That’s where many small business owners are doing themselves a disservice. Innovation isn’t just about coming up with the next cats eye or jet engine. It’s about finding new ways of doing things. This applies to services and strategies as much as it does products.
Today innovation is seen as critical to economic growth. So much so that millions are being invested annually in Catapult Centres scattered across the country which bring businesses, scientists and engineers together to bring their ideas to reality. The Big Innovation Centre has also been set up to promote collaboration to create innovative wealth in Britain.
With so much focus and investment going into innovation, the time is now for SMEs that are eager to grow to test and apply innovative tools and techniques. But for those 41% of SMEs who, in a Premierline survey, said that innovation was central to a successful business, where do they start?
So what is innovation?
Forget the dictionary definition of innovation. When your small business is vying for space in an overcrowded market, innovation means always being quick, nimble and determined to find different ways of doing, well, everything.
That can mean all sorts of things. From the more mundane end of the spectrum like managing your cash flow better by taking a crash course in management accounting to learn how to get more pennies from your pounds. To the more fun activities, like setting up a unique type of loyalty scheme like Kenco coffee. Kenco customers collect points to support two charity initiatives in central and south America. Your food or retail business could do the same with charities closer to home as well as appealing to the hearts and minds of your customers.
Really innovative businesses are not necessarily the ones we all hear about. They’re often the subtly successful ones that somehow make being in business look easy. The truth of the matter is that their leaders don’t sit back and watch their people do their job like they always have. They constantly challenge the status quo and find ways of improving processes, systems and services to better meet their customers’ needs.
What is disruptive innovation?
Disruptive innovation was born at Harvard Business School almost 20 years ago. It’s essentially the disruption of an existing market or sector (ie the status quo) with something that initially looks unimportant but which, over time, redefines the market. Disruptive innovations make products and services more available by making them simpler, cheaper and easier for more people to access. An example of this is the 3D printer which is revolutionising manufacturing in the same way that personal computers transformed technology and communication in the 1980s.
The arrival of social media hasn’t made it easier for people to achieve disruptive innovation like you might think. It’s just made it quicker to realise it. Those crowdfunding projects that hit their targets within a couple of hours and those YouTube videos that go viral within days succeed because what they contain is appealing to lots of people. Why? Simply because we all like something new or things which make life easier.
What is open innovation?
Open innovation is about businesses collaborating with others to share ideas and linking their internal processes with external ones to share the associated risks and rewards.
Open innovation doesn’t usually happen by itself. It is often part of an organisation’s strategy to either find a solution to an unsatisfied need or to build a community through which it can expand its network. The notion is that ideas are more likely to succeed with more heads and bank balances working together on it.
Very few businesses operate in complete isolation, so many SMEs could be dabbling in open innovation without realising it. But to really see some benefit, having a plan of action and actively seeking out those relationships that will help a business do things differently are what will truly step its progress up a gear.
What value does innovation bring?
Being innovative doesn't guarantee success, nor is the value it brings every truly quantifiable. However, keeping track of the time, money and effort it takes to bring new ideas, whether alone or with others, to fruition is important in measuring whether or not to continue pursuing them.
Will Butler-Adams is Managing Director of the folding bike company Brompton Bicycles, which is seen as one of the most innovative companies in the world. Will has a cap on the amount of cash the business can invest in new ideas before calling it a day. The cap provides enough of an opportunity to properly test an idea to see if it has potential without crippling the business in the process.
Recently Will explained how an idea for a Brompton jacket was shelved as soon as it reached the spending cap after they received unimpressive customer feedback. But another innovative idea, the Brompton Dock, has resulted in folding bikes being made available for hire in cities across the UK. Without the initial investment budget with which to explore the concept to make it work, the business might never have had the opportunity to capitalise on the Brompton Dock's potential.
Five tips for helping your business innovate
- Ensure everyone in the organisation cares about it’s future. Encourage them to share their gripes about what holds it back, as long as they come with ideas for solutions to solve them.
- Don’t accept the status quo. Continually question how things are done, and work together to find ways to improve them.
- Stand by the decisions you make to try something new. Fully commit to an idea and give it the best chance of working. But be ready to move on if necessary.
- Actively seek out opportunities for collaboration with others, including universities and competitors. If others might benefit more from ideas that are of no use to this business, pass them on. Reciprocation will come.
- Don’t be afraid of taking risks. Failures and mistakes are just as important as successes, if not more so.