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Ideas and Strategies for Business Innovation

To some people, business innovation appears hard to deliver. Whether that would include you is unknown to me because we’ve probably never met. Even if we have met, what chance is there that we would have discussed this topic?

One of my observations is that all innovation starts by challenging the status quo, by asking questions, especially the question why! Which I guess, begs the question, what happens in your organisation, if someone challenges the status quo? Are they encouraged to carry on, or told to stop because they are upsetting the apple cart?

Innovation is so vital, and yet some businesses struggle to move forward. My hope and wish, is that you will find at least a few points, in which to reflect on your business.

Problems or Opportunities

Some people would suggest that all innovation must start with a problem but I would beg to differ. I think seeing the world through a problem-solving filter can sometimes limit our imagination. There are occasions when we shouldn’t focus on a problem but focus on a goal or vision.

Perhaps a more useful way to think about innovation is to be ultra-careful about the questions we are asking. I do though think it’s helpful to have a framework to prompt thinking. A guided type framework could add some useful pointers in which to make new connections in our mind and lead us on a useful path.

As mentioned earlier, I’m going to look at a guided framework but first I want to show you a graphic which came from Deloitte University Press | DuPress.com. This graphic is trying to tell us something important, which is that incumbents may get replaced, and there are multiple paths to that displacement. With that slightly scary thought in mind, here is the graphic!

Displacement of Incumbent via Disruption

Short Term or Long Term?

It’s my belief that any and every business that wants to stick around must apply innovative thinking and strategies. Fail to do that and you risk losing it all due to displacement. In many respects people who own their own business and have a lot of skin in the game are in a great position to do something positive.

It’s not always the case with managers of larger businesses who are public companies. The short-term incentive and the fact that business managers are in it for a much shorter time frame mean that decisions maybe made which stifle or thwart business longevity. I realise that not all large companies have this type of culture but nonetheless the pressure is always there to deliver short term profits.

Guided Framework from Doblin Group

Having a framework has many benefits but it has its downsides as well. The benefits of using a consistent framework in a business is that everyone in the business will learn how to use the same tool, this saves confusion and lowers costs associated with learning it. Innovation can be made as part of a business system and its use can become almost automatic.

The downside of using a framework is that it may not cover everything and new ideas may be missed. I think the downside can be mitigated by ensuring the vision/goal is well thought through or by carefully thinking about the problem that needs a solution.

I’ve suggested using this structure originated by Doblin group which is now owned by Deloitte Touche Tohmatsu Limited. Why this structure? It’s been around since the 1990’s, has stood the test of time and we need to start somewhere!

These types of innovation are focused on the innermost workings of an enterprise and its business system.

  • Profit Model
  • Network
  • Structure
  • Process (These types of innovation are focused on an enterprise’s core product or service, or a collection of its products and services)
  • Product Performance
  • Product System

These types of innovation are focused on more customer-facing elements of an enterprise and its business system.

  • Service
  • Channel
  • Brand
  • Customer Experience

Let’s take a look at the innermost workings of the enterprise and its business systems first

Profit Model InnovationProfit Model

What exactly is a profit model? At its simplest, a profit model is the way a business, turns what it offers into cash.

Innovative profit models will challenge assumptions about what to offer, charge or how to collect revenues.

Profit models can remain unchallenged for a long time. In many mature industries, you will see some big operations who act almost with impunity. They control not just their market but what they allow competitors to do (if the competitor lets them by not innovating).

Occasionally something pops up which challenges and has the potential to change multiple industries and markets. Carbon based fuels and the industrial revolution, the money system and of course this thing called the world-wide web.

Network or Joint Ventures or Collaborations

The people at Doblin Group use the term Network but I’m not sure that’s the best name for it?

The world is becoming more connected and innovations with other businesses are abundant. Other organisations may be able to deliver, processes, technologies, products/services and even their brands.

Your organisation may be able to utilise the people and connections you already have to scale and reach new markets and do so much more without it necessarily costing you much. Collaborations are all around us if you look for them.

Structure

According to Doblin Group, structure is how you organise and align your talent and assets.

I think this underplays the nature of structures because it’s the underlying structure which will always tend to drive behaviour. In other words, if you want to change the culture and behaviour of for example your business, then change the underlying structure.

I don’t want to bang on about silos too much, (already mentioned in other articles), because it could get a bit monotonous but they do have a profound effect on the way people and departments work together! I’ve shared on other posts the effect of departmental targets which will tend to drive a wedge between people who would otherwise co-operate.

Remember, your fixed costs will tend to remain in place, unless you downsize, so you might as well consider innovating your structures to see if there are ways to create more value/profit.

Process

Whilst some people think that innovation is mostly about the product/service. There is something which is much harder to copy and often represents a company advantage that lasts for years and that something is process.

Perhaps your company has methodologies or processes which are already unique in which case could they be further enhanced? It’s even possible you could spin out another business from your processes.

If yours is a business which has tended to do what everyone else is doing, is this the time to do an audit and seek process improvements?

Process improvements hit the bottom line in a positive way and show as productivity improvements which you can benefit from for years.

The steps needed to implement process improvements are as follows;

  • Identity the process – Audit the process and understand it fully, assess the steps, the people and the goals. Gather all that you learned when identifying the process and create a model of the process as it is right now.
  • Re-Model the process – Once you’ve looked at what happens now, start to tease out how the model could change. This is an opportunity to test the model and refine (see below).
  • Execute the new model – Carefully execute the new model. This may mean setting up a special team or piloting it before rolling out to the whole business.

I’ve already mentioned the Plan – Do – Study – Act methodology to try, test, implement and learn/refine process improvements.

The one thing we want to avoid is a costly roll out to the whole company before everyone is ready.

Next up – Core products or services

Product PerformanceProduct Performance

Have you ever noticed how products have evolved? Look at, for example, electronic gadgets and witness the extra bells and whistles, which get added and which often add layers of complexity which weren’t there before.

What you’re seeing is the focus on product innovation and the natural result of competitors trying to outdo each other with product tweaks. Product managers who are very likely targeted with selling their range sometime seem a bit stuck. Stuck because they put so much effort into their products without looking at the big picture. The big picture being their customers!

By spending so much time on product features, we sometimes miss other far bigger innovation opportunities.

There are of course opportunities to create innovative products but beware the competitor who is fleet of foot and will copy you. China anyone!

I’m not saying don’t innovate product offerings just be careful where you look to do it.

I would argue that Apple have done a great job in developing iTunes but I think this has more to do with their product system (see below) and tying up all their products so they easily share apps and services.

James Dyson has done an excellent job in innovation, starting with his Dual Cyclone technology which he has defended against copying. Other very innovative products are continually being designed and developed.

OXO Good grips is another great idea which had a simple premise. Making cooking utensils easy to use for people who were arthritic. This has now been expanded to a philosophy which they call universal design. This philosophy is about designing products which are usable by as many people as possible.

I’ve seen innovations in other areas and across other sectors although not that many which had what I would call longevity. For example, there’s a door which converts into a table tennis table. Now I might be wrong but who would want that and how practical would it be?

Product System

Starting with something easy like product bundling, before moving off into creating integrations which bring what appear to be disparate products together.

I said that product bundling is at the easier end of the product system. Well it should be but sometimes it isn’t. A quick story!

I was once at an IT distributor and came up with an idea to bundle a couple of products together which I believe would have sold very well as a bundle. I was thwarted because each product had different product managers and this caused no end of problems due to the way, they were measured and targeted.

In the end, the distributor lost, the vendors lost, the customers lost and I suspect each of the product managers lost.

Perhaps one of the biggest and most obvious of product system innovations come from Apple Inc. Founded on the 1st April 1976, this organisation has evolved and developed well beyond it’s pure computer background. For me, iTunes was an inspired idea which is well and truly integrated with Apple’s other products.

Another great innovator and innovation was the development of Scion, originally a separate brand and offshoot from Toyota. Started in 2003 it served as a laboratory for products and key sales and marketing processes that have provided valuable lessons for other Toyota brands.

It was announced on the 3rd of February that Scion was transitioning back into the Toyota brand.

I think there’s a lesson from Toyota here that other organisations could copy or learn from. Sometimes innovation inside a business is too much to ask for and it may be better to create separate operations in which to try/test ideas and strategies.

Customer facing innovations – Service

Judging by the number of complaints on social media forums about the lack of customer service you’d imagine a huge opportunity for competitors to step in. Hopefully your customer service is up to the task and delivers an excellent customer service.

Service innovations could include the way you integrate customer support, education, extended warranties and guarantees. As a by the way comment, extending guarantees is a risk reversal and could be enough to pull a customer in to buying from your business and not another.

I mentioned integration above and the way I see it is to use the power of the world-wide web in such a way as to make the customer experience quicker and more fluid.

One example of a company who excels at customer service is Amazon. Their whole focus is to serve the customer and to keep on enhancing customer experience.

Their already excellent returns policy gets further extended during Christmas.

“Extended Returns policy information:

We’ve specially extended our returns period for the Christmas season. Items dispatched by Amazon.co.uk during the period from 1 November, 2016 to 31 December, 2016 inclusive may be returned at any time before midnight on 31 January, 2017. Our returns policy will revert to the standard 30-day period for items dispatched after 31 December, 2016”.

Channels

Physical stores, e-commerce, sales people, resellers, social media, white papers, joint ventures etc; are some of the examples of channels.

A channel in this context is defined as the way you connect your organisations offers with your customers and end users. In simple terms the more ways you connect with your customers the better. There is one caveat in my statement and that is to ensure that the cost to you is less than the lifetime value of a customer or you will go bust!

There are of course dozens of potential innovations with channels. I’d suggest that the key here is to really understand your customer habits because once you do, it will open new ideas and with it, new customers.

One such innovation could be to consider a joint venture. For some reason, joint ventures seem more popular the other side of the pond in the USA but that doesn’t stop you from exploring your own in the UK.

Many businesses have what I would call hidden assets. They are hidden because it takes a little thought and innovation to uncover them. An example of a hidden asset is your own customer base or it could be your own sales team.

Have you considered what else you could offer your customers that is an extension of your own products and services? All you need do is find a supplier who fits your customer base and form a joint venture with them. Doing this need not add a lot to costs but could deliver huge profits.

If you are a company who has a great product but not many customers you could reverse this idea and find an organisation with a large customer base and do a deal with them.

Branding is Part of InnovationBrand

Brand is but one part of many which contributes to customer experience. Great brands imply a promise to customers and it’s what a brand stands for which is its real power. Virgin, Dyson, IKEA, Amazon are just a few great brands which have become household names.

I believe that brand innovations are a viable option and have the potential to attract people even when products have become commodities. Perhaps your market and your business is immune from these pressures but beware any product business that isn’t careful. Amazon’s business model tends to attract lots of competition from products made in China which are copies.

From my standpoint, a brand has the potential for a great customer experience if thought is given to customer needs. It’s customer’s emotions which are key.

People remember a poor customer experience and will tend to attribute it to the company or brand and not to an individual. I recall recently someone complaining about a café but it wasn’t the person or even the café itself which took the brunt it was the brand IE all their cafés were now labelled as appalling.

Likewise, people will remember a great service and attribute it to the brand.

Customer Engagement

Where would any business be without customers? My best guess is that the business will be stuck and in a bad place.

Customer engagement is high up on my list of importance because once you’ve found a way to really engage you’re well on the way to building a business system which keeps on getting more customers and becomes self-fulfilling.

Your customers are just like you, they have deep seated aspirations, developing and understanding what makes them tick offers all sorts of opportunities.

Perhaps one of the biggest areas to focus on for customer engagement/customer experience is how much effort is exerted by people buying from you. Creating an effortless experience has huge benefits and yet many businesses have been blindsided into thinking or believing their customers experience is effortless when the truth is quite opposite.

By way of an example, we bought a new washing machine and part of the reason for buying it was it offered a warranty of 5 years (great risk reversal offer). The machine was delivered and installed, it was then we realised that the standard warranty was 2 years and the 5 years’ warranty was an extension.

The effort required to do this simple task was well outside of anything reasonable. The telephone number no longer worked so we had to find one that did. The person taking the call seemed stuck because of where we had bought it, apparently, the drop down menu on their screen didn’t have the business name on it. Then we got letters offering extended warranty but with a cost associated!

We did in the end manage to achieve our objective but only after expending considerable effort.

My question to you is this, are you confident that you understand how much effort is being expended by your customers? How do you know what effort your customers go through when engaging with your business?

In summary, innovation opportunities are everywhere, you don’t need to bet the bank to find and implement some of them.

Hope you found this helpful, wishing you every success.

About the Author Steve

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