There is money in innovation. So much so, in fact, that companies leading in the art of innovation are expecting revenues to increase to the tune of $250 billion over the next five years. Learn how your business can capitalize on internal innovations to reap significant rewards.
Innovation can be a scary word for business leaders and executives. The word implies risk, slow returns, and, yes, change. However, there is a significant difference between change as a response to disruption and change through focused, incremental, and sustained innovation. The former refers to rethinking business models or product development as a result of outside influences, while the latter denotes change sparked from within—a lasting desire and inclination to improve.
The key? Switching behavior from a reactionary state to a mindset that fosters innovation and growth. This sounds high-minded and abstract. And the work isn’t easy. But as more companies are beginning to incorporate elements of innovation into their business strategies, the risks of staying idle increase exponentially. Besides, your competition is also already exploring innovation.
Do Your Homework
Repositioning your business as a powerhouse of innovation and advancement begins by understanding three basic arenas: the changing market in which you operate, the expectations of your customers, and the value you bring to these customers. So, let’s start at the top:
> The Market: Even the most lucrative markets don’t last forever. They all go through periods of growth and maturity before they peak and begin to decline. This market lifecycle is oft en illustrated as an S-curve. For executives, the key element of an S-curve is the inflection point, the moment when existing products or services start outlasting the shelf life. It can be difficult to identify an inflection point, but these moments represent a natural point in the cycle for the new, innovative processes, products, and customers.
> The Customers: The wants, needs, and motivations of your customers should be the driving force behind the innovations you undertake. Familiarize
yourself with your target audience to identify unmet needs, to create value, and to meet service expectations. To accomplish this, it is necessary to incorporate design thinking into your company’s services. Design thinking seeks to identify creative solutions by placing employees, or designers, in the shoes of the end user or customer. The results are services essentially developed for the customer by the customer.
> The Value: Bringing value through innovation can be interpreted as developing new products. However, product development comes with a price—it can be costly and risky, and sometimes doesn’t result in significant competitive advantage. Process innovation provides opportunity for innovation with less risk and barrier to entry than product development. Examine the process behind production and the services being offered to consumers or clients. Seek out ways to shorten production times and increase customer service by internalizing takeaways from formal design thinking exercises. Doing so will encourage a culture of innovation—an environment that promotes creative thought and practice.
Process and service innovation may bring to mind images of unruly, hours-long “brainstorming” meetings. But fear not. Even innovation processes benefit from a little structure. In the words of design legend Charles Eames, our limitations of time and money can actually help us build-in pragmatic, small ways to change and improve. This is the heart of what we term continuous improvement processes. He said:
“Here is one of the few effective keys to the design problem—the ability of the designer to recognize as many of the constraints as possible—and his willingness and enthusiasm for working within these constraints. Constraints of price, of size, of strength, of balance, of surface, of time and so forth.”
With this in mind, leaders should seek to formalize innovation, with structured outlets and channels to turn innovation into tangible benefits. Innovation can be just as effective when it is the product of a concise, well-developed process. This process should be a natural progression developed by your team to better serve your customers. The key lies in understanding what makes your business unique and how elements of innovation will supplement and better fulfill this identity.
Keep Going For It
Innovation is like a lifestyle or philosophy. It’s foundational! The goal for your business is to include innovation as an element of strategic development. But it doesn’t stop there. Remember the S-curve? Your current processes and solutions will eventually begin to fade. A culture of empowered thinkers who clearly understand the desires of consumers with a process rooted in the principles of design thinking is crucial.
Sterling National Bank strives to reach new goals with clients as they design a future of growth. Reach out to your relationship manager to learn more about how we can provide the financial support needed to fuel your next innovation.