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Inside innovation: the practical reality of new ideas

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Jeremy Pooley


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Inside innovation: the practical reality of new ideas

Posted 05 Jan 15 by Jeremy Pooley

Innovation is as much a process as it is a personal mindset and a cultural or collective way of thinking.

'Innovation' is one of the buzz words today in the same way as Human Centred Design, Six Sigma, JIT, TQM, and Strategy have been in the past. But what is it? Why is it important? How do you do it? Who does it? How can I do it? How can I identify if I need help, or if my clients need?

What is innovation?

Innovation is about creating commercial value from good ideas. This definition highlights three features of the process of innovation:

1. Innovation must be based on an idea. The idea can be incremental to improve a product, service, system or process or something more radical that reshapes an industry.

2. The idea has to have value to a customer. It must be desirable, and it must solve a customer problem on a scale that makes the solution economically viable.

3. The idea must be implemented. Most innovation happens in business solving for observed customer problems rather than in a research lab in a white coat.

Why is innovation important?

We know that businesses that invest in innovation grow value faster than businesses that don't.

A recent survey of Australian SME's found that the most innovative businesses record:

  • 3x the revenue
  • 5x the productivity
  • 3x the profitability and cash flow
  • 3x more likely to export
  • 3x more likely to collaborate with other businesses in order to grow.

These businesses generally are more resilient and self-sustaining because they have developed a habit of growth, are highly customer focused, and less dependent on their entrepreneurial founders. These are attributes successful businesses need to be able to negotiate increasingly competitive local and global markets.

Innovation is a process but it is also a personal mindset and a cultural or collective way of thinking.

How do you do it?

SME owners and CFO's now recognise that innovation is a vital component to future-proof their businesses. But they also report that they are not clear how to invest in innovation, citing the lack of time and resources, budget, short-term pressures, lack of process and lack of strategy as key barriers to innovation.

Getting started does not need to cost money, but it does require prioritised time and effort from business leaders. They must start the process of generating good ideas, evaluating and refining them and turning them into implementable products, services, systems and processes that customers want to buy.

Where do good ideas come from?

Research and experience says that ideas come from three sources: employees, internal R&D teams and the outside environment - customers, suppliers and competitors.

How do you get those ideas?

There are many ways to engage your idea generators.

Observe your customers (some of whom are your employees) as they use your products or competitor products. What are their pain points?

Invite your customers and employees to tell you how to improve the products, services, systems or processes they use.

Evaluate the ideas either by building simple prototypes and testing whether and how effectively they address the pain points. Creating prototypes to test is inexpensive with 3D printers and other technology. The aim is to learn and refine.

You have proved your innovation adds value, so how do you produce, deliver or implement your innovation at the minimum scale and quality needed to make money? This is about translating the ideas into action.

Work out how to market your product effectively and efficiently to the customers who want it. Good design has its marketing built into it. Good design not only goes to solving for the customer need but also goes to how your customer experiences your innovation from how and when they buy or use it, to how they store it and ultimately dispose of it.

How do I start?

Innovation starts with observation and curiosity - being brave enough to ask, why? This is as true of asking customers, as for a new employee asking why a process or system works the way it does. The idea of curiosity presents its greatest challenge to each of us, especially business owners and managers. How do you respond to a suggestion about how to improve a product, service, system or process you may have designed or are proud of?

The process of innovation is important, but the mindset of curiosity and observation is a more important human skill. Start by asking your employees what they have observed, or to start observing. You will be surprised by the answers.


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