deliveries from cafés and restaurants that otherwise couldn’t do it. The result – happier customers and a far greater exposure for the businesses. For these cafes, online ordering and delivery is a new process and is a way of innovating. These are the services that can make a difference to your clients, your innovation goal is to choose the right one and implement it.
3. Internal processes.
The potential for innovation on the backstage of your business are endless. Some innovative practices will pay for themselves and will bring quick results in cash. Others will allow you to make better products and will have indirect effect on your bottom line.
Good areas to focus are increases in efficiency and performance monitoring. For example, cloud based point of sale system can allow automatic re-ordering – this is the internal time turned into chargeable instantly. Same can be said for cloud based accounting systems like Xero and MYOB – a couple of hours saved on bank reconciliations can mean a few of extra sales for you.
Monitoring the use of the business’s resources is one of the most important task a business owner has. And the one that is mostly overlooked. Let the technology do it for you.
Your job as a business owner is to find the right one. Time logging systems are a great place to start for many businesses – yours and your team’s time is your business’ main resource, make sure it is used wisely.
Regardless of the area of focus and style of innovation, it is important to make sure that your innovation process is part of the overall strategy for your business and is aligned with the rest of the processes.
Isolated innovation effort, even if initially successful, are more likely to regress in the long term. Old habits will consume a brilliant idea if it doesn’t integrate with the rest of your business.
And remember – you don’t have to innovate on your own. If you build the right culture in your business, your team will start coming up with great ideas of their own. Make sure their creativity is encouraged and well rewarded.
The key motivation for innovation in a business is to provide a competitive advantage.
However, the age of maintaining a particular competitive advantage in the long term is over. In a much more complex contemporary business environment, your competitive advantage will be constantly challenged by your industry peers as well as other evolving industries or the new ones that no one anticipated.