INNOVATION
We enjoy making the below case for innovation. Quite simply, over time, should nothing in the business change, the business will decline as a natural course of action.
Why is this? Competitors are finding ways to erode your business. Customer demands change with experience. Technology provides greater choices and more information. The economy is influencing buying patterns. There are many factors outside of your control, and they all influence your business.
Simply put, failing to improve and continually differentiating a business is tantamount to slowly killing it off.
So where does innovation come from? Below are a few thoughts from Peter Drucker. The first four sources of innovative opportunity lie within the business or its market sector:
1. The unexpected – the unforeseen success or failure, the unprecedented outside event.
2. The incongruity – between what is and what ought to be, between reality and our assumptions about it
3. Process need – a process becomes ineffective or inefficient and needs to change
4. Changes in industry or market structure
The last three lie outside the enterprise itself:
5. Demographics – changes in population
6. Changes in perception – mood swings or new reasoning in society at large
7. New knowledge – scientific, social or otherwise
The danger in innovation is that many companies do not track the true costs and benefits of innovation. Many companies believe that innovation is a universal good and that they should be innovating everywhere in their company.
These companies lose sight of the fact that innovation is not free and can be both expensive and risky. As in every management program, discipline needs to be applied to the innovation process. A company needs to ensure that they innovate in those few critical areas where innovation can really pay off and create a competitive advantage – avoiding those areas where innovation may not be beneficial or may even be harmful to the overall strategic agility of the company.
One of the keys to successful innovation is the linkage between innovation investments and the overall goals of the business strategy – look at those areas where you are going to get, or think you can get, a competitive advantage. In some companies this may be the production process, while in others it is the product itself. In still other companies it may be the management of the supply chain or refocusing marketing and branding efforts.
For further thoughts on innovation and how it can help your business, please contact us.
