The successful exploitation of new ideas is crucial to a business being able to improve its processes, bring new and improved products and services to market, increase its efficiency and, most importantly, improve its profitability.
Marketplaces – whether local, regional, national or global – are becoming highly competitive. Competition has increased as a result of wider access to new technologies and the increased trading and knowledge-sharing opportunities offered by the Internet.
This guide explains how you can make innovation a key business process and outlines the different approaches you can take. It gives you advice on planning for innovation and creating the right business environment to develop your ideas. It also outlines the help and support available to innovative businesses.
- The business case for innovation
- Approaches to innovation
- Planning innovation
- Encourage innovation in your business
- Funding innovation
The business case for innovation
It is important to be clear about the difference between invention and innovation. Invention is a new idea. Innovation is the commercial application and successful exploitation of the idea.
Fundamentally, innovation means introducing something new into your business. This could be:
- improving or replacing business processes to increase efficiency and productivity, or to enable the business to extend the range or quality of existing products and/or services
- developing entirely new and improved products and services – often to meet rapidly changing customer or consumer demands or needs
- adding value to existing products, services or markets to differentiate the business from its competitors and increase the perceived value to the customers and markets
Innovation can mean a single major breakthrough – e.g. a totally new product or service. However, it can also be a series of small, incremental changes.
Whatever form it takes, innovation is a creative process. The ideas may come from:
- inside the business, e.g. from employees, managers or in-house research and development work
- outside the business, e.g. suppliers, customers, media reports, market research published by another organisation, or universities and other sources of new technologies
Success comes from filtering those ideas, identifying those that the business will focus on and applying resources to exploit them.
Introducing innovation can help you to:
- improve productivity
- reduce costs
- be more competitive
- build the value of your brand
- establish new partnerships and relationships
- increase turnover and improve profitability
Businesses that fail to innovate run the risk of:
- losing market share to competitors
- falling productivity and efficiency
- losing key staff
- experiencing steadily reducing margins and profit
- going out of business
Approaches to innovation
Innovation in your business can mean introducing new or improved products, services or processes.
Analyse the marketplace
There’s no point considering innovation in a vacuum. To move your business forward, study your marketplace and understand how innovation can add value to your customers. For more information on analysing your marketplace, see the page in this guide on planning innovation.
Identify opportunities for innovation
You can identify opportunities for innovation by adapting your product or service to the way your marketplace is changing. For example, if you’re a specialist hamburger manufacturer, you might consider lowering the fat content in your burgers to appeal to the health-conscious consumer.
You could also develop your business by identifying a completely new product. For example, you could start producing vegetarian as well as meat burgers.
You could innovate by introducing new technology, techniques or working practices – perhaps using better processes to give a more consistent quality of product.
If research shows people have less time to go to the stores, you could overhaul your distribution processes, offering customers a home-delivery service, possibly tied in with online and telephone ordering.
If your main competitor’s products have a reputation for being cheap and cheerful, rather than trying to undercut them on price you could innovate by revamping your marketing to emphasise the quality of your merchandise – and consider charging a premium for them.
Some innovative ideas may just come to you out of the blue. However, you should ideally have:
- innovation as part of your business strategy
- a strategic vision of how you want your business to develop – if you dedicate your time to monitoring trends in your business sector, you can then focus your innovative efforts on the most important areas.
Innovation will not only improve the chances of your business surviving, but also help it to thrive and drive increased profits. There are lots of practical ways of assessing whether your ideas have profit potential:
Assess the competition
Find out who your competitors are and where they operate. Use the Internet and advertising sources such as the Yellow Pages to find out about their products, prices and operating culture. This can give you an overview of their selling points, as well as any areas you might be able to exploit.
For example, if the competition is focused on value for money, you might want to emphasise the quality of your product or service.
Study market or industry trends
Awareness of the climate in which your business is operating will help you to plan.
You can find a lot of information about your industry on the Internet. Business and trade magazines will also feature useful articles.
Build a relationship with your customers
It’s not enough simply to know who your customer base is. You need to communicate effectively with them as well.
Communication involves not only listening to their needs but also actively observing their behaviour around current products and services and generating ideas on how you can make improvements.
Involve your suppliers and other business partners
Pooling your resources with your suppliers or other business partners will help to produce and develop creative ideas. Potential partnerships can also be developed through business networking opportunities.
Next, consider what taking a particular innovative step could mean for your business. Ask yourself:
- what impact it will have on your business processes and practices
- what extra training your staff may require
- what extra resources you may need
- how you’ll finance the work
- whether you’ll be creating any intellectual property that will need protecting
Finally, you should include your vision in your business plan by:
- putting down your goals, both long and short term and detailing how you intend to achieve them
- linking goals to financial targets, such as achieving a specific turnover by a set date
- reviewing your plan regularly
Encourage innovation in your business
There are many sources you can use to help generate new ideas for the business.
Suppliers, business partners and business network contacts can all make valuable contributions to the creative process, as well as providing support and encouragement.
Your employees are also a vital asset in generating innovative ideas.
To get the most from them, you need to create an innovative environment and encourage creative thinking.
Steps to promote innovation
- Make sure you have processes and events to capture ideas. For example, you could set up suggestion boxes around the workplace or hold regular workshops or occasional company away days to brainstorm ideas.
- Create a supportive atmosphere in which people feel free to express their ideas without the risk of criticism or ridicule.
- Encourage risk taking and experimentation – don’t penalise people who try new ideas that fail.
- Promote openness between individuals and teams. Good ideas and knowledge in one part of your business should be shared with others. Teamwork, newsletters and intranets can all help your people share information and encourage innovation.
- Stress that people at all levels of the business share responsibility for innovation, so everybody feels involved in taking the business forward. The fewer the layers of management or decision making in your organisation, the more people feel their ideas matter.
- Reward innovation and celebrate success. Appropriate incentives can play a significant role in encouraging staff to think creatively.
- Look for imagination and creativity when recruiting new employees. Remember that innovative thinkers aren’t always those with the most impressive list of qualifications.
There are a number of ways you can fund your growth through innovation, either by using your own funds or tapping into external funding such as loans or equity finance.
However, any route to external funding will need a high-quality business plan that describes your business and sets out detailed forecasts of where it’s going.
Businesses often turn to their banks for a line of credit or loans for additional finance, depending on their borrowing needs.
You may be interested
Lagos state government relaxes curfewadmin - October 25, 2020
The Government of Lagos State has relaxed the statewide curfew Recall a curfew was imposed by the Government due to…
I have sympathy for widows, NONE for single mums – Reno Omokriadmin - October 25, 2020
Controversial Nigerian evangelist, Reno Omokri has stirred up controversy on social media and his followers are not having any of…
Lekki toll-gate shooting: “DJ Switch should be prosecuted” — Journalist Gbolahan Macjob saysadmin - October 25, 2020
Nigerian journalist, Gbolahan Macjob, has called for DJ Switch to be prosecuted. If you can recall, on the 20th of…