In the very first post of this series of A2Z challenge titled "Agility in business", we had touched upon the significance of innovation for being competitive and fighting fit in a VUCA (Volatile, uncertain, complex & ambiguous) world. Innovation starts with a new idea. It could be anything from a plan for an improved product, service, an updated method for running your operations or a new business model. In simple terms, innovation is about successfully implementing a new idea and creating value for your customers and stakeholders.
The key words are "successful implementation", in the absence of which, it just remains a creative idea and not innovation. As Adam Gutman, Assistant Vice President, BDC Innovation, puts it " Some people think that creativity and innovation are synonyms. They are not. Creativity means coming up with a new idea. Innovation is taking the novel idea, and solving customer pain points and creating value." Innovation can help in bringing in novelty to existing product lines or processes, leading to increased market share, revenue, and customer satisfaction. Sometimes innovation is used to upgrade the operating systems of the business or to introduce modern technologies for automation.
Even if a company is doing very well with an excellent product, solid customer base, multiple suppliers, perfect supply chain and growing sales, it is necessary to be aware that your industry is changing quickly, outside your company. Standing still could mean putting your business at risk. There are too many examples of solid companies like Nokia, Polaroid, Pan Am and Borders, beating the dust when least expected. Therefore, the importance of innovation and continous improvement for companies cannot be overemphasized.
The steps for being proactive could include transforming your existing business model in line with changing environment, satisfying existing market needs that are yet to be met, bringing new technologies, products or services to the market, creating new markets and reacting to market disruption.
Innovation could be short term and incremental involving small changes that increase the efficiency of the current business model or expansive innovation wherein science and technology is leveraged (including use of artificial intelligence or internet effectively) or disruptive innovation that creates a completely new business model offering a new value proposition. Expansive innovation can take 12 to 24 months to implement.
According to Anna Walkowiak, Senior business advisor and Business model innovation Lead of BDC Advisory services, a company should focus 30% of its efforts on expansive innovation and no more than 10% to disruptive innovation, given its uncertainty as also time and effort involved (when successful, takes 3 to 5 years to develop). She says that small businesses should devote 60% of their efforts be it money or manpower on incremental innovations.
Although there are challenges associated with the innovation initiative, including that of resources crunch, no organization can afford to ignore it in the present business scenario. A program suitable to the company should be drawn up and implemented. CEOs have a strategic role to play in this regard. They can be true drivers of innovation starting with allocating a budget and allowing sufficient freedom to their team to explore solutions. Autonomy is important for the team members to try out different ideas.
In view of the indispensability of innovation many companies are considering open innovation. This is the practice of sourcing ideas from both internal and external sources. This involves sharing of knowledge and information about problems between companies so that solutions to and suggestions can from people, even outside the business. As for example Unilever's innovation portal seeks and provides solutions to problems faced by companies in terms of packaging, transportation and storage of food products.
In conclusion, it is to be stated that innovation is the not the baby of only R&D department of a company. Employees of all departments need to think innovatively. Moreover, an innovation 'mindset' is most essential to meet the challenges of today for which a culture of innovation is to be developed throughout the organization. HR has a major role to play in this regard.
Upskilling and innovation is the future of companies.
ReplyDeleteInnovation is a tough thing, Rajeev.
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