Why Innovation Matters for Businesses That Want to Grow and Thrive

“Innovation” is one of those terms that has always generated confusion and debate, particularly about how to harness innovation strategies to generate business growth.  This article will focus on why your business needs to be more innovative now and how to go about developing a real innovation plan.

Defining business innovation

One of the reasons for confusion is that the terms “innovation,” “innovate,” and “innovative” have been milked for all they’re worth by pundits, management gurus, speakers, and consultants. Everyone is familiar with these terms but most business executives are unclear on how to apply them to their businesses. Technically, innovation simply means “to create something new.”

Translate that definition into a business context and you have a more useful definition: “to create something new and of value that generates profitable growth and improves competitive advantage.”

Taken in this context, most business leaders inherently understand why innovation is important to their companies—the challenge is how to develop a true innovation process that produces results.

First steps

To begin the journey toward developing an effective innovation strategy and process, it’s critical to objectively evaluate a business or an organization’s current situation and develop a benchmark for what innovation really means for any company.  Questions to ask include:

1. What is a company’s motivation to develop an innovation process?
2. What has the company done in the past in terms of innovation?
3. What are the company’s strengths and opportunities?
4. How will the company’s employees and culture react to a new innovation process?

Determining motivation

Understanding any company’s motivation to develop an innovation strategy and process is critical before evaluating possible options. Larger companies are typically motivated for the following reasons:

• Crisis mode: Profits are dropping, markets are changing, customers are more demanding, products need to be refreshed, services are not in demand, and there is pressure to find new growth.
• Evolution: The company has realized that innovation is a process that must be managed to be effective and that a “home run” is highly unlikely.
• Staying ahead:  The company is a leader in the markets it serves, it is profitable, and it plans to stay ahead of the competition.

Smaller companies may not have the same reasons as larger firms but there are certainly similarities.  The key is to understand what any company’s true motivation is for pursuing an innovation strategy before going down the long and winding road to develop one. Each of these different motivations requires a tailored approach if a successful innovation strategy and process is to be developed.

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Past innovation activities

Another key step is to understand what the company has done in the past and is doing right now regarding innovation. Here are a few questions that help uncover what has been happening within a company:

1. What has the company’s experience been with innovation up to now?
2. What has resulted from these efforts in the past?
3. Please describe the company’s innovation process from beginning to end.
4. Who leads the innovation process?
5. What successes has the company experienced in terms of innovation?
6. What failures has the company experienced?

Strengths and opportunities

Understanding a company’s strengths and the opportunities that are presenting themselves should be the foundation for any successful innovation strategy.  It’s much more effective to build on what a company does best and its strengths when developing an innovation strategy than to develop a half-baked plan focused on a brand new idea with no real connection to the company’s past.  Ask the following questions:

1. What are the company’s Hidden Assets?
2. Who are the most profitable customers the company serves?
3. What products or services do they buy?
4. What new problems do these customers have that the company can solve by leveraging its Hidden Assets?

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