We live in a time of unprecedented innovation. The internet has enabled companies to reach far more customers than ever before, allowing small businesses to compete with industry giants. Artificial intelligence is ushering in a new era of automation, eliminating jobs but also creating many new ones. Even in today’s economy, where it often feels like nothing is going right, there are endless opportunities for business growth, especially if you’re able to lean into disruption.
All companies face challenges and opportunities in the face of constant change. In order to succeed, they must innovate: finding new ways to deliver products and services, improving the efficiency of their operations, and finding new markets and ways to reach customers.
The dictionary defines “innovation” as the action of introducing something new, especially a new idea or method. But in the business world, “innovation” refers to the process of coming up with new ideas, products, and services that will improve the way we live and do business. It’s the engine of progress, the driver of economic growth, and the key to staying ahead of the competition.
When most people think of innovation, they think of technological advances—things like smartphones, artificial intelligence, and algorithms. But the truth is that you don’t have to be a tech firm to innovate. The best innovators in every industry and field are constantly experimenting, trying new tactics and strategies, and keeping track of which ones are working best.
Why Innovation Is a Must
In a recent article, Forbes declared that “Business innovation is necessary for survival today.” But why? Because:
1. Disruption: From regulation, to climate change, to a global pandemic, markets are being disrupted more and faster than ever before. If your industry hasn’t seen major disruption yet, it’s only a matter of time.
When most people think of innovation, they think of the introduction of entirely new products or services. But in reality, true business innovation involves disrupting the way things have always been done in order to find better and more efficient ways of serving customers. This can range from introducing new technology to finding a better way to deliver an existing product or service.
Howard Shultz, chairman and CEO of Starbucks for over 20 years, says “Innovation must be disruptive. And by disruptive, I mean disruptive. You gotta fracture and break the rules and disrupt.”
Most of us are familiar with the term “disruption” in the context of technology. When an innovation is said to be disruptive, it means it is changing the way a specific industry works. But disruption is also a driving force behind many groundbreaking innovations. (Think fax machines, smart phones, etc.) Disruption is the process of using innovation to solve a problem or meet a need in a new way.
2. Competition: Markets change rapidly and new players enter your space constantly.
Competition is everywhere. You can’t walk into a grocery store without finding dozens of options for every product—and that’s just the deodorant aisle. The same is true for just about every product and service you can think of. It’s no wonder that so many people are starting businesses; they feel like they can provide similar products and services at a lower price and with better service.
And most of us aren’t making deodorant. If you offer a digital product or service, the barriers to entry have never been lower.
3. Technology: Some might call this synonymous with modernization, particularly as cloud technologies and SaaS offerings level the playing field for small and mid-sized organizations.
We all know that the pace of technological change is accelerating. This disruption has created unprecedented opportunities for those who can recognize and exploit it.
The world’s greatest companies aren’t defined by where they were born or who their founders were. They’re defined by where they are now. They’re defined by how they’ve disrupted their industries, impacted lives, or changed the world.
Where to Explore Innovation in Your Business
Companies are always looking for ways to improve the customer experience, lower costs, and increase sales. They do this by experimenting with new technologies, processes, and products. They’re continually coming up with new ways to connect with their customers and build a sustainable, profitable business.
You can do the same thing. In fact, you need to in order to grow or even to survive. But what areas of business do you need to focus on for the most impact? As always, you have options:
1. Product or service: When we think of innovation, we often think of the latest technology: smartphones, drones, self-driving cars. But the greatest innovations are often the ones that improve the lives of the people we care about most. Product innovation is the process of finding better ways to build the products and services we use every day. It’s the reason we can text our friends instead of sending letters or search the entire world’s knowledge with the click of a button.
Companies like Roblox work to scale community-sourced innovation. They believed that their “user-generated content would be the key to making their platform great.” Your customers use your products and services sometimes even more than you, and they are a great source of motivation and inspiration to help you make your product or service even better.
2. Process: Innovation can also take the form of process or organizational innovation, such as finding a better way to deliver an existing product or service to your customers or a way to work more efficiently.
Involving employees in process innovation is a great way to build a culture of innovation. And taking advantage of new technologies for process automation will help give you a competitive advantage.
3. Marketing innovation: The best entrepreneurs are the ones who are constantly finding new ways to market their products and services. Marketing innovation isn’t just about coming up with new marketing strategies and tactics that haven’t been tried before. It’s about experimenting and trying new things to find the most effective ways to reach your target market.
In recent years, marketers have been forced to adapt their strategies to accommodate the rise of web 2.0 (and shortly web 3.0), endless social media algorithm changes, ABM models, new privacy laws, and changing consumer preferences. In some ways, marketing is synonymous with innovation, always looking to the future and if not accurately predicting it, following customers there.
4. Sales innovation: The process of creating value for customers is at the heart of any business. Sales innovation is a critical component of any growth strategy, but it’s also one of the most difficult to execute. Most companies focus on the part of the process that involves coming up with new ideas and concepts—the innovation part.
But innovation is needed to make sales more effective, efficient, and enjoyable. It’s the path to achieving your sales goals and the lifeblood of any business. Without sales, companies can’t operate, service providers can’t provide the highest quality products or services, and consumers can’t get what they need.
5. Customer experience: I’m sure you’ve noticed that the way customers interact with companies is changing. Today, customers expect a seamless and personalized experience wherever they are and however they want to interact.
I am constantly amazed by the innovative ways that companies are improving the customer experience. The smallest details, like using text instead of phone calls to send reminders, can have a big impact on how we feel about a company. The best companies know that the only way to succeed in an increasingly competitive landscape is to find new ways to delight customers.
In order to provide the best possible experience for your customers, you need to find new ways to reach them, understand their needs, deliver the products and services they’re looking for, and delight them in the process.
6. Revenue models: Last but not least, is the way you make revenue. As all of the factors above come into play, the way you sell your products or services to customers also may need to change. You may be held back from the very thing you want more of, customers and higher revenues.
A classic case-study is the Adobe decision to pivot from an evergreen software purchase to a monthly subscription model. A risky decision at the time but a business pivot that was planned, tested, and then rolled out enterprise-wide.
“Since its transition to a subscription-based model, Adobe’s market cap has increased by more than 87%.”
Considerations for Innovation
Innovation for innovation’s sake does not guarantee success. If you have a great idea where your business would benefit the most from innovation, you need to also think through these considerations:
1. Cost: Whether it’s new software, technology, or more team members—innovation can be expensive. And if you don’t know the outcome, it can be hard to truly calculate the ROI. As you plan your innovation, you need to also think about the costs required to do it well. Or at least a healthy pilot. Make sure you don’t cut corners and have your innovation fail because you did it halfway.
2. Risk: This question cuts both ways. What are the risks of not innovating? What do you risk if you innovate? This can be a very sober question when things like people’s jobs and livelihoods may be the things at risk. The instability that disruption could bring is another risk to your organization, so make sure that you’re looking carefully at risk with a 360-degree view.
3. Process: Innovation takes time, and that is time that you’re not spending doing other things or that takes you away from your core business. You also have to pilot innovations in a way that can be scaled and repeated. Don’t forget to wrap your new ideas in an effective and efficient process, or they won’t do you any good.
4. Can you do it yourself or do you need help: Sometimes, when your industry is experiencing disruption or intense competition, it’s hard to see the forest for the trees. You may need some help bringing your team together or thinking outside of the box. Our recent post about design thinking may provide some inspiration about how to use a consultant to help you think differently about your business challenges.
How Do You Become More Innovative?
When we think about innovation, we often forget that the most innovative organizations are the ones that are constantly evolving and improving. These organizations cultivate an atmosphere of creativity and openness, where employees are encouraged to brainstorm and share ideas. They provide the resources and opportunities for their people to develop and experiment so that the most innovative ideas can take shape and grow into something amazing.
- Innovative cultures: Innovation sometimes feels like a high barrier,the product of success after the experiment.Instead of focusing on the result, to be truly innovative we should focus on building cultures that are willing and able to experiment and fail.
Gary Pisano, professor of Business Administration at Harvard University, says that “innovative cultures require a combination of seemingly contradictory behaviors, they risk creating confusion. A major project fails. Should we celebrate? Should the leader of that program be held accountable? The answer to these questions depends on the circumstances.”
- Get help: If your industry is being disrupted or is facing a new challenge, you may not know exactly how to solve it. You may not have the right tools in place to extract the right outputs from your team.
Often the answers are already there within your internal team. No one knows or cares more about your organization than the people investing their time working there every day. Sometimes you just need to add a skilled facilitator to bring the right people together, ask the right questions, and create an environment in which innovation can truly happen.
- Where you have control: Many people synonomize innovation with entrepreneurship. Building. Starting something new. But we all have areas of influence. You may not be developing the next new major product that will change the world. But you can create a culture of innovation wherever you are.
Kaizen, a Japanese philosophy for constant improvement, is a powerful philosophy centered around finding new ways to improve the products and services we offer. By constantly asking ourselves how we can do things better than before, we’re able to deliver better experiences for our customers and keep ahead of the competition.
Many people think that the world is already filled with the best ideas and products. But without fail, a better, faster, cheaper way to do something always pops up. It might be a new way to grow food, create energy, or build something. The possibilities are endless.
Innovation is the driver of process. The real key to business innovation isn’t to fear it. It's to embrace it.
We’d love to talk more with you about innovation and your business. Reach out to schedule a consultation to see how we can help.
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