Innovation is your company’s launching point for sustainability and relevance. It drives continued growth and brand loyalty and enables companies to tap into new markets or maintain their existing ones. A PWC global innovation survey revealed that 43% of executives see innovation as their competitive edge, and 93% believe that it will drive their main source of revenue. But 65% of executives aren’t satisfied with their ability to drive innovation.
Between 2009 and 2014, large enterprises lost $18 billion in revenue to small and medium businesses (SMBs). Why? Despite seeing innovation as crucial to their ongoing business success, large companies often struggle to be flexible and take risks toward the ever-changing needs of customers—and lose their market share as a result.
So what can savvy companies do to stay ahead of the innovative curve, and maintain market share? And just what is innovation anyway? Here’s your essential guide to business innovation, and how to win at it.
More than 70% of executives believe innovation will be an integral part of their growth in the coming years. That said, many people are stuck in a Webster-definition of innovation as “a new idea, device or method” and overlook the intricacies of real-world practice.
Innovation is a key factor in driving revenue and corporate growth and helping businesses stand out from the competition. Innovators around the globe define it as “the output of a collaborative team culture”, “a new offering or business model… [that gives a] competitive advantage,” “embracing possibilities, evaluating what’s not working and why, and then collaborating to create something new—and better,” and “the deviation from, and improvement upon, the status quo.”
However you define it, innovation isn’t just a stop on your company timeline–it’s an essential and ongoing process to keep your company relevant and sustainable.
Simply put, innovation propels your company forward at every turn, from revenue
and growth to brand building and value adding. And customers want it, which is why it’s imperative for companies to get on board if they want to maintain their market share. A Lab42 Innovation survey revealed that more than 83% of people would pay extra for innovative products.
True innovation begins with the customer in mind. It solves a real problem or addresses a real need, rather than just trying to beat the competition. This focus on the customer and their ongoing and changing needs is a savvy business secret to success. But for innovation to achieve your bottom line, it must matter. 90% of customers believe that innovation must impact society—and if it doesn’t, it’s an innovative failure.
Key Challenges of Achieving Innovation
Bringing innovation into every department
Innovation that becomes lost in translation begets failure. This happens far too often in enterprises with siloed departments and teams. A product may go seamlessly through R&D, but when it comes time to merge with the business units for the big launch, innovative efforts flat-line. 26% of executives reported that the process of transitioning innovation from the R&D labs to the business side “needs serious work”, and 16% said it was “terrible.” Communication and collaboration between departments, and R&D and business units is crucial to take innovations to the next, successful level.
Trying to create frameworks for innovation
Enterprises tend to be too rigid and bureaucratic. Thus, they try to fit everything within an unyielding framework to minimise risk and adhere to regulations—and kill innovation before it begins. Innovation naturally poses a risk, and companies who realise its importance must become more willing to take calculated risks for the good of their company—within a more flexible framework.
Executing strategies at the expense of innovation
Large-scale businesses focus on executing strategies and optimising their operations rather than brainstorming and staying ahead of the creative curve. But innovation is crucial to a company’s longevity and should be the aim of every future-minded leader.
How to achieve innovation
94% of executives believe that people and corporate culture will fuel innovation in the coming years—not creativity alone. And that’s welcome news for employees who increasingly feel pressured to choose productivity over creativity.
Innovation by its very nature is fluid, which provides a wide landscape of options. Whether expanding your brand to include new products that compliment and enhance your core products or collaborating with existing brands and products to create new solutions for customers, established companies can create a winning value proposition for their customers by taking steps to differentiate through innovation.
Despite high rates of innovation failure in large businesses, there are plenty of exceptions—and those brands provide a model for other companies to emulate and grow. From giants like Amazon constantly exploring market needs and creating business models to enable solutions, to GoPro building upon their existing products to capture greater market share, large-scale businesses can break through the odds—they just have to look to the customer, not the competition.
To implement innovation large and small throughout your company, follow these steps.
Regulations are the pillars of corporations and the bane of the innovator. Many believe constraints and innovation lie at opposite ends of the spectrum. But the reality is that constraints can create necessary structures that narrow down the innovative landscape, and focus your innovations into the market.
Look for challenges
Seek and you will find, so the saying goes. Find what needs to be improved in the world around you, and what your customers need—then do it.
Never leave well-enough alone. Problems are opportunities for improvement. Find the pain points, brainstorm the solution, and most of all, communicate across departments and infrastructures.
How to measure your innovative effectiveness
Measure your innovative effectiveness against the 8 essentials of innovation from McKinsey to see where your innovation quotient lies, and how you can improve it.
How important do you see innovation for your company’s growth? By creating a vision and plan to work toward, you can enhance innovative performance and direction.
Are you investing in a portfolio of future-oriented, sustainable initiatives? With so many avenues for innovation to emerge from, it’s crucial to create a boundary to define your innovative focus and explorations.
Do you have cross-sector insights to help you differentiate your value proposition? Innovation doesn’t always have to be creativity, and often, for large companies, it means intensely scrutinising a problem, and developing a technology solution and business model that enables it.
Do you take time to rethink your business model to ensure that it remains scalable and profitable in the innovation boon? Businesses that evolve to keep up with changing market needs stay relevant and ensure sustainability through the coming years.
Do you stay ahead of the competitive curve with new releases and innovations? Timeliness is key in a fast-moving innovative landscape, and leaders who can make quicker decisions to start executing innovations can keep their company in the competitive forefront.
Do you launch innovations bigger than your business can handle, or adjust it to the market and segment? With business, your scale matters. Whether you operate in a niche market or on a global scale, your market should determine how much and where you invest in innovation.
Do you stay within your own network or extend the boundaries to collaborate with others for greater success? The highest performing companies look for existing opportunities within their space, to see how they can join forces for greater reach, or enhance products and services through collaboration.
Is your team excited and motivated to keep innovating? For innovation to flourish, it must become part of your culture. By being more transparent and sharing the innovative aspirations, leaders can mobilise their teams to adopt and drive the vision forward.
The business landscape is a dog-eat-dog world where companies often try to gain the upper hand on their competitors by creating vanity products that quickly fizzle out. Don’t fall prey to the temptation to fight fire with fire. Instead, make structured, customer-focused, solution-based innovation your differentiator, and you’ll become a creative force to be reckoned with.