Four Steps to Grow a Company's Innovation Practice
By Neeraj Jain
Innovation â€“ what is it and how can it be achieved? Innovative strategies are used in order to deal with high oil prices, to breakaway from the clutter in fast moving consumer goods, to develop a business model to be profitable as early as possible in aviation, to develop “green” products while keeping their costs of production low, to develop cost-effective water filters, etc.
Whirlpool alone allocated $45 million to embed innovation into its culture and find ideas to develop new products. The revenue from innovative products for Whirlpool increased from $10 million during its first year of this process to $760 million at the end of five years. Southwest Airlines focused on business model innovation and continues to be a preference for customers who prefer their customer service and more reasonable fares.
Chief executive officers of companies, heads of state, education leaders and even U.S. presidential candidates want innovation to be a prime focus in order to provide new and unique solutions to economic, social and business problems, by creating new products and services.
What Is Innovation?
Innovation stands for identifying opportunities and designing products/services accordingly. One opportunity may be cutting costs (e.g., GE’s Six Sigma program). Another opportunity may be entering new markets due to changes in laws. Opportunities may develop from customers’ unmet needs, coming up with new products and services (e.g., Sony Walkman). Innovation is about recognizing and seizing these opportunities. But simple things are often the most difficult to be achieved, so innovation (which is of the utmost importance to companies across the globe) is difficult although there are dozens of methodologies andtools to achieve it.
A series of four steps should be followed to successfully innovate.
1. Always Be On the Lookout for Problems
One of the lessons of Kaizen is that one should always be on the lookout for problems. A problem noticed provides a chance to innovate better and faster. Innovative companies or individuals focus more on identifying problems of both customers and non-customers with current services and products. For example:
- Leaking pipes gave Pidilite (an Indian company) the idea of making an M-seal for the pipes â€“ catering to new customers.
- Makers of [yellow tail] wine saw consumers thinking of wine as complex and too hard to understand to drink. [yellow tail]’s marketing approach made it simple and fun.
- Tata noticed the need of many middle class Indian families to travel using two wheel vehicles (in all seasons) because they are affordable; they undertook the challenge of developing the world’s cheapest car, the Nano.
- One woman noticed the growing female workforce in the city was not being looked after well, so she created Forsche â€“ a cab service only for ladies, driven by and operated by ladies, in Mumbai, India.
The underlying point of these examples is that managers need to shift their roles from that of just providing solutions to being excellent at noticing problems. A simple problem being noticed (like long waiting times at retail stores’ checkout counters) can provide opportunities to retail managers to innovate (retail companies can sell space near checkout counters).
2. Re-form/Re-phrase the Company’s Response
Once an answer to the problem is you re-formed/re-phrased, new answers keep coming which can unlock opportunities.
Consider Future Group, (an Indian company with interests primarily in retailing). Five years ago they were into fashion retail brand development and operation. But when Future Group’s predecessor, Pantloon, re-formed/re-phrased their response, they became not just a fashion retail brand developer and operator, but are building businesses at every touch point of customers. That is when they unlocked their true potential of opening many lines of business including restaurants, a mall development company, ice cream parlors, telecommunications, etc. That is how Pantloon shifted from one business into a plethora of businesses existing under the umbrella brand of Future Group.
3. Know Latest Trends
A business should know the latest and most significant business trends across all industries, which can be useful in developing new products and services â€“ and apply those lessons to one’s own industry.
One such trend is networking â€“ networking with customers and creating products involved customers directly into the product and service development process. This trend can also be applied to fashion retailers to develop next season’s clothes, service providers to develop new services, restaurant owners to develop new recipes, etc.
4. Take Help From Customers in Order to Improve
Companies frequently say that they are customer focused, but is that really the case? How many companies truly value the feedback provided by their customers? How many companies reward their customers for identifying problems within their organizations? Companies need to be more customer focused as customers provides the bread and butter of the organization.
Innovation is the only source for survival in the 21st century. The aforementioned steps will help companies to continuously innovate and be ahead of their competition. Follow IBM’s tagline â€“ stop talking and start doing!
Neeraj Jain has an MBA focused on business design and is trained in Kaisen. He is working with India’s leading strategy and design firm solving problems and identifying innovation-related opportunities for organizations. Contact Neeraj Jain at freespirit_neeraj (at) yahoo.co.in.