In the business world, not a day goes by where the word innovation isn’t thrown around like a frisbee at a summer BBQ.
Many startups have innovation embedded in their DNA and live in an “innovate or die” state of mind.
On the flip side, very few enterprises have been forced to innovate over the last 30 years.
Things are changing.
With startups cutting into more and more of enterprise profits, larger corporations – often household names – can no longer afford to sit back and wait for innovation to simply happen.
Consumers crave it. In fact, 63% of respondents to a Nielsen survey say they like when manufacturers offer new products.
End users expect highly customizable solutions to their problems and only a small percentage of businesses are delivering.
But first, let’s define innovation.
Do B2C and B2B define it differently? Do startups have their definition of innovation while enterprises have their own?
Regardless of industry, profession, or type of business, there isn’t one agreed upon definition of innovation.
Although many common points do exist, 15 innovation experts couldn’t even give one consistent definition of what innovation means in business.
The best definition I found came via EY who defines innovation as:
“Innovation is a collaborative, structured process that involves different parts of the organization, as well as outside partners, to contribute, create and exploit new opportunities and find new ways to solve complex problems. The sole action of generating ideas is not innovating. An idea only becomes an innovation when it has been implemented in a form that generates value.”
To put it even more precisely, they go on to say:
“Innovation is the art of making hard things easy and creating value where it did not previously exist.”
Further complicating the discussion is the common confusion of innovation with invention. While equally important, innovation and invention are not one and the same.
Invention occurs when a product is created through a process of design and experimentation.
(Source: Surbhi S: The Difference Between Invention and Innovation)
While innovation may also involve the process of design and experimentation, the end product will be an enhancement of something already in existence.
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With technological advancements like cloud computing, artificial intelligence, and machine learning, businesses tapping into these are coming out on top while those that don’t find themselves closer and closer to extinction – remember Blockbuster? Circuit City?
Business innovation occurs when an organization introduces new processes, services, or products to affect positive change in their business. This can include improving existing methods or practices or starting from scratch. Ultimately, the goal is to reinvigorate a business, creating new value and boosting growth and/or productivity.In a perfect world, the ideal environment to foster business innovation would be one that promotes a culture of creativity and collaboration. Catherine Plano of Start-up Nation describes the ideal innovative business culture encourages and supports the following characteristics:
Rapid innovation is no longer … Businesses both small and large have access to the same technology and resources. Innovation now becomes the key competitive area of focus for businesses looking to extend their shelf life.
For businesses to remain competitive, they need to be open to the needs of customers and team members alike, while being aware of emerging trends in the marketplace that will allow them to remain current with their product offerings. Daniel Nolan breaks this down into the 6 Reasons Innovation is a Survival Skill:
Business innovation can be broken down into four primary categories, which are determined based upon the role of technology in the process, and on the extent to which it previously existed in the marketplace. Jorge Lopez defines the four categories of business innovation as follows:
Incremental Innovation – Utilizes existing technology to increase value to the customer in an existing market.
Disruptive Innovation – Applies new technology or processes to your company’s current market will often be inferior to existing market technology.
Architectural Innovation – Takes the lessons, skills and overall technology and applies them to a different market.
Radical innovation – Revolutionary technology giving rise to new industries.
(Source: Jorge Lopez Types of Innovation)
Fear. Fear of criticism, of failure, even fear of success. It’s human nature to resist change and to avoid risk.
In addition to the human condition, there are also practical reasons businesses resist innovation, even when we know it’s a critical element to continued success.
Risk aversion and complacency are two key reasons businesses avoid innovation.
Oftentimes, we simply over think it – assuming that the end can’t possibly justify the means.
To be truly innovative requires significant investment, in both capital and personnel.
Unless you’re serious about investing in it, innovation becomes just another buzzword – something that all too commonly happens within well-established organizations. Executive and management teams get employees bought into an idea or methodology, excitement grows, and then poof, nothing happens.
We immediately revert to old habits, keep focus on core business competencies, and innovation takes a back seat – and it’s not too uncommon for this cycle to repeat itself, creating this culture where once new and exciting opportunities turn into a case of “in one ear and out the other” any time its resurfaced.
There is no magic innovation wand.
Put systems in place that enable your employees, customers, stakeholders, investors, and outside consultants to collaborate around innovation.
“The tools are usually right there. Problems arise when people don’t use their imagination because they end up making things too complex. But everyone has the ability to make innovation happen.” – Jack Burton, Burton Snowboards
According to a National Science Foundation study, only 15% of an estimated 1.3 million for-profit companies introduced one or more products or process innovations between 2012 and 2014. These rates are very similar to those between 2009 and 2011.
Simply acknowledging innovation puts you at an advantage when you take these stats into consideration.
Just as it’s important to invest in innovation, it does you no good to make those investments and expect an immediate return. We can follow best practices until we’re blue in the face but the fact of the matter is: Innovation is not a science.
Failure will occur.
Depending on the velocity at which you’re creating new products, you may very well see more failure than the “next big thing” and that’s something you’ll have to learn to come to terms with.
Just as we’re agreeing upon embracing innovation as a means of growth, we too must embrace failure and put ourselves in a position to learn from…
A defined process is critical to the success of any innovation.
According to EY data, 63% of organizations either have no defined decision‑making process and framework, or one that is partially defined but not implemented.
Your innovation process should be separate from other business processes, but in alignment with them at the same time.
McKinsey & Company believes that any company serious about innovation needs to master each of the following Eight Essentials of innovation performance:
They go on to state that top-quartile innovators are far more likely to have strong practices consistent with the Eight Essentials versus lower-quartile innovators.
Technology can ease the workload at each stage of the innovation process. Streamlining mundane tasks and minimizing opportunities for human error.
As we touched on earlier, advancements in technology over the last several years have made it easier for businesses to innovate.
Cloud computing makes it easier to deploy systems and keep us connected.
Artificial intelligence and machine learning make it easier to process immense amounts of data quickly – something that was nearly impossible without massive resource pools prior to this technology.
With this data and these technologies, it becomes possible to create/update software better and faster than ever before. The chart below looks at traditional software delivery in comparison to continuous software delivery.
In addition to optimizing our speed-to-market, we can test go-to-market strategies and go from idea to product faster than ever before.
(Source: Finding the speed to innovate, McKinsey & Company, 2015)
When we apply the various tools of technology, the opportunities for innovation are limited only by our imagination. The following are just a few examples of how different industries are harnessing the power of these new technologies for continuous improvement.
Innovations in healthcare technology are constantly evolving. According to Marketresearch.com, an estimated $117B will be spent by 2020 in applying tools such as the internet of things (IoT), blockchain, and edge computing to the improvement of patient care and streamlining of the healthcare process.
Recent examples include:
With climate change on the rise and natural resources dwindling, innovation in the environmental sector is more important than ever.
The following are a few recent innovations in energy and sustainability:
In the ever competitive industry of travel and tourism, customer satisfaction is the driving force for innovation. Apps, wearables, and augmented reality are just a few of the tech tools being used to create the optimal customer experience.
Recent travel and tourism innovations include:
Financial technology or Fintech as it’s often referred to is a booming industry aimed at continuously improving security over financial information, while also optimizing customer experience in a crowded and competitive marketplace.
Recent technology innovations in the finance world include:
Technology innovations in the building and construction industry are focused on increasing project efficiency, workplace safety, and project workflow visibility.
While some look at innovation as nothing more than an unnecessary and distracting buzzword, numbers don’t lie.
Innovative businesses are chewing away at big brands to the tune of $18 billion between 2009 – 2014 according to the Boston Consulting Group.
To become competitive and enable growth by way of innovation, businesses must create innovation-specific processes, become closer than ever before with customers, invest in innovation, staff with innovation in mind and start letting outsiders in, and insiders out, and embrace technology.