Innovation in companies, almost like income tax and death, is unavoidable. Indeed, companies that neglected or failed to innovate are sadly no longer with us. Or, for those not innovating, well, it’s just a matter of time…
In fact, innovation is part of our DNA. After all, we were, since we’ve started using shelters and tools, inventors and innovators. Indeed it took some extraordinary innovations, starting way back many millennial ago, that brought us where we’re now.
Innovation is something we must keep doing – especially in companies – where the stakes are high.
What is innovation?
The Business Directory defines innovation as “The process of translating an idea or invention into a good or service that creates value or for which customers will pay.” It’s a process which involves the adoption of procedures or products which are perceived as being new by the adopter 1. And, therefore, it is concerned with changes in the established ways of doing things.
In fact, the values created by innovations are often manifested in new ways of doing things or new products and processes that contribute to wealth 2.
There is however a difference between invention and innovation 2. “An invention” is an idea, a sketch or model for a new or improved device, product, process or system whereas “an innovation” in the economic sense is accomplished only with the first commercial transaction involving the new product, process, system or device…
Innovation can be part of almost every aspect of a company. For instance, companies that perform well apply innovation strategies with product development, company processes, customer communication and care. Most importantly, they promote and nurture an innovative company culture…
Why is innovation in companies so important?
“Innovation is the key ingredient for business survival and growth”, says Dr. Josef Martens – Innovation in business expert. Indeed, according Dr. Martens, companies that do not practice innovation will have slower growth rates; their profits and market share will be lower; customers will be less loyal and their competitive position will decline.
Gordon Tredgold writing in Inc. proposes the following four reasons why you must focus on innovation:
- Company growth. Businesses that innovate are able to scale up and add more employees. That allows them to take on more customers and grab a bigger share of the market.
- You are better than your competitors. The right innovation will allow you to offer something unique to your customers.
- Your customer’s needs are met. Innovators predict changes in the market and provide solutions before people even realize they need them.
- You will attract the best talent. Talented, innovative people want to work for innovative companies.
Neely and Hii (1998) reminded us that success or failure in innovation should be viewed as a necessary but not sufficient cause of business performance and survival. Hence the performance of business is dependent on a wide range of factors that are not susceptible to simple conception.
The key drivers of innovation in companies
Since innovation in companies has to do with adapting to changes in the business environments, the following questions 3 needs to be asked and answered in order to create a strategy for innovation:
- Does the leadership team know what the future will look like? The pace of technology change is such that when we look towards the future sometimes it seems that the only certainty is that there is no certainty.
- Do you know what will be successful in the future? Never lose sight of the fact that the world is changing daily so that the insights you gather should be on an ongoing basis if you want to avoid being caught out by change.
- What trends are moving faster than your growth? The world is changing too fast for permanence to be a solution.
- Is there agreement on where to innovate and what to risk? If the leadership team can’t agree to work together to define innovation parameters then there isn’t a lot of hope for innovation being embraced by the rest of the organization.
- How do you combine internal resources with external influence? As the organization develops innovation maturity it will become apparent that collaboration is not purely confined to the business itself.
- Are your gambling on the future too safe? By leveraging intelligence and defining acceptable boundaries for external collaboration and adaptability the leadership team should be able to devise a strategy that will make optimal use of resources to deliver the required results.
Regardless of your company’s size, industry or location, it can be an innovation powerhouse. However, there are many times barriers that may hinder innovation in companies…
Barriers to innovation in companies
Of course there are many barriers to innovation and that these are both internal and external to a firm 2.
The external barriers are:
- The lack of infrastructure,
- Deficiencies in education and training systems,
- Inappropriate legislation, and
- An overall neglect and misuse of talents in society.
Some major internal barriers may include:
- Rigid organizational arrangements and procedures,
- Hierarchical and formal communication structures,
- Conservatism, conformity and lack of vision,
- Resistance to change, and lack of motivation and risk-avoiding attitudes.
So, what are the minimum requirements you need to qualify as an innovative company?
Gary Hamel and Nancy Tennant writing in The Harvard Business Review identified five requirements for a truly innovative company:
- Employees who’ve been taught to think like innovators.
- A sharp, shared definition of innovation.
- Comprehensive innovation metrics.
- Accountable and capable innovation leaders.
- Innovation-friendly management processes.
That’s all for now… However, keep on innovating!
A Business Plan that is well researched and written will help you to get your business started the right way.
Here’s a video by Arpit Malik that explains innovation…
1 Sutton, C.J. 1980. Economics and corporate strategy, CUP Archive.
2 Neely, A. and Hii, J. 1998. Innovation and business performance: a literature review, The Judge Institute of Management Studies, University of Cambridge, pp.0-65.
3 Beswick, C., Geraghty, J. and Bishop, D. 2015. Building a culture of innovation: a practical framework for placing innovation at the core of your business, Kogan Page Publishers.