11/07/11

Simon Mosey, Head of Institute for Enterprise and Innovation

Cost-cutting might solve cash flow problems in the short-term, but it does nothing to encourage sustainable growth. To achieve this, companies need to encourage new ideas and develop these ideas into successful innovations.

The thing about innovation, though, is that it requires a willingness to do something differently. Not only is this considered risky, but it also takes time and effort. In the current climate, people are too busy fire-fighting or just servicing current customers to take the time to step back and think about problems or opportunities in a new way. New things are a distraction — and they demand resources if they are going to come to fruition.

On the other hand, the reluctance of many larger companies to take risks with “the new” presents smaller, more agile companies with a great opportunity to capture the niches or launch a disruptive proposition

Another barrier to innovation is how it gets rewarded and recognized — or rather, how it doesn’t. Innovation isn’t really part of anyone’s job description. It is a hard thing to measure or evaluate. So the impetus and motivation for individuals to come up with new ideas often isn’t there.

Idea capture schemes or suggestion boxes can sometimes help here. But while there is often a flurry of ideas to start with, they will quickly dry up if nothing happens to the ideas or there’s no feedback or follow-up. Worse still is when an idea is picked up but its original creator is not acknowledged or involved in the process. Ideas need to be recognized — and they need to be rewarded — if they are going to keep flowing.

Innovation starts with great ideas, so it’s crucial that if you’re investing in just one or two, they are the right ones — the ones the most clearly aligned with the company’s long-term goals. That’s why health-checking the sanity of ideas is crucial and worth spending some time over.

So to maximise the chances of developing a successful innovation, here are the five key steps companies should take before they take the plunge.

1. Start with a specific strategic goal

By definition, innovation is a departure from the norm. There needs to be some sort of novelty, even if it’s just an incremental improvement. But at the same time, if an idea is going to work it needs to align with the overall goals, values and mission of the business. This means that a key message from the leaders is that they endorse and support doing things differently.

Research shows that new products and services that the customer thinks are different are five times as likely to succeed as ‘me too’ offers and so that is a compelling reason to try and find something different and not just to follow others.

This can be particularly difficult if it means going into a new area — doing something you have never done before — launching a new product or service, expanding into foreign markets. But whatever it is, you need to make sure that what you’re proposing is consistent with your overall strategy.

2. Do your research

Most innovation comes as a result of gathering ideas and analysing possibilities rather than some “eureka” moment (although that will happen if you spend enough time generating ideas!). So take your time before investing in one or two key ideas.

It also helps to put some structure around the process of innovation. We’ve already looked at ensuring that ideas are in line with overall strategy, but getting a fresh perspective is important, as well.

It’s all too easy to get trapped in a “not invented here” mindset. So try to involve people from different areas of the organisation, with diverse work experience and industry backgrounds when you’re gathering and analyzing information and ideas.

You can open up the dialogue to employees and key stakeholders, encourage debate in meetings to gather radically different approaches. Better still, involve people from outside the organisation — a supplier or a customer. The small effort involved will more than pay dividends in terms of the fresh perspectives it brings .

When you’re evaluating the ideas you have come up with, it is important to think of all the reasons it might fail. Look at it from a customer’s perspective. If it is a physical product, ask yourself how you will manufacture and distribute. What about the financial and legal aspects?

Once a product or service have been launched, it is too late to discover that it isn’t fit for purpose, not sufficiently differentiated from the competition or too expensive to deliver. So do your homework as early as possible to identify all the ways it could go wrong and think about how to deal with these in advance.


3. Consult widely

Another stimulus to effective innovation is co-operating with non competitive firms from different industry sectors. Often this can uncover common issues and suggest common solutions.

For example, a company in the printing industry who had a production capacity problem attended a workshop and discovered that they shared exactly same problem with a manufacturer of UVPC windows. By comparing notes and working together, they were able to devise a solution to their problem, yet neither would have been prepared to do this with a direct competitor.

This type of contact is increasingly being encouraged by formal channels such chambers of commerce or universities and it is an approach that is increasingly popular among some larger firms - for example, Rolls Royce compare notes with BP and Caterpillar.

For smaller firms, one way to instigate and benefit from such co-operation is to enlist the help of a university or business school as a facilitator. They have a wide range of contacts and will be able to do the match-making and make introductions.


4. Beta test the idea

Ideally, developing a new product or service should involve an experimentation stage where radically different approaches are tested and evaluated by an independent group.

It is particularly important if you are going into a new area where you have limited experience in that you have a reliable third party to gather information, help with prototyping, research, using new materials, user testing, etc. The challenge is to find a partner who you can trust whose business it is to do these things. By working with such a partner and sharing knowledge and best practice,
you will learn how to do it yourself — so the next time around you will need less outside help.


5. Evaluate the evidence

Finally, before launching your innovation to the world, set up a group and involve representatives from all parts of the organisation likely to be affected by the changes. This is the time to anticipate some of the barriers to acceptance — both internal and external - and how these can be overcome.

At this stage, you need to pay particular attention to the opinion leaders and influencers within the organisation who are respected and listened to by others. Every organisation has people like these and they need to be involved in the innovation effort as they can derail it by coming up with 100 reasons why it won’t work!

The way to get these people involved and to get buy-in more generally is to encourage discussion and even decision-making lower down the organisation. Ensure you Involve people at all levels as their opinion is valuable and seek practical suggestions from them as to how to overcome any problems and ensure that the introduction of “the new” runs smoothly.

About The Author

These tips and many others are included in the following step by step guide to successful innovation from Nottingham University Business School:

Ingenuity in Practice: A Guide for Clear Thinking by, P.Kirkham S. Mosey and M.Binks

http://www.amazon.co.uk/Ingenuity-Practice-Guide-Clear-Thinking/dp/0956345301