Manage Innovation, It Pays

Whilst controlling costs within your business and providing good value for your customers is important, your competitors over time can replicate your cost base and product offering –  leaving you without a competitive advantage. In other words, you have to find another way to get ahead and stay ahead. According to Professor Lawrence Bellamy, from the Warrington School of Management (University of Chester), innovation holds the answer.

People love Apple. The brand recognition, product sales, status and desirability or their products is global and transcends all levels of society. Apple has enormous research and development capability with hoards of workers on a quest to deliver outstanding products. However, do all of the products have unique features? Absolutely not; Apple products share technical and design features across the range including the’ look and feel’.  The company takes good ideas and use them time and time again to get the most out of them. After all, good ideas are expensive and need to be paid back.

When thinking about innovation, people sometimes confuse this with creativity. Whilst these areas may be related they have differing fundamental purposes. Creativity is about coming up with new ideas, whilst innovation is often more about taking ideas, which may be pre-existing, and applying them elsewhere.

Creativity may require costly research and development or a dedicated creative staff team to deliver the new ideas. Innovation can be used throughout the organisation by all members of staff to deliver new or improved products, cost savings, better service or greater customer value. Innovation most of the time will be about incremental development, rather than breakthrough creation. It’s not just there for hi-tech companies with huge budgets, but for all organisations. However, to be successful it needs to be managed.

Dyson vacuum cleaners utilise a ‘cyclonic’ extraction system. Dyson did not invent this concept; it had been used within industrial dust-extraction applications for many years previously. Instead, they took the idea and used it in vacuum cleaners – a new product application. Other manufacturers now also produce ‘cyclonic’ or vortex extraction based vacuum cleaners. Dyson however has been so successful in developing and promoting the concept that far fewer people are now calling their vacuum cleaner a ‘Hoover’.

We all see things in our daily working lives which we think could be done better. The challenge for any business should be to ensure that those improvements, whether they are associated with products (which include all the things we sell i.e. physical goods, services or ideas or knowledge) or processes (the things we do) are nurtured, considered and put in place in a cost effective manner.

Innovation can work for us not only on the big things but also importantly on the micro level. If we put together many small innovations within an organisation then cumulatively they add up to a large improvement and are difficult for other organisations to copy.

So how do we get our business to be more innovative? Key areas are:

  • Leadership of the innovation agenda
  • Screening’ project proposals
  • Empowering people to act
  • Embedding innovation into the DNA of the organisation

Comparison sites such as Confused.com, GoCompare and Money Supermaket have been instrumental in changing the way we purchase insurance and other finance services. Direct Line pioneered the work which made this approach possible, by moving away from High Street insurance brokers to telephone applications and expert systems to process the data from insurance quotes.

Comparison sites are a development of this early work and have been instrumental in helping to make shopping for financial service more visible and convenient. Now though new types of organisations are being formed which get consumers together and negotiate deals from insurance companies on behalf of groups of customers, for better premiums. The industry is gradually changing.

Leadership

Leadership throughout the organisation should recognise and encourage suggestions made for innovation projects, whether product or process focused. Leaders should clarify the most important areas of focus: product, service or cost? Though many projects may be small, any development is a step in the right direction. Whilst not all projects will be given the ’green light’ without a stream of innovation proposals the company will not generate sufficient opportunities for the future. Successes should be widely promoted as the way forward for the company.

Screening

Organisations should not blindly implement all suggestions, but should go through a supportive screening process.‘ Innovation Champions’ should work with employees to help them put together the project proposals. Large projects will need to be considered at a senior level; smaller projects within departments. Try to keep this process to a minimum level of bureaucracy.

Empowering

Some people will put proposals forward which have little or no expenditure and have limited impact outside of their area of working. If what they are proposing appears reasonable after a conversation with their manager then the answer should be ‘yes’. Why put barriers in the way of improvement?  For complex projects then some training may be needed to give people the skills they require in taking proposals forward, this may involve researching, writing and calculating and project management skills.

Embedding

Use staff appraisals, budget setting processes, staff awards and meeting agenda items to reinforce the need for innovation. Arrange for innovation events periodically to encourage employees to focus upon possible projects and make it part of the usual way of working across the organisation. Measure the successes being achieved and report back. Make it part of the culture of the organisation and an expectation that all will contribute at some level.

Innovation should be at the heart of the culture of a company, as it gives the organisation the best chance of long-term success. It should be built-in and not bolted-on and encompass the whole of the organisation. Once the innovation culture develops then success will breed success – accelerating performance improvement. However, management needs to focus efforts to get this moving… innovation won’t just happen, it needs managing.

 

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