Innovation. The word is tossed around carelessly, and is repeatedly illustrated with the same few business cases. Some of the usual suspects include autonomous transport (Google, Tesla), wearable tech (Apple) and of course … the sharing economy (Uber, Airbnb).
While these success stories have value, they can also confuse or even dishearten business leaders. Too often, innovation is presented as a largely random process, fueled by sudden mind shifts and unexpected strokes of genius. For most companies though, this picture is dead wrong. Overnight miracles are possible, but they are an exception to the rule.
A lot of business leaders know they want innovation, yet they struggle to define what it actually means to them. Simply put, innovation is about making changes that add business value, in terms of either revenue growth or increased operational efficiency. This value can be created in four ways:
The goal is never innovation itself, but the competitiveness and long-term survival of the organization.
Considering the key elements of this definition (‘creating value’ and ‘safeguarding competitiveness’), it quickly becomes clear that innovation and entrepreneurship are two sides of the same coin. And just like entrepreneurship, innovation is never a one-time deal. To the contrary: it is an indispensable and ongoing business discipline. By default, innovation takes time – and usually quite a lot of it. Ignoring or avoiding the innovation imperative – driven by either confusion or fear – is a surefire way to destroy your business.
A question that naturally follows from the above is this: how can we maintain a clear focus on innovation, by treating it as a discipline? While a solid innovation strategy isn’t designed overnight, a lot can be gained from thinking in terms of functions instead of solutions. An example:
Companies that solely focus on the solutions they offer, risk losing sight of the bigger picture.
Companies that solely focus on the solutions they offer, risk losing sight of the bigger picture. That’s what innovation is all about: developing, new and better solutions for the function that you fulfill.
Consider the bankruptcy of a major entertainment store selling CDs, DVDs and video games. Its function was to ‘deliver entertainment’, but the solution (selling classic storage formats through bricks-and-mortar retailing) was surpassed by solutions that were simply better. On-demand streaming services such as Spotify and Netflix have turned CDs and DVDs into a thing of the past. And why would you purchase video games in a store if digital distribution platforms like Steam offer everything online? The entertainment store we’re talking about could have seen this coming, if only they hadn’t lost sight of their function.
For companies wondering how to innovate, these questions are a great start:
Understanding your company’s function and staying ahead of the curve by knowing your playing field are two important first steps to ignite innovative thinking within your organization. It will also help you in determining a clear direction for future innovation efforts. Yet, as stated earlier, this is never a one-time exercise: innovation is a discipline that requires constant attention.
For a lot of companies, this is the second hurdle. After all, answering daily client demands and keeping day-to-day operations up and running usually requires most – if not all – of the company’s resources. Allocating people and budgets to dedicated innovation efforts requires a willingness to embrace uncertainty, for the sake of long-term goals. This is what it means to create and sustain a culture of innovation: giving teams the autonomy to focus on uncertain, non-routine business opportunities, without using classic financial benchmarks to assess the returns.
By Mathieu Mottrie
Mathieu Mottrie, Managing Partner – CEO at CREAX, a frontrunner in innovation consulting and research. With his vast experience in business development and management, Mathieu leads and manages the daily activities and operations at CREAX. In addition, he is responsible for the business development and the management of the international resellers’ network and is regularly invited to talk about business innovation at conferences, schools, universities, management committees and professional associations in Belgium and abroad.With his vast experience in business development and management, Mathieu leads and manages the daily activities and operations at CREAX. In addition, he is responsible for the business development.