THE BLOG

Innovate Your Way to Success - Part 1

10/07/2013 17:37 BST | Updated 04/09/2013 10:12 BST

Have no doubt - innovation is the key to future success.

There is no escaping the need to innovate, changes in technology, consumer trends and what the competition is doing, mean you cannot afford to stand still. You need to be innovative in all aspects of your business, from how you recruit new talent to the products you develop, or even the way in which you manage maintenance.

Innovation is creativity with a job to do. Coming up with new ideas is creativity, converting them into real tangible activity is innovation. As a result of organisational resistance, many great ideas never make it through the business. We need to avoid such organisational friction. What we need is a process that transforms ideas into commercial value as quickly and easily as possible.

The beauty of innovation is that all the ideas we need are out there. Skill is needed to combine different combinations of ideas, products or processes together to create something new. Think of it like music, most music is made up of the same notes, just rearranged in different sequences and played using different instruments but the result is everything from classical music to rock music. In the same way, the ingredients we use in many recipes are the same but the way we put them together results in many different types of dishes.

In this blog I'm focusing on the nature of innovation and the things that stop us from being more innovative. In part two I look at how to be more creative both from a team and an organisational perspective.

What's your problem?

Innovation needs a problem to solve. The need to develop a means of mass communication within villages in Africa where there was limited electricity supply led Trevor Bayliss to develop the 'wind-up' radio. As a result, the government could communicate with millions of Africans about the threat from AIDS. Innovation without a problem is going nowhere. Defining the problem clearly and precisely provides a focus for your efforts.

*Top tip

Start by working out what problem you wish to solve. The clearer you can be and the more precise, the easier it is to innovate. For example, you could focus on kids, aged 7-9 years old, on-the-go consumption, and specifically how to get them consuming more in schools.

Types of innovation

Radical

When most people think of innovation, they assume it's about coming up with a radical new idea which no-one has thought of before. Examples of such innovations include using electricity to light houses, the first aeroplane, or the microwave oven. Such ideas have a massive impact on the world. They are also rare. Radical innovations are rare, expensive to develop, often result in failure and take a very long time to develop. A career spent working on radical innovations may mean you spend your whole life failing to come up with the big idea (but probably laying the foundations for others to build upon). Taking 30 years to develop something radical is not an option for most of us.

Incremental

On the other hand, incremental innovation is taking an existing product and through exploiting technology or re-thinking a process, finding new opportunities for efficiency or effectiveness. For example, the cap on a drinks carton is a simple example of incremental innovation. Whilst seemingly inconsequential, it has a significant impact on the consumer's ease of using the product and the longevity of the product.

The use of social media has resulted in a great many incremental innovations where the purchase and consumption of the product is not the end but the beginning of the interaction with the consumer. Incremental innovation is about making a change but the outcome doesn't destroy and industry or market but grows it. Incremental innovation enables you to experience lots of small successes through the changes - but it's very unlikely to result in 'the big idea' that will destroy industries and build new markets. It's also infinitely 'do-able' by everyone in the business.

*Top tip

Don't worry about having to find the next big idea. It's a worthwhile activity, but if your personal performance is measured in what you do over the next 6 - 12 months, and there is an expectation that will deliver results in the short to medium term, you'll struggle to succeed by focussing on radical innovation. Instead, learn how to be very effective in being incrementally innovative.

Innovation - it's more than just the product

Invariably the focus on innovation is on the product. That's understandable - it's what most people focus on, however it's such a small part of the overall process. The opportunities to innovate are many and diverse. Heineken innovated the way they recruited interns in order to more effectively select the type of people they wanted in the business. This innovation has been used very effectively to build their brand profile with target consumers. You can see what they did here:

http://www.youtube.com/watch?v=j5Ftu3NbivE

The point to note is this has nothing to do with beer. It's all about recruiting the right people and developing the brand image. Other areas that can be innovated are operational factors such as the way maintenance is undertaken and managed.

Nestle innovated in the way they took their Nespresso product to market. Instead of selling through shops, they sold direct to the consumer. This cut out the retailer and protected margins; given that selling coffee in capsules delivers a margin five times great than selling regular roasted coffee, this was a great move. Since they launched the capsule system in 2000, they have sold 20 billion capsules. According to Euromonitor, coffee capsules now account for 20% - 40% of the $17bn European coffee market.

We can also use innovation in 'soft' aspects of business such as the relationship with suppliers and customers. Typically these have been 'arms-length' relationships. However, changes in technology have enabled people to work much more closely together and more and more companies are beginning to work together in a more integrated way. Known as co-value creation it enables all involved to access a much broader set of capabilities and skills. Nike co-created value with customers having them help design new shoes.

In short, all aspects of your business can be innovated.

*Top tip

Map out all the aspects related to the creation, production, sale and consumption of your product. Consider all aspects when deciding what to innovate. The solution may be to focus on your product, but it may just as easily be the 'channel to market' or in the communications you use. Be both open minded and broad minded.

The problem is the way you think!

The British economist John Maynard Keynes once said "the real difficulty...lies not in developing new ideas, but in escaping the old ones." This is so true. The biggest challenge we have when working with companies is challenging the assumptions people have about the way things must be. Typical responses include "In our market people would never buy that" or "It will never work here" or worse "We've tried that before". To paraphrase Henry Ford: 'If you think you can do something or you think you can't, you're right'. As long as you believe something can't or won't work in your market you exclude the possibility of discussing how it might be able to work.

There are two challenges: the first is overcoming the way people think, and the second is helping people to be creative. In both cases the good news is innovation is a skill, and like any other skill with enough practice you get good at it. Ask yourself this question: 'How many hours have you spent practicing innovation?' If like many people the answer is a few hours or possibly not all then don't be surprised you are not that good yet. It takes practice to become a great innovator - the good news is that's all it takes - which means we can all do it. By practicing using idea generation exercises you will become better and better and generating new ideas. By spending more time learning more about your consumers you will become more and more expert at consumer behaviour. By doing both you will become great at developing new ideas for your target consumers.

*Top tip

When faced with a new idea that you think won't work. Instead of dismissing it, ask yourself the question: "what would we need to do to make this idea work?" This can often create some really interesting ideas. When faced with someone dismissing your idea ask them for the evidence in support of the point of view. More often than not there most people rejecting an idea base their rejection on nothing more than an opinion disguised as a fact and they have no evidence to say it won't work. Instead of saying 'No' ask 'why?'

You've failed

'What would you do if you knew you couldn't fail?' This is a great question to think about. What it shows is that the reason we don't do many of the things we would like to do if we could is our fear of failure. Almost all education systems teach us we have to get it right. Life teaches us it's much more about trial and error. The Psychiatrist Alfred Alder likened it to learning to swim. When you learnt to swim you made mistakes. You made mistakes many times over without drowning and the outcome was you learned to swim. So it is in life, mistakes are the best way to learn. Tim Harford has written an excellent book called 'The Power of Failure' that demonstrates how much of the progress we have achieved is as a result of trial and error, much more than it is through planned success. The skill is in making sure you learn and adapt from these 'failures'. Innovating involves failing - and learning from failure.

*Top tip

Think carefully about how you respond to failure. If you treat failure as a problem, and something to be avoided at all costs, or even punished for, then you will never develop innovations. Failure is one of the greatest assets you have - it provides a fantastic source of rich data but only if people are encouraged to be open and honest and share what happened.

What's next?

This brings us on how to be creative both at a team level and as an organisation. In part 2, I'll be exploring some of those issues.