Not Just For Techies: Why Innovation Should Be At The Heart Of Your Business

Of course, this is exactly how Apple became so successful. Jobs was a master at watching how we humans were evolving and responding with a product that suited our desires.  But you can be sure that this wasn’t an easy ride and that, behind the scenes, there was a daily struggle to change the mindsets of those around him and the direction of resources.

Don’t forget that Jobs left Apple in 1985 as he was coming up against too much resistance to his vision of personal computers for all. He was re-hired as CEO in 1997 after the company he went on to build – NeXT Inc. – was acquired by Apple and his persistence in developing ‘inter-personal’ and ergonomic computers was finally embraced.

Innovation can lead to shiny new gadgets but it is, in essence, simply a process that every business should employ in order to grow. The key is knowing what your business needs and innovating appropriately.

The question is not should we innovate but how to innovate.

Innovation Styles

Over the years, innovation has been categorized to a certain extent and this can be useful in terms of deciding how to move forward in your own enterprise. Ways to innovate include:

Breakthrough

This is the most radical of all innovation styles. It’s simply the development of a totally new concept that bears no relation to preceding products or practices. Nintendo is a great example of a breakthrough innovator: it has existed as a company for over a century and has offered up products such as playing cards, instant rice and even a taxi service before settling on video games in the late sixties. Attempting this kind of innovation is of no use to your existing business…unless you actually come up with the next big thing and can sell up and retire to the Bahamas!

Disruptive

This phrase was originally coined by Harvard Professor, entrepreneur and author, Clay Christensen who defined ‘disruptive innovation’ as the transformation of an existing market by introducing simplicity, convenience, accessibility where expense and complication are the status quo. Originally forming in a niche market, the new concept/product ultimately redefines the whole industry. Steve jobs was the undisputed king of disruptive innovation and his Apple I-mac personal computer was the ultimate game-changer in tech history.

This is a useful type of innovation, in terms of streamlining your business practices.

Incremental

In highly competitive business sectors, where market share is everything, this type of innovation is essential. It is basically the implementation of repeated small changes to a product or service in order to keep ahead of competitors. Its crux lies in building on existing successes. Think about how much we come to expect as standard in our cars or with our phones these days, compared to twenty years ago.

Open

Another innovation type given credence by a College Professor, ‘Open innovation’ was first identified by Berkley’s Henry Chesbrough as the ‘…use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively’. Basically, this innovation approach involves the appropriation of external ideas that have proved successful for other enterprises and blending them with initiatives from within your own business. This is an organic way to innovate and, if applied well, can reduce costs, improve market share and create new revenue streams.

Define Your Innovation Blend

Given that there are a number of innovation styles, the best approach when deciding how to innovate is to take the elements of each that best suit how you want to move forward. Standing still is not an option for any business that wants to stay competitive so start by looking at your product or service, customer relations and resources and how making changes to any of these areas could increase your market presence.

In a Harvard Business Review article entitled ‘Managing Your Innovation Portfolio’, innovation consultants Bansi Nagii and Geoff Tuff report on a survey they conducted in 2012 looking at how businesses chose to innovate.

Surveying a number of publically traded enterprises across the industrial, technology and consumer goods sector, they discovered that, generally, the most successful companies used a blend of 70 % ‘safe’ internal initiatives (think incremental), 20 % more risky, disruptive plans that run adjacent to core practices and just 10 % on the more ‘transformational’ breakthrough ideas.

Of course, this is not a ‘one size fits all’ model: the balance will differ from sector to sector. Tech businesses, for example, will naturally spend less time on core products as sales are driven by novelty and shiny new gadgets.

What Nagii and Tuff do insist on, is that businesses should address these three types of innovation with a systematic approach. They also suggest that management of innovation should be directed towards five key areas: talent, integration, funding, pipeline management and metrics. It will take a while for any business to work out its ultimate blend and success will lie in strategic planning rather than randomly introduced ideas.

Channel Ideas

A key part of being a strong business manager is separating the good ideas from the bad. Most small businesses don’t have sufficient systems in place to decide which initiatives to pursue, which to ignore and how to monitor any innovation’s success. Essentially, the ultimate goal of the company should be at the heart of any decisions made and the introduction of any new idea should be accompanied by proof of how it addresses a problem or need.

Whether solutions are required for improving brand awareness, customer retention or sales figures, a clear case needs to be made before any innovation is introduced and its efficacy should be reviewed regularly. Pursuing exciting new ideas that bear no relation to the requirements of your business will be an expensive and fruitless waste of time.

Listen and Learn

It’s not always the case that the first to bring something new to the market will reap the greatest rewards. Pioneers in emerging industries are often surpassed by late-comers to the party who have absorbed the initiative without having to absorb the associated costs. Amazon and Google are prime examples of this: they followed the lead of Book.com and Yahoo and then blew them out of the water!

The once commonly used term ‘First mover advantage’ has now been dispelled as a myth and the legacy of these first-to-market trailblazers is often a story of disadvantage. The higher costs of being a frontrunner eventually overwhelm profit advantage and leave room for second or third generation players to move in on the act.

Primary innovators can be toppled by followers who only have to improve on or simplify a product or concept in order to out-market them. This is an important lesson for would be innovators – it pays to wait.

Pace Yourself

If your business has benefitted from a recent innovation, the temptation will be to try something else new. The pressure to be ‘an innovative company’ is everywhere and the word ‘innovate’ can almost be interchanged with ‘succeed’ these days. However, whilst certain industries like fashion, tech and advertising thrive on new products, most businesses need to take a more measured approach.

The successes of any radical change should be fully leveraged before any investment is made in new ideas.If you reap the rewards of incremental innovation at a steady pace, you will be far better placed in the long run to fend off competitors.

Don’t Waste Money

It’s important to remember that ploughing money into research and development isn’t going to instantly win your business innovation points. Apple is a consistent winner in the world rankings for innovation and yet spends just 3.3% of its near $200 billion cash pile on R&D projects. Companies like Google and Microsoft spent far more relatively and the industry average comes in at about 6.5%.

In 1998, Jobs told Fortune magazine that ‘innovation has nothing to do with how many R&D dollars you have’ and this is a philosophy the company has held since the 1980s. A spendthrift and measured approach to innovation has been proven to reap rewards and a clear goal for any money spent is a must.

Stay Grounded

Serial entrepreneur and author of ‘The Lean Start-Up’, Eric Ries, is a fierce advocate for continuous change as a means to success in business. He describes this process as a ‘pivot’. In this, Ries emphasises the importance of positive and gradual responsiveness rather than knee-jerk reactions to problems:

‘I want to introduce the concept of the pivot, the idea that successful startups change directions but stay grounded in what they've learned…By contrast, many unsuccessful startups simply jump outright from one vision to something completely different. These jumps are extremely risky, because they don't leverage the validated learning about customers that came before.’

For most business owners and managers, this is a great way to approach innovation – as history and the great innovators of our time have revealed.