Understanding Innovation Management In Business

Before we delve into our topic, there is a need to make a quick clarification about how to define innovation.

There are three types of innovation in managing a business for success:

  1. Innovation is that creative input into your product that is welcomed by your targeted consumers.
  2. Innovation can be about making the internal workings of your business to be more efficient.
  3. Innovation can also be about how the business engages all external factors, to enable the business run smoothly.

As regards the market place, you can’t be creative, just for the sake of it. If you do so, that exercise is simply for your own personal enjoyment, if the market is not receptive to it.

  • Probably the product features, the timing, the audience or location is simply not right.
  • The timing of your coming out must be appropriate.
  • However, when consumers – who are always self-centered – appreciate your novel efforts and are willing to pay for it, then it can be said you have come up with an innovative idea.

Be aware that it is mainly your targeted consumers that will applaud you and vote for your product with their money. And they may spread the word of the good news or bad news.

It means you have eliminated their pains. It means your creativity has brought further improvement to their existence. However, all these are still subject to other external factors.

Look for clues in taste; for trends, lifestyle, and prevailing culture. And maybe future culture – what will they most likely be interested in and willing to pay?

  • A well accepted innovative idea may not be all that elaborate but could be a simple twist of a product and the market could love it very much.In other words, it doesn’t have to be an earth shaking exercise.An intangible idea may be as simple as; a rehearsed set of phrases that are uttered by your staff when they receive your clients.It may be a re-arrangement of the restaurant chairs to achieve a purpose. You can experiment on your own after deliberate observation.

One of the goals would be to increase customer’s satisfaction. And this could shoot up dwindling sales – when measured – after the deployment of the new creative input.

  • Innovation can also be applied to other areas: such as, process development as well as the need to improve some aspects of your business as a system.For instance, it may involve a few twists of the traditional way of doing things.It could be a new set of guidelines of hiring staff. An improved tactic of reaching out to prospects. Or finding new ways of reducing costs in the business.
  • The expanse of innovation is as wide as the imagination of a visionary – the entrepreneur. That is, if the entrepreneur allows his or her imagination to be elastic.Going by the popular saying; if you know the rules, you may break them, ethically. That gives you further creative freedom. That is one of the secrets of past pioneers in many areas of human endeavor.

This courageous and resourceful mindset of innovators and has brought about breakthroughs. On the other hand, if mistakes are made, you are still much better off than those sitting on the fence – hugging the status quo.

  • The wisdom here is to make your calculated foray. But the challenge is to fine-tune your raw thoughts. They must be subjected to the needs of the market, as I would always advice. That is the test of reality.

I know that while trying to cope with competition – by fine-tuning a better customer experience – all sorts of new ideas will be going on in your mind. You will need to calm down and manage the situation objectively.

Innovative Ideas That Sell

Let me share a personal experience, which occurred sometime – in early 2015. I had some items in my personal inventory for a while. The product till now has a very good profit margin. For some reasons I was not positioned to sell directly to potential customers.

The items were just lying down there, staring at me. I do have such items like that. Outside my core business, I thought I could make some regular cash – by the side – from this product. And that got me thinking.

A new e-commerce platform, a website – which has been dominated by other types of products – just came on board in my country, Nigeria. I was wondering how my products would get patronized in the midst of all the competition.

I did not want to compete on price (reduction) with similar items. I knew I had some comparative advantages over the other online merchants selling the same items.

Due to my expertise, I could give more detailed and relevant descriptions of each item. It was as a simple as that. This was not done very well by other merchants. So I had an edge.

I went further to develop a combo package without increasing the average price. No other merchant was offering a bundle of these items.

Can you guess the result of this experiment?

My inventory was sold out within the first week I tested this idea.

When the sales stabilized after a month, I tinkered with the prices by increasing them a little, yet the sales did not drop. I maintained these prices without pushing them much higher than competition. This encouraged me to get more supplies for further retail.

I believe, this is a simple example of how intuition and acceptable creativity meets a need that sells.

  • Making a cocktail or hybrid of ideas could be another way, to come up with unique products.Great business ideas may be packaged as an admixture of products and services as your offering.If you are into physical products, you could add a complementary but intangible service to it and vice-versa.You will see aerobic trainers that sell gym products; same with hair and beauty salons that sell different products. It is a simple form of diversification from the main offering.

Also make efforts to ensure your idea is unique to a large extent. You don’t want your efforts to become a flash in the pan, but an enduring one.

Barriers To Innovative Ideas

Have you considered if it is easy for just any competitor to enter into your line of business? There are ideas that have low entry barriers, which make competition very stiff. It will be a sad future if a competitor comes in and provides a much better service. This might make your business ultimately irrelevant, with time, if care is not taken.

Such a business idea may be dropped, unless your strategic objective is to work on your product offering; or quickly make some profit and thereafter exit as soon as possible.

  • If the idea is commonplace – and not really unique in its outlook, then you would be competing with others – so seriously. Nearly all of the players will sell at the lowest prices eventually. An all comers affair with low barrier of entry tends to be the easiest to copy.Cutting prices – otherwise known as price war – is the most common tactic. Not a very profitable one for all players at the end of the day, I must say.You are all probably selling at the same level of quality or formulation. Your services are equally positioned the same way in the eyes of the consumer. If you continue in this manner, your business will not do well into the future.

But you should be asking; “Are there other ways of resolving this problem”?

There could be, of course.

  • As I had mentioned before, one of the options is to add a complimentary product or service to your initial offer. Scan around for an additional offer that is very exclusive to you – that gives your business a comparative advantage.It could also be a product that you have sourced, at a negotiated discount, through an alliance with another business. Sell the combo at a price less than the total, each item would have sold separately.
  • Another option is to continue with the original business idea until you discover another one, with a higher barrier of entry. And continue with both, if profitable collectively.
  • You may want to diversify into another line of business which gives you a better comparative advantage – that may have a higher barrier of entry.
  • Yet another extreme idea; you can relocate to another well-thought-out location where there is little or no competition. This could be a tough decision but it might be your saving grace.Do a very good business and personal appraisal before making this move – literarily speaking. Be sure such a movement is profitable and will be worthwhile on the long run. Such an action supports the fact that ideas could be very intangible, that is, by this movement.

In my own case, some years back, I took a drastic step in starting a business with a different business model from what I had planned. There was a reason for it. From the blues, a competitor beat me to the same location where I really wanted. I delayed because I was yet to raise the minimum starting capital.

  • This brings to mind, when you look around and you wonder why many people shy away from investing in a seemingly profitable type of business or industry. I am talking about a business opportunity which might look attractive to your own naïve eye, until you get closer.

There could be unforeseen barriers put in place, as a competitive strategy by the existing players.

It could also mean those stuck there barely make enough profit.

As the popular sayings goes… they want out, but they may not be courageous enough to start another business or move elsewhere.

While some of such businesses may be at the brink of declaring bankruptcy – which might not be the situation – they may still choose to stay on. They linger on with the hope of a positive shift in the business horizon.

  • The lesson here is to watch out for a business or industry you have not investigated properly. It makes smart sense to do a prior study of that industry very well no matter how attractive it might appear to you at onset.For instance, anybody can produce “Tee” shirts for sale or cut the lawn. But it takes a while and special tutelage to become a lawyer, a surgeon, a successful marketer or a salesman.That is the reason why good money is made in highly skilled professions or businesses where the entry barrier is high.

There are noticeable examples as can be seen in high technology, manufacturing, delicate medical surgeries, inventors, even in soldiering.

  • All these can’t be compared to selling coffee at a sidewalk.I don’t mean to downgrade the latter. Many have made millions from such simple ideas.

    But you must add something to that to stand out.Anyhow, if your brand of coffee is unique and exotic to the palate of thousands around your market, you could stand out.But you would do better, if you could add more ideas, so that your business would not be commoditized.What do I mean by that?Let that coffee business be about a properly defined experience – from the perspective of your prospects, beyond just selling a product.
  • Intangible businesses are wise to sell emotional experience to consumers – to stand out in their minds. For instance, all experiences are varied with different hotels by their patrons.Service businesses can take a cue from what I have just highlighted.

As reported this is how some coffee shops in Australia have survived Starbucks? This increased barrier has allowed the local operators to open shop despite this big sized company.

Regulatory & Cultural Limitations

Now that you have mooted an innovative idea, have you looked at the legal and cultural limitations? The idea must conform.

Your locale, state or country would influence the final product before your full launch.

  • A company may need to modify its creative ideas to meet the legal requirements of the state. You will see such examples in the medical, pharmaceutical and food industry.

New products, procedures or surgical techniques must get legal backing from local regulatory agencies and even professional bodies.

This equally applies to small-business owners and micro-entrepreneurs in their respective levels. There should not be any exception to these rules for consideration by any serious business owner.

No matter how attractive your innovation is, even if the populace is yearning for it, it must be permitted by these watchdogs.

  • Recall the recent Ebola outbreak in West Africa – late 2014 and early 2015. It became a dilemma, whether or not to use a drug – not yet fully approved – by the American Food and Drug regulatory authority, as we read in the papers.

While the outbreak ravaged on, there were infected people including American missionary health workers stationed in Liberia, who were at the point of death. The infected American missionaries were returned to the US for treatment.

It was said that those that recovered were given some shots of this drug, but it was not supplied outside the US, according to the global media. There could be a possibility that it had not passed through all the test-requirements.

  • This also brings to mind, the issue about cloning. It has been claimed in some quarters, that a human being can be replicated. Glad to say that most countries have openly refused the full exploration of this idea. Sentiments have been based on the moral and ethical implication of this sensitive undertaking.

However, a monitored regulation and guidelines have been given to the practitioners of the stem cell research for its derived benefits. Whereas some countries won’t even touch this particular discovery, despite its life-saving results. This is due to the influence of local culture, tradition and belief system.

  • The acceptance of a creative idea is also subject to the cultural behavior of that immediate society. The people have to be mentally ready to accept a new idea and how they generally interpret its usefulness in their lives.

An idea rejected elsewhere, may be accepted in another clime and time. Businesses that want to operate in multi-locations must take note of these cultural restraints in their strategic planning.

Innovative Management System

Idea development within a group of people such as a team or in bigger organizations can be a real challenge. It is also a sensitive issue to the survival of a business of whatever size.

  • To develop a good system for an effective idea development program, there is a need for proper management of both the internal and external factors.

However, continuous tinkering with existing products is very important for a company’s long term survival. As the enterprise grows from infancy to adolescence and matured phases, you have more people to contend with in a group.

This exercise will usually throw up some friction; where there is a need for consensus; to agree to new ideas and product development.

If we take it closer to a family setting, you can’t even rule out such a friction in a husband and wife working together on their business, when crucial decisions have to be made.

  • And how do we handle novel ideas that are suggested by a few individuals in such a big company?Same question could be asked in small outfits too? Because a creative idea at first, might appear untenable, such that the particular contributor might have some self-doubts.

This is how to manage innovative ideas within a group:

  • The individual that comes up with the idea needs to really investigate it objectively. This has to be done, devoid of any ego trip or sheer sentiments.
  • Be ready for a honest critique by others. The idea should be supported for “further investigation” by others but not out of mischief.
  • The idea should not be rushed to the trash bin. The creator cannot be disregarded or made fun of, no matter stupid the idea might be. This objective approach would help a sensible company in its entrepreneurial journey.

If collaborations are missing, many breakthroughs may not see the light of the day. Such companies could easily discourage the gifted from volunteering new ideas. A lot of companies have gone under because there is no system in place to encourage individual’s creativity.

(I don’t need to list the popular companies in this unfortunate group, but they are well known).

  • Asking a group in particular to come up with new ideas collectively, may be an exercise in futility in many setups. If you must, adequate care must be put in place to manage group social behavior.Brainstorming by a group, done within the same space and allocated period will simply become a merry-go-round affair. An exercise in futility – of motion without movement. And nothing is achieved, if care is not taken during and after such sessions.
  • If you would, there is a need to set up a guideline or an agenda to remove possible self-inflicted obstacles – by the group – in order to arrive at timely recommendations.
  • Such guidelines agreeable by all must be designed to downplay each member’s ego. There is a need to arrive at a collective and an agreeable idea. Some members who may not have much to contribute at a particular session should not be disregarded, because you can’t force genuine inspiration.Reasons for this could be due to diverse individual personalities, experiences and influence of strong posturing by other participants. Silent conflicts may be created which could slow things down.
  • Opinions of those regarded as dissenters, non-conformists or rabble-rousers should still be respected – within reasonable means.Their submissions must be objectively studied and never a rush to get them discarded.This is to avoid Groupthink – a social psychological phenomenon – that could be noticeable within a group of people.It is a mindset associated with entrenched groups that share common beliefs. Members tend to think alike, at times, at the group’s detriment.A lone voice that suddenly has a spark of inspiration – contrary to the group’s tradition – may be shouted down.In retrospect that suppressed voice could be the saving grace against an impending problem or an opportunity that ought to be taken up.
  • When an idea has been agreed upon, resources must be deployed immediately for implementation. A time frame is applied to test the idea and inference must be made from results received.
  • If the outcome meets the parameters of the overall pass mark, the creator of the idea ought to be congratulated. It is also important that all the other participants must be applauded too.Without contributions from other participants, there is no way the selected idea would have been appreciated.
  • Likewise, the chosen idea must be discussed across the organization, down to the factory floor. Complete collaboration and patience will be needed, to allow the idea work its full course of testing.In many ways, the innovative exercise in an organization should be an all-inclusive affair. Everybody should be celebrated when it eventually brings a positive outcome.Otherwise, if some members of the team are ignored, this sends a bad signal and prevents future cooperation. The whole project my fail and money will go down the drain.
  • Don’t kill the motivation of the workforce by secretly brining a novel idea to them to implement.
  • The creator of the seed idea must be compensated. The management should extend a weighted means of appropriating compensation across board amongst the contributors. This stimulates others to be motivated. They will see themselves as co-contributors and not as mere bystanders.

This approach reduces any form of rivalry but gives the needed chivalry for the team.

Personally speaking, I am not an advocate of group creative exercises, where people are put together inside a room, to come up with ideas, within a time frame.

I’d rather all individuals, were briefed to come up with their personal and isolated ideas, when there are issues the company wants to address. These ideas will be annotated anonymously and investigated for usability by all stakeholders at scheduled meetings. The best idea is considered!

Take Away

Finally, innovation has to be that creativity exercise that is genuinely appreciated by your target consumers which both parties can mutually benefit from.

Do not be creative for the sake of it.

Think of the people you are doing it for?

Think of other internal and external factors that could influence your innovative efforts. If you need further help – on innovating consulting -to help your business stand out; you can always seek assistance.

Let me read your thoughts below …

Access Your Free Video on
Working Capital and Cash-flow Management and Other Updates 

Tagged .

Leave a Reply

Your email address will not be published. Required fields are marked *