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Innovation. What does it mean to you? Is it something you embrace? Or is it an idea you find daunting and shy away from? If you find yourself in the latter category, it’s time to reassess your relationship with innovation because it’s imperative if you want your business to stay relevant in an ever-changing world.
As we continue to navigate through a global pandemic, specific recommendations on how organizations and individuals can be more innovative have surfaced from various sources. I argue, however, that we need a more flexible approach to innovation.
Now, in order to enhance innovation, we must first understand it and consider what our goals are in trying to do it. For example: There is a big difference between writing a new song and developing a vaccine for the Coronavirus.
Some questions to consider:
- Are you tweaking a problem, examining alternatives, or creating an entirely new solution?
- Does the problem involve diverse expertise, extensive analysis, and extensive outside resources?
- What resources, constraints, risk, and requirements will affect innovation?
Let’s expand on a few of these issues:
Are you solving problems or developing new concepts?
Much of corporate innovation revolves around finding better or new solutions to existing problems. For instance, for many years, car companies focused on developing better combustible engines, retailers focused on developing better shopping experiences, and IBM focused on building bigger and better computers. In contrast, other companies focused on developing entirely new solutions, which gave us the electric car, E-commerce, and the cloud.
Decisions regarding these issues involve a number of considerations. Do you give research groups complete freedom or do you require specific goals and financial objectives? How much risk and error do you encourage and allow? In general, venture capital firms allow more risk and pursue a home run while corporations tend to stick with more planned efforts.
While new markets and technologies are exciting, minor innovations can also be very productive. Logistics involving areas like inventory management, customer service, and sourcing can have dramatic impacts on cost, sales, and profits. In particular, Amazon has become extremely good at what they do: Prime, their own truck fleet, and automated safe warehouses have dramatically stimulated their performance.
Simple measurement and focus can dramatically improve results. Reviewing sales by product, P&L, and the 80-20 rule can inspire effective new practices. I have a client who switched 70% of her business from retail to E-commerce and has grown 40%. The process also requires new strategies on pricing, inventory management, and marketing. One huge advantage was that she was able to introduce new products on the Internet almost immediately rather than waiting 6-12 months for the retailers to make and execute decisions. In this instance, a problem was solved using existing concepts, but it was innovative for her specific company.
How are your decisions affected by analytics and intuition?
Decision-making used to be a simple choice between things like experience and intuition. However, Artificial Intelligence and other tools have added a new dimension to reduce the uncertainty of decisions. There are even major breakthroughs in medicine regarding the diagnoses and treatment of disease using improved statistics and analysis. The development of the Coronavirus vaccine has also been greatly accelerated by new technologies and processes.
Tools and presentations are also dramatically changing. For example, a colleague of mine objected to my website because it was too dependent on PowerPoint and Excel. While these are great tools and are the most used for analytical and presentation methodologies, they do have many limitations. The information can be old, longitudinal analytics is frequently lacking, they are not interactive, and they may not be visual enough. The lesson being: we must continue to challenge our ways of doing things…
Analytics as a new dimension requires consideration of new parameters. The most important is replacing hierarchal structures with collaboration, analysis, and facts. Many organizational structures are based on hierarchy and this simply needs to be replaced by a search for excellence and consideration of alternatives. Additionally, as we deal with more complex goals and analysis, we must remember that intuition is still important. In particular, the more creativity and uncertainty there is in a situation, the more intuition is required.
Some of this dilemma is created by the differences between “left-brain” and “right-brain” thinkers. Left-brained people are said to be more analytical, logical, detail and fact orientated, numerical, and more likely to think in words. Right-brained people are said to be more creative, free-thinking, intuitive, able to see the big picture, and can visualize more. So, whichever you are, perhaps try asking someone who thinks differently than you how they would handle something you’re working on—you might realize they have an entirely different approach that may or may not be better than your own.
The most important aspect of this discussion is to understand the use of analytics versus intuition in your decision-making process. We love to hang on to our hunches, beliefs, experience, and hierarchy. We even twist facts and ignore reality to provide continuing support for an argument. But, we need to invest time and money to analyze, filter, and review ideas. New analytical tools can enhance our flexibility, testing, ability to adapt, and the evaluation of alternatives.
Are you focusing on excellence and collaboration?
Innovation requires collaboration. It thrives with participation, diversity, new rules, and (to some extent) chaos. It also rejects bureaucracy, authority, hierarchy, and closed decision-making processes.
A major component of collaboration is excellence. Large organizations say they want excellence, entrepreneurship, innovation, risk takers, etc. However, they often fail to revise practices that encourage mediocrity (i.e. hierarchal structures and non-diverse cultures). Testing and failure (both critical parts of innovation) are punished more than rewarded. Even sound risk taking is reduced because of the fear of repercussions within the organization. In short, organizations frequently ignore the advice: “you can’t score if you don’t take a shot.”
It’s also important to note that exceptional people are often eccentric and can be challenging to manage. You may find that these employees like to work odd hours, need specific environmental stimuli for inspiration, and, generally, refuse to do things in a traditional way, which can often be disruptive to an organization’s flow. The upside, of course, is that they’re producing remarkable work.
Does your company culture encourage innovation?
While we tend to focus on innovative methods and technologies, we sometimes forget that culture can dramatically affect innovation. For example: California has about 15,000 patent applications a year compared to less than 200 in eleven other states. There are simply more resources and a more comfortable culture in California, which spurs innovation. Some organizations encourage testing, failure, and research while others believe in the “we have always done it this way” approach (which never stands up to the test of time). You need a forward-looking company environment for innovation. For example, market research should be a tool rather than an absolute. As Steve Jobs said:
Are we having fun yet?
In order to balance innovation, you must enjoy what you’re doing. You started your business because you had passion—Don’t lose that! If you’re truly happy doing what you’re doing, your customers will want to buy into that. They will feed off of your excitement!
You have to be willing to change with the times. And you have to give emerging business trends more than just a passing thought or you may miss out on big opportunities. Consider multiple and dynamic alternatives, goals, and methods. Innovation is the key to growth, profit, and sustainability. And the great thing is: there’s no one way to do it. Be innovative about innovation—the possiblities are endless!