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Innovation in Business

I have been in the start-up space for over 20 years, and start-ups rely on innovation to compete against the big boys, or dinosaurs. Today I want to open your mind to innovation in your business, job or just way of life. Innovation is about change and as you know if we keep doing what we are doing we keep getting what we get. However I think it’s harsher than that. If we keep doing the same thing we get an ever decreasing slice of the cake, until we starve.

Before that I would like to tell you a little bit of my story and how innovation has played a role for me.

My first start-up built software that enabled researchers to view drug molecules in 3D to speed up their research and discovery processes. This was a business that was really at the bleeding edge of technology with real innovative technology. However, our major innovation was not the software, but how we pre-sold the development to finance the company. By getting customers to commit to consortia and pay upfront to have a piece of software developed, we funded the development of our software and reduced our capital requirements which gave us a competitive edge while testing the software throughout its development on paying customers.  We sold this business in 1993 and I left in 1994 to start a new innovative business.

The business was to send faxes for other people, tons of faxes. Just when email was starting to get popular.  Lots of people told me its old technology, it’s going to die, it’s not innovative. And they were right fax was old technology, there were large players such as deutsche Telekom entrenched in the market however the innovation was in the delivery of the service and how we sold the benefits to the clients.  We were faster leaner and more aggressive. Smarter, and more willing to listen to our customers and give them solutions they wanted not products we had to sell. The business grew to 110 people in 4 years and we exited in 1997 to a US based company.

So I have a simple message today....

Innovate or Die!

It’s your choice

Cake or Death.

What is Innovation?

  • The term innovation refers to a new way of doing something. It may refer to incremental and emergent or radical and revolutionary changes in thinking, products, processes, or organizations. 
  • Improvement identification and implementation.

The key word here is doing! Never lose sight of the fact that innovation should be the route to improving returns- i.e. creating income- money. It’s about identifying opportunities and acting upon them

Invention or Innovation?

  • Are you an inventor or innovator?
  • Inventor- Money to Ideas
  • Innovator – Ideas to Money

Here is a fundamental difference

In business, innovation can be easily distinguished from invention. Invention is the conversion of cash into ideas. Innovation is the conversion of ideas into cash. This is best described by comparing Thomas Edison with Nikola Tesla. Thomas Edison was as innovator because he made money from his ideas. Nikola Tesla was an inventor. Tesla spent money to create his inventions but was unable to monetize them.

Go with the money- be an innovator!

Ideas are worthless unless you act upon them and act upon them successfully. But further than this, I would maintain that a good product on its own is no guarantee of success, in today’s competitive market you also need an innovative approach to business.

Why Innovate?

  • It’s a competitive world
  • Business cannot survive by standing still, or merely reducing costing, it must constantly review the what, why and how of everything it does, look for improvement and implement this.

Or as I like to put it, standstill- you’re dead. Cake or death?

Product Innovation Lifestyle


 
This chart shows how current technology is eventually replaced by the next emergent technology. The time line has got forever shorter, we live in a time of warp speed innovation and it’s not slowing.

Decreasing Life Cycles!!

Visit:  http://www.youtube.com/watch?v=pkGIBIuiZcI

It took 38 years for radio to reach 50 million users.

Facebook adds 100 million in 9 months.

Every time I see this video I am dumbstruck by the rate of change.  But I use this as a spur to look at how we are doing things, use it as a push to question how we do things. Because without doubt, the world is changing faster than ever and to keep our slice of the cake we need to innovate.

Social media is an important part of the marketing mix, are you innovative enough to use it?

Why Innovate?

  • “Never innovate to compete, innovate to change the rules of the game.”
           David O. Adeife
 

  • "Value innovation is about making the competition irrelevant by creating uncontested market space. We argue that beating the competition within the confines of the existing industry is not the way to create profitable growth."
         W. Chan Kim and Renee Mauborgne, Blue Ocean Strategy

Two great quotes for you.... Very clever, very challenging.

However I find these a bit daunting - only change if you can produce fundamental change?  Uncontested market space?

As small businesses we are seldom in a position to change the rules of the game and create our own uncontested market. We can however use our size and ability to change to stay a step ahead of the competition by continually producing incremental change across the organisation.

Innovation for SMEs

  • Innovation is about looking at what you are doing, why you are doing it and how you can improve on how it’s done, how it works for your customers, how they can be encouraged to keep paying you or pay you more and how to keep more of the money you get for doing it.
  • It’s about making money!

This is my less theoretical view of innovation and why we do it. And then in summary---- it’s about making money.

Where to Innovate? 



So where can we innovate? Often people think innovation is about inventing a new product or improving their current product. However any invention needs to have an innovative business model to make it successful in the market. To understand where innovation is possible you can look anywhere within the organisation and create strategies to add innovation in these areas. The innovation you work on should offer to deliver sustainable competitive advantage in a measurable way.

Product  Improve what you sell

Production Improve how you make what you sell

Service  Improve how you deliver what you have sold

Sales  Improve the way you sell

Market  Change the market or improve how you market

Finance  Change the payment structure of what you sell or the finance model of the business

People  Encourage people to be innovative and improve tasks

How to Identify...

  • Production or Product Improvement
“We know where the most creativity, the innovation, the stuff that drives productivity lies- in the minds of those closest to the work”
 Jack Welch, ex CEO General Electric

Improving your product is the most obvious innovation, but be fearful of doing this in isolation from your customers, what may seem like a good idea to you and your staff maybe unwanted, so engage early and listen well.

Production improvement and innovation can reduce costs or improve quality, which in turn can produce increased customer loyalty, higher profit margins or more competitive pricing. Here you are relying on your staff to provide the ideas and need to have an innovative environment.

Do you have an Innovative Environment?



Process  Is there a process to deal with and encourage innovation suggestions?

Trust  Are employees secure enough to suggest changes? Have they seen previous suggestions acted upon or ignored?

Permission Is the fact that you want innovation communicated and encouraged? Do your staff know they have permission to innovate or suggest improvements?

How to Identify...

  • Product or Service Improvement

Often the biggest innovations come from how you sell, finance and service not what you sell. Understanding your customers is key in this process.  

What does your product do for them today and how could it provide more value to them?

In one of my current businesses, we have changed the way we find our customers as the first innovation. This leads to a ten-fold increase in enquiries. Sales have increased 500%.  How much did the product change? Not at all. How much did the customers perception change- quite a lot.

Innovation can be seen in all facets of a business.

Changing the market position and perception of your product by using an innovative marketing strategy can reap benefits. Changing how the customer pays for your product can also have a great affect on your business.

Working with one business, the owner complained about lots of work, but little cash. People were not paying on time and often disputed invoices and ended up getting a discount on payment. By changing the payment terms and the acceptance sign-off we were able to turn this into cash rich business and because of this able to give an upfront discount to win more work.

Habit 5

  • “Seek first to understand, then to be understood”             Steven Covey, 7 Habits
To innovate from external input you need to go and talk to your clients ask them what they like and do not like about your product, service and how you work with them.

Coveys 5th habit, which I like to call the “Shut up and listen” habit, is key in customer engagement.

Why do customers buy your product?

How do you find your customers- what can you change in this process to make it more efficient, what can you do that your competitors are not doing?

Look at every way that the client interacts with your product from first point of contact to the final payment- how can you improve the customer experience here?

Start by documenting the process, then by measuring how it performs today, a customer survey for example, and then look for improvements by asking those close to the coal face. Then put a plan together. Test and measure and change and test and measure.

SPIN your Customer


 
Spin selling is the brain child of Neil Rackham

When interviewing your clients and stakeholders run them through the spin process, by asking them questions about their business.

Situation What situation is your business in today? How does our product fit in to your business today?  Does your business face any difficulties today?

Problem  What Problems does this cause you or can you foresee?

Implications What is the monetary effect of these problems? Here you are trying to understand what a solution is worth without actually asking for the money.

Need Here’s the Innovation- your redefined product that solves their problem. It may not change at all except how you supply it, how they use it or pay for it.

Spin selling is the brain child of Neil Rackham

Again it’s important to listen more than you talk. Understanding is paramount.

We have now covered the discovery phase, but how do we put it into practice?

Innovation in Business

Six principles companies can follow to unlock their innovative potential.

Stefan Thomke, Experimentation Matters: Unlocking the Potential of New Technologies for Innovation

1. Anticipate and exploit early information through 'front-loaded' innovation processes

2. Experiment frequently but do not overload your organization

3. Integrate new and traditional technologies to unlock performance

4. Organize for rapid experimentation

5. Fail early and often but avoid 'mistakes'

6. Manage projects as experiments.

Innovation needs to be a process, but needs to be a flexible process to enable discovery, failure and success.

The six principles when applied enable fast innovation, but do not expect everything to work first time. Edison needed 700 attempts at the light bulb.

In simple terms –

1. Is be open to innovation and ideas, actively look for it and you will find opportunities

2. Keep it under control. Allocate 10% of your working week to thinking about innovation and allow your staff to do the same.

3. Look at technology changes and how they could be used to benefit your business. Process innovation supported by web based tools can reduce admin, which reduces costs, increases productivity, and increases competitiveness in the market

4. Have a process on how to work on innovation. Brainstorm amongst departments, set SMART goals (Specific, Measurable, Attainable, Realistic and Timely), allocate responsibility and budget and test and measure, test and measure.

5. Recognise what’s not working and learn from the failures, do not repeat them and treat them as learnings. The culture of the enterprise will need to encourage experimentation and not punish failure in the innovation process

6. Go back to high school chemistry- state your hypothesis, define the method (how you will test) and establish parameters, test and measure.

7. But never forget the purpose is to make money. If its not going to make you money then stop doing it!

Where to now?

  • Are you open to innovation?
  • Are you open to failure?
  • Are you open to success?
It will only work if you know what you are trying to achieve or to go back to Covey

“Begin with the end in mind” Habit 2

Visit www.innovation-centre.com.au and use the zero to hero scale to see where you are, its equally useful for starting a business or project or innovation.

By Nigel Hall, Innovation Centre Sunshine Coast Pty Ltd.

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