Acting Small For Innovation And Growth

July 6, 2007
Businesses that actively pursue innovation generate more growth and profits than those that do not. Plus they usually enjoy higher brand awareness and appeal.

This is the second part of a two-part series on finding innovation presents four ways of finding ideas and opportunities for innovation and growth. Part one, Thinking Big For Innovation And Growth presents five ways of "thinking big" and looking at the big picture about innovation. Depending on the task you are trying to accomplish, switch wearing these two hats to get the best results and performance.

Asian industry is rising. U.S. manufacturing is shrinking. Regulations are pressing. Employees are retiring. So what? Does it really affect you at this moment? By acting small and focusing on the matters at hand today, you will get new ideas and move your business forward toward its goals.

Businesses that actively pursue innovation generate more growth and profits than those that do not. Plus they usually enjoy higher brand awareness and appeal.

Innovation is about introducing something new or doing something in a new way. The goal of innovation is to take an idea from concept to commercialization and improve business performance. An innovation can be a new product, a new process, or a new way of doing business.

"Acting small" means looking at and managing the details of your business and the task at hand. How will you deliver the right products to the right customers right now? How will you deploy your resources for making new products and doing new things today? Focus on sales and keep an eye on costs. Don't even think about strategy and such things. It's time to act, now!

Many employees are preoccupied with managing day-to-day operations and "putting out fires." They don't see opportunities because it's not their job to innovate.

But others have their heads up. They see more and know more. They develop more new products. They sell more to new customers and new markets. Innovation makes their products and company stand out from the competition. Innovation puts their organization on a path of sustained growth and profitability.

Develop New Products, Services Or Processes

New products are the lifeblood of growing and profitable companies. As products get older they are copied, matched or beaten by competitors. To find new product opportunities:

  • Understand the trends in your industry. Acquire deep insights into your industry, markets and customers to develop the right products.
  • Use (create or buy) new technologies in your business to make your products better or lower your costs. For example, high-speed Internet access is creating many opportunities for new services.
  • Offer new technologies in your products to customers. Example: Mobile location-based services.
  • Offer your customers a better value proposition by providing more benefits (features or perception) or reducing prices.
  • Offer different value propositions to different market segments. This forces you to optimize your resources and will maximize your profits. Example: Toyota and Lexus brands.
  • Create an "innovation funnel." Maintain a constant flow of ideas into the top for consideration. Many will not pass to the next stage. Some products will fail. But over time you will be managing a portfolio of projects that will steadily produce a range of successes.
  • To take a concept from idea to commercial success, make sure your resources, skills and motivation support your objectives.

Case Study --- Open Culture and Patience Produce Innovations At W.L. Gore & Associates

The $2 billion, Newark, Delaware-based maker of market-leading Gore-Tex fabrics, Elixir guitar strings and Glide dental floss was ranked by Fast Company as the most innovative company in America in 2004. It is consistently cited as one of the "100 Best Companies to Work for in America."

Gore's product development is aimed at helping its customers sell more. Its tradition and strength is its engineering prowess, which it actively nurtures.

Gore has a 1,000-plus stable of products in nine division spanning fabrics, medical, chemicals, filters, electronics and other products. The keys to its consistent innovation are its open culture and patience for developing ideas in five ways:

* Open culture -- The company has an innovative and open organizational structure. To encourage innovation there are no bosses, job titles, or organization charts, just sponsors, team members, and leaders. Multi-disciplined teams of associates organize around technologies and market opportunities.

* Small teams -- Gore keeps its teams small and limits its manufacturing plants to 200 people so everyone knows each another and work rules are minimized. They work as small task forces acting like they are solving a crisis -- no time for formal rules that stifle progress, by which many conventional companies live.

* Passion -- New products spring from a culture where people feel free to pursue ideas on their own, communicate with one another, and collaborate out of passion and self-motivation rather than a sense of duty. Gore encourages its associates to spend some of their time - typically around 10% -- on speculative new ideas.

* Take the long view -- Gore is impatient with the status quo but patient with new ideas and product development -- sometimes taking decades to bring revolutionary products to market. The privately owned company, with 7,500 associates in 45 locations around the world, is not under pressure to produce quarterly results.

* Celebrate failure -- Don't criticize it. When a project doesn't work out and the team kills it, they celebrate with beer or champagne just as they would if it had been a success. Celebrating a failure encourages risk taking.

Gore strives for dramatic improvements -- not me-too products -- that are "unique and valuable." But superior technology also often needs breakthrough marketing to push past entrenched but inferior market leaders. Its marketing campaigns are convincing and generate results. Gore has a culture focused on and patient for breakthrough innovation that has worked consistently well for almost 50 years.

Pursue A Range Of Degrees Of Novelty

The degree of novelty of an innovation ranges from incremental to breakthrough. Incremental innovations are smaller, easier to implement and less risky. They are good for sustaining your business. Breakthrough innovations are more radical, more complicated and more risky. They can disrupt the market in a big way and provide a big leap in growth.

Most companies succeed over the long-term by making a continuous series of incremental innovations focused on growth and developed across many areas. But some organizations are too risk-averse and resist all change to the point where they stifle all innovation and growth. To pursue a range of degrees of novelty of innovation:

  • Define your risk tolerance and pursue innovations within it.
  • Create and manage a pyramid-shaped portfolio of innovation projects. Many incremental innovations, some midlevel innovations, and a few breakthrough innovations.
  • Be rigorous about managing new product development, especially staying focused on customers and controlling costs.

Foster A Culture Of Innovation

Your employees can be a very rich source of innovation, especially those who have contact with customers. But if employees are not motivated or given incentives to innovate, they will simply maintain the status quo -- with all its good and bad consequences. Effective methods of generating new ideas from employees are:

  • First, make sure you have the right employees in the right positions with which to start.
  • Then, let them network, interact, collaborate and share with each other in the organization and with outsiders.
  • Have as many employees as possible thinking of ways to improve your products and business as part of their regular work. Make it fun. Don't "command" it.
  • Allow some free time (maybe 10%) for employees to pursue ideas that they are interested in or think might be worthwhile. They will be happier and pay you back with 20% more productivity.
  • Company suggestions -- Have a system for getting new ideas from all employees. Define the authority, responsibility and accountability to make the process effective.
  • Brainstorming sessions can generate original ideas. Don't make them too formal or too controlled. Just let the participants' "neurons fire" and collect the fallout.
  • Don't punish employees for ideas that don't "fit the mold" or fail to work out. Make failure a positive learning experience. Learn from mistakes and move on.

Case Study -- Technical Leadership And Market Focus Call Up Innovation For RIM

Since its founding in 1984, Waterloo, Canada-based Research In Motion has redefined the concept of typing on a mobile device and made two-way mobile, enterprise communication fast and easy.

RIM has consistently won awards for its product innovations. In 2002, InfoWorld named the BlackBerry 5810 gadget of the year and best wireless product of the year, and the RIM 957 product of the year and best handheld of the year. The BlackBerry wireless solution received the M.I.T. Sloan eBusiness Award in 2002 in the disruptive technology of the year category - an award that recognizes technology that positively disrupts our daily lives.

RIM's laser focus on technical innovation stems from the engineering roots of its founders and its location near the University of Waterloo, which is one of the premier engineering schools in Canada. The company's practice of innovation is supported in three ways:

Product improvement and differentiation for technical leadership -- In the early days of wireless communications in the mid-80s to 90s, RIM's management identified where competitors were weak and RIM was strong.

The first decade at RIM involved long hours of research, brainstorming and refining its wireless data technology. The designers became pioneers in the efficient use of battery power and wireless bandwidth. The first-generation BlackBerry used its processor chip only one percent of the time, enabling the device to run for three weeks on a single AA battery and lithium-ion battery -- and demonstrating impressive engineering skills.

RIM's approach was to create very marketable products, something that could really solve the problems at the time. They focused on the wireless end of the business and addressed the convergence of mobility and digital data. Over time, they systematically improved the products and their position in a sector that they thought was going to be important.

The curiosity of its engineers drives new ideas and innovative products at RIM. The company hires people with similarly inquisitive minds.

RIM understands the market and how to sell. The BlackBerry's nickname "crackberry" reflects a cult and shows it really meets users' needs. Although the user experience is addictive for many, RIM strove to make it practical and affordable.

Constant search for product development funding -- Culminating with an IPO in 1999 and share issue in 2000, the company's management has worked ceaselessly with investors on funding and with bankers on cash flow.

RIM has used many sources of private, commercial and government funding, such as loans, capital, grants, stock, and tax credits to fund its growth and product development.

RIM invests a significant portion of its revenues in ongoing R&D, which was 17% of sales in 2002, now down to 8% as revenue jumped recently. More than 600 people are employed in its state-of-the-art R&D facility, which comes complete with research, testing and certification labs to facilitate new product development and help speed up the time to market for new products.

RIM's patent strategy has been very important to its growth. The company's portfolio of several hundred patents is an asset that has allowed it to enter a competitive market space, and gives it bargaining power and leverage to offset against royalties that will be paid.

Pick your battles. Know when to partner -- Although it has a wide portfolio of patents, RIM licensed some of the most winning features of the BlackBerry model, including keyboard features, to Palm and Handspring.

Instead of spending a lot of time and money fighting contestable patent protection in the courts, the company chose to earn an income stream now from judicious licensing to partners.

For example, Nokia will integrate RIM's terminal software into its more expensive phones But the agreement does not give Nokia the rights to incorporate or resell BlackBerry server software, which synchronizes data between handhelds and corporate and wireless networks, and is a RIM money-maker.

RIM achieved much of its brand and business success through alliances with powerful technology companies such as Microsoft, Lotus, IBM and Sun, and leading wireless carriers such as Rogers, Bell Mobility, Cingular, T-Mobile and AT&T.

Now it is developing a global network of service providers in Europe and Asia. RIM is forming strategic alliances with leading telecommunications carriers in Germany, U.K., Italy, Hong Kong and Australia.

In addition, RIM made its Java Development Environment available at no charge, so three million Java developers worldwide can build applications to support the BlackBerry.

To RIM, innovation is a process and a discipline. It's hard work, but focus and persistence has made it pay off. It's taken over twenty years for RIM to achieve global success, but all along they strove to provide an innovative solution that met the market's needs.

Look Outside Your Organization For Ideas And Opportunities

Good ideas can come from anywhere. The more diverse your world is, the broader the range of ideas and opportunities to which you will be exposed. To find opportunities outside your organization:

  • Network, share and collaborate with people outside of your organization. Their ideas or activities may seed good ideas at your organization.
  • Look for ideas and opportunities at trade shows, trade publications, competitors, patents, universities, consultants, experts and advisors.
  • Have a regular program to scan for information and gather business and market intelligence. Watch trends in popular culture. Use the Internet as a radar.
  • Sometimes step outside of your "regular world." Be open to chance events that might lead to good ideas. For example, visit a trade show or read a magazine from outside your industry.

Acting small is the "detail hat" you wear for finding opportunities for innovation and growth. How can you best deploy your resources to get the job done today, be it make a sale or reduce a cost. Exactly who is doing what right now? Do the right thing, and try to do it right.

Finding opportunities for innovation and growth is hard work. There is no magic formula. But the sooner you start, the sooner you will reap the rewards, as most innovators before you have done.

The opportunities for innovation and growth in the world are unlimited. With a positive attitude, the right skills and the right motivation, any company can make the path of innovation clearer and more rewarding.

Blair Kingsland is a senior consultant with Spectrum Innovation Group. He has 25 years of experience working in business development, marketing and product design roles in the telecommunications, software and aerospace industries. Spectrum Innovation Group is a consulting firm specializing in innovation and growth. It provides insights into business trends and helps companies exploit opportunities for improving their operations and growing their business. The company is located in Toronto, Canada.

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