According to a recent report by IBM, innovation is directly correlated to business value, growth and profitability. But what is innovation and how does a small business innovate in an increasingly competitive landscape? In the article Expanding innovation: It takes and ecosystem (ibm.com) it seems clear that there is no one way to innovate. But there are certain points of commonality among the most innovative, i.e, profitable companies in the world today.
According to the article, the following ten companies are among the most innovative companies today: Alphabet, Amazon, Apple, Microsoft, Samsung, Netflix, IBM, Facebook, Tesla, and Adidas. Every one of these companies can be described as being highly innovative and also highly profitable. What do they have in common? For starters, it seems that they are part of an “eco system”. They do not operate in a void all alone, but rather, they tend to play a role in a broader space that involves many partners, players and competitors/collaborators.
How can a small business owner be more innovative and therefore experience higher growth and profitability?
- Think of yourself as being part of an ecosystem
According to the article by IBM, the ecosystem approach to innovation is not necessarily reflexive but it is the smarter way to approach innovation. It is all about being part of a cluster and this cluster does not necessarily have to be comprised of only “like-minded” people. Where innovation is concerned, try something unexpected, maybe even “wild.” Innovating can be a whole lot more random than many small business owners realize. According to IBM:
To innovate at scale and speed, organizations also create new and, at times, unexpected ecosystems. For example, Jaguar is collaborating with Waymo (a self-driving technology development company and a subsidiary of Alphabet Inc.) to create premium self-driving cars. And Amazon, Berkshire Hathaway, and JP Morgan are partnering to create a healthcare company to offer cost-effective healthcare services to their collective employees.
- Hire the right people
The people you hire can have a lot to do with how innovative the company is overall. The good news is that innovation is innate in humans so just about everybody can come up with an original idea from time to time. But it could take longer for some rather than others to harness these ideas in a way that benefits the company. Hiring managers should focus on hiring people with a clear history of innovation, and initiative. How can a hiring manager know that an prospective employee has the innovation gene? That could come down to something as simple as having and maintaining a blog in a niche area. It could be the types of intellectual property the person owns. It could be their work or travel history, their internships or extra-curricular activities. It could be the answers to the interview questions either individually or collectively. Hiring managers need to be able to listen for the cues to suss out those who are likely to be innovative and those who are not.
- Encourage creativity
It is one thing to have creative people on the payroll and another thing to profit from that creativity as a company. The way to do that is to actually encourage your employees’ creativity. Just because the employee is doing something in a way that has never been done before does not mean that the employee is weird or crazy. It could be that the employee is innovative! Small business owners need to open-minded about their employees’ creativity.
- Partner up
According to the IBM report, partnerships are key to innovation. Again, think of it is an ecosystem. Within that ecosystem, there are partners and partnerships to be met and formed and these collaborations can be a lot more random (maybe even “unthinkable”) and varied than you might instinctively think.
“Among the ways that innovation is changing is how and where business is conducted. Competitors are now collaborating in ways unthinkable in the past. For example, Apple and Samsung have entered into a partnership where Apple will offer iTunes movies and TV shows on Samsung’s smart TVs.” (IBM citing Irish Times Apple and Samsung announce unthinkable partnership – The Irish Times)
Think of it this way: Birds are very different from bees and bees are very different from hibiscus flowers but they are all part of the same ecosystem, and they help each other survive and thrive. All the big companies are partnering up and some of these partnership were unthinkable just a few years ago.
- Look for the void in the marketplace
Another way to innovate is to look for that void rather than just piggy-backing on what everyone else is doing. Of course, this can cost a lot of money and requires a budget that allows for failure in the event that they product or service does not achieve its aims. But where time and budget allows, definitely focus a good chunk of the company’s energies into identifying and filling voids. According to IMB:
Find a void in the marketplace. Then define the exact value proposition of the platform and ecosystem to fill that void.
- Always put the NEEDS of the customer first
What is crystal clear is that innovators think about what customers need and they fill the void as noted above. The very definition of the word “void” suggests that it is something that needs to be filled up. In the marketplace, it is the filling of the needs of customers that drive successful businesses. If a business has the best business plan in the world and offer the most interesting products and services that the customers do not need, the business will fail. A key element of profitability and growth is innovation that fills a void based on the needs of customers.
