What Does Innovation Mean for Smaller Business?

by Richard Hughes-Jones

What Does Innovation Mean for Smaller Business? I heard a quote the other day by an experienced business associate. In the context of talking about future business opportunities, they announced that “it’s all about innovation at the moment”. This stopped me in my tracks. Why?

Because in many ways they were correct. Innovation is a buzzword that’s on everyone’s lips at the moment. But if it is only all about innovation at the moment then what have we been doing in the years up until now? Were we all just enjoying the pre-recession gravy train ride so much that we didn’t have to be innovative?

No of course we weren’t. You only have to look at Apple and the launch of the iPhone (in 2008 I note) to see that the game changers were innovating long before the credit crunch of the same year came along. To say that it is all about innovation at the moment is a dis-service to all those that have been ‘doing’ innovation and studying it for many years up until now.

The times they are a ‘changin

What Does Innovation Mean for Smaller Business? Despite the buzzwords, the world is certainly changing at a very fast pace and the need for businesses to stay ahead of their competition through innovative practice is becoming more apparent. Here is an excellent visual via Tim Kastelle’s blog that hits you right between the eyes.

This is based on US corporates in the S&P500. Whilst I wouldn’t be surprised if analysis of the UK’s FTSE100 didn’t show similar trends (I am not aware of it having been done?) it still begs the question of what the innovation agenda means for smaller businesses. Here are my observations for you to think about for your small business.

Observation 1. I was lucky enough to listen to Costas Markides talk a few weeks ago. He is a Professor from the London Business School and one of the world’s leading experts on strategic innovation. He was very clear that innovation will only be achieved in an organisation that has in place the culture to support it. In fact, he says, it is small firms that have the skills and competences for discovery in abundance (playful cultures, no bureaucracy, freedom to experiment etc). So think about how you will foster a culture of innovation in your company.

Observation 2. Being innovative does not mean that you have to be the next Skype or invent the next generation of smartphone (referred to as disruptive innovation). It can be much more subtle than that but still have big relative impacts on your business. There are lots of different types of innovation (product, process, organisational, business model, management, marketing etc) so think specifically about where you could make creative change within your company.

Observation 3. I was talking to the Director of a company I have been doing some strategy work with recently. Their business strategy was made up of 3 Strategic Pillars, one of which related to pursuing innovation. When I asked them what specific actions they intended to take forward in order to pursue innovation they were unable to tell me. Unfortunately, saying that you are going to be innovative does not mean that you are. You need to be clear about what actions you will take.

In summary

Don’t get too carried away by the word innovation and don’t fret that those around you are innovating whilst you feel like you are struggling to understand what it means. Continue to focus on your core business but recognise that for high growth businesses, innovation is essential.

Think about how you can improve the culture of innovation within your company, where you could make creative change and what actions you will take to encourage innovation and arrive at specific new ideas. Then make them happen.

image credit: andynulmanmarketing

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    What Does Innovation Mean for Smaller Business? Richard is an experienced management consultant, having spent most of his career with Deloitte UK and working in a senior management role for Her Majesty’s Treasury. He brings strategic business thinking to ambitious startups and established businesses that are pursuing sustainable high growth, helping them to formulate and execute their ideas through innovative but realistic and coordinated approaches.  Richard blogs about a range of business issues at www.fire-london.com and is on Twitter @FireLDN

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  1. I thought this blog was useful and touched on much of my own work that I’ve been doing. It’s a great debate isn’t it, do we need to innovate more? Are organisations innovating more? Given the level of discussion around the word I suspect not – at least not all in the same way! Innovation is becoming too focused on this notion of us having a light-bulb moment and solving a problem with it, but like the author says, hasn’t everyone always been trying to do that? The issue for me is more about the environment in which we find ourselves innovating in. The landscape has changed, even since the 2008 Apple ideas. The worlds is connecting at an ever increasing rate and mobile technology means we rarely switch off. The drive home, a coffee waiting for the family or the next appointment, where are those moments to ‘ponder’ and to think ‘what if’ in the totally safe confines of our own mind.
    That is what has changed and the forward thinking organisations have recognised this and are MAKING the time. That’s a big ask, but it’s the start of the modern innovation process if senior leaders are serious about moving beyond the talk.
    That’s only step one however, an idea is not innovation, it’s the start. Process, culture, knowledge management, there’s a whole lot more but perhaps that is for another blog. I’ll get writing!

  2. Richard Hughes-Jones

    Matt, thank you for your comments and glad you found the post useful.
    Quoting Apple was of course an obvious example but I used it because it exemplifies so clearly that innovation is a PROCESS and is something that has been going on for a very long time (hence my frustration at people who say “it’s all about innovation at the moment”!)
    That Apple could launch such an innovative product at the height of a global financial crisis and make such a huge success of it proves to me just how important the innovation PROCESS is and its potential impact.
    That forward thinking businesses are increasingly recognising this is great but, as you say, lots of factors must come together to make innovation really work.

  3. Richard, thank you for your interesting and thought-provoking post. I am currently leading a project exploring innovation in the visitor economy and I wanted to pick up on point 2 in your blog where you say that innovation does not have to be disruptive, it can be much more subtle than that, but still have big relative impacts on your business.

    Arguably the most revolutionary innovations in the visitor economy in recent times have been the adoption of online booking engines, the introduction of dynamic bundling of products and the provision of geo-specific visitor information. All are the result of technological advances which originate from outside the sector.

    Incremental change or constant improvement is still innovation as you suggest, but I would argue that only fundamental change can lead to real business growth.

    I have been asking for illustrations of innovations from within the visitor economy and have been presented with examples (such as Glamping) which seem to demonstrate diversification or adaption to changing market demands rather than anything revolutionary. It would seem therefore that this ‘innovation’ if we can call it that, is the result of businesses trying to maintain current levels of income rather than growing in real terms.

    I am interested to understand how we should look at innovation in the sector: Should we accept that small-scale, incremental changes from within the visitor economy must continue to maintain the status-quo and wait for revolutionary innovation to come from outside the sector, namely technology? Or should the visitor economy look to drive disruptive innovation from within the sector and if so does this come from individual businesses or the collective?

    • Richard Hughes-Jones

      Hi Jason, thanks for the feedback.
      I’ve had quick look around your website and you’ve got yourself a fascinating project there haven’t you! You also raise some very interesting points around disruptive V incremental innovation.
      An initial thought is that it would be interesting to try and quantify in some way (not easy I know but could be done) the financial impacts of the different types of innovation that you are witnessing in the tourism sector.
      This could help you as an organisation make some strategic decisions around where to focus innovations support – in essence, what gets you the most bang for your buck? I suspect the answer lies somewhere in the middle but that is just a hunch.
      Interesting to see you are teamed up with North Yorkshire LEP on this… I spent about a year driving around East Riding working on an economic development project for what was Yorksire Forward so I know the area very well!
      Thanks,
      Richard

  4. Innovation has been there and will be continuing leaving its legacy behind forever. The problem is our understanding and interpretation. We have been making cars, home goods, phones, and you name it for a century. We never stopped at our first invention. We added so many unique features and functionalities that would fit our needs from year to year. In other words- we have been doing innovations non-stop since the first invention even though the pace of our performance may varies. However, one point that should be clear is that the challenges we are facing as a manufacturing industries nowadays are quit different from the past as competitions and consumer preferences are highly polarizing. Fifteen years ago, what was most important was having a phone regardless of its functionalities and features. That was answering the question of necessity. But necessity is no longer a driving force in the setting of a 21st century business intelligence. In a simple language – today’s market is all about “who needs what in a what manner and time”. We just don’t need a cell phone but we need a cell phone that fulfills our greed and emotions. Here is where the curve of innovation changes from a physical phenomenon to a behavioral manifestation. If we need to survive the erosion of competition we have to design those behaviors into a product – like iPhone or any other hot mind numbing products.

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