How To Use Innovation To Fuel Your Small Business
One of the keys to any successful business, regardless of its size, is innovation. Developing new ideas is the fuel which will keep your business up to date. Innovation will keep operations, products, and services fresh. Adding this fuel will make your business more competitive.
According to a study from PwC, an overwhelming 93 percent of business executives believe that “organic growth through innovation will drive the greater proportion of their revenue growth.”
But, what exactly is innovation? The answer to this question can and will vary depending on your industry or market.
Jacob Berkeley, founder of Fusion92, has a clear description in an article he wrote for Business News Daily:
“It embodies the improvement of something that has come before. It is the evolution of convenience, efficiency and effectiveness. Beyond that, we live in a world of make it smaller, faster, bigger, clearer, simpler, better. We live in an age being defined as innovation by innovation. It’s everywhere. It’s happening all around us, from the moment we wake until we sleep, our lives are being influenced by innovations.”
Unfortunately, many small business owners have the misconception that innovation is only reserved for larger companies. This notion couldn’t be further from the truth.
As Richard Branson has explained, “Small businesses are nimble and bold and can often teach much larger companies a thing or two about innovations that can change entire industries.”
Small businesses are prime for innovation
This may sound unbelievable, but small businesses are actually better suited to be more innovative than a larger organization.
Small businesses can execute ideas more quickly and pivot easier than enterprise level companies. They don’t have to spend months or years evaluating new ideas. Smaller businesses don’t have to clear every microscopic dot through multiple departments.
In other words, there are less hurdles for a small business to jump over when it comes to innovation. They can develop and implement new ideas quickly. In turn, this forces competitors to have to play catch up to them.
Additionally, small businesses can temporarily allocate all of it’s resources to a new idea. Shortening development time is critical. This also develops a culture where everyone is encouraged to get involved.
Moving the innovation process to a fast track promotes creative thinking in your company. It will also offer your employees excitement and rewards for their innovative ideas.
Types of innovation
Businesses have a variety of strategy options when it comes to the different types of innovation.
Henry Chesbrough, a professor at University of California Berkeley and executive director for the Center for Open Innovation coined this phrase. This is when companies use both internal and external ideas to help advance their existing operations.
“Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation,” says Chesbrough.
In Chesbrough’s book Open Innovation: Researching a New Paradigm, he adds, that this paradigm assumes that firms can and should “use external ideas as well as internal ideas.” Chesbrough explains how these internal and external paths will quickly advance their technology.
According to Chesbrough, open innovation can be a more profitable way to innovate. Potential to reduce costs, and accelerate time to market, and increases differentiation. This will allow ways to establish new revenue streams.
This word was coined by professor, author, and entrepreneur Clay Christensen. A product or service is disruptive when it starts out at the bottom of the marketplace. Eventually it displaces the competitors in their market space.
According to the Clayton Christensen Institute for Disruptive Innovation, the “theory explains the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility and affordability where complication and high cost are the status quo.
“Initially, a disruptive innovation is formed in a niche market that may appear unattractive or inconsequential to industry incumbents, but eventually the new product or idea completely redefines the industry.”
An prime example is mobile phones replacing the landlines and now desktop computers.
Vijay Govindarajan, author of “Reverse Innovation,” writes that, “At its core, reverse innovation describes solutions adopted first in poorer, emerging nations that subsequently — and disruptively — find a market in richer, developed nations.”
For instance, Nestle developed dried noodles for customers in India. This product has since become adopted by many countries, companies and practically all dorm rooms across the world.
This is when companies will make minor changes to their existing products and services, as opposed to changing their products or services completely.
For example, think of razor blades. Originally starting out as just a single blade, razors blade then they began to offer three blades. Now razor blades have a variety features, even battery-operated razors.
Also referred to radical innovation. A business develops new ideas and concepts that are completely different from any existing products, services, or operations, currently on the market.
Pretty much everything that Elon Musk is working on can be considered as breakthrough innovation.
Encouraging innovation in your small business
Want to encourage innovation in your small business?
Here are a variety of ways to do so:
- You don’t have to reinvent the wheel.
Keep innovation simple by improving your existing products or services, trying out a new marketing strategy, or finding a supplier that is offering you a better rate.
Make innovation a routine.
Schedule an hour or so each week to brainstorm and exercise you and your team’s creativity and establish goals that encourage you to improve your business through techniques like mind mapping.
Ask or survey your employees, customers, and even vendors or suppliers if they have any suggestions on how you can improve your business.
Get your team on-board.
Have them involved in the entire innovation process, such as solving problems during a meeting, providing a suggestion box, rewarding them for their ideas that become implemented, and providing creativity or innovation workshops.
Invest in innovation.
Purchase technology and equipment that can improve your business operations. Also invest in developing new products and services.
Continue to learn new skills or information by attending workshops, webinars, conferences, local industry events, and reading everything from blog posts to books.
Harness underappreciated trends.
Don’t invest your resources in what might happen. Focus on the trends that are currently happening and ones that your competitors have overlooked.
Being innovative takes a lot of hard work and little bit of risk. But, if you want to thrive and stay ahead of your competitors, it’s an essential part of being a small business owner.