That being said, innovating doesn’t require you to be the next Steve Jobs or to create something the world has never seen before. In the context of a small business, it rather involves responding to your market’s needs quickly and accurately – and ensuring that you put appropriate systems and processes in place. This will ensure that innovation becomes an extension of your business’ thinking and operations…
Defining innovation in the context of a SME
While innovation is often thought of as something involving cutting-edge technology, in the context of SMEs it should rather be defined as a small business’ ability to adapt to changes in its environment – with the process catalysing new ideas, products and service offerings, and potentially different ways of doing business.
As such, innovation can enable your SME to exploit changes and opportunities in order to stay relevant and gain market share. This is especially possible given the speed with which you as an entrepreneur can effect change in your business.
Setting the scene for innovation in your business
Innovation needs to become a natural input and key ingredient of your business. Because it’s more of a mindset than a science, it needs to be driven by you personally. In my experience, it often starts with a “can do” attitude and seeing opportunity where others find adversity. Remember that innovation doesn’t involve reinventing the wheel. The “big” idea usually exists already – it’s your ability to adapt the idea that will set you apart.
What drives innovation within your SME?
When looking at what systems and processes to put in place in your SME to enable innovation, it is important to correctly identify what is driving change in your market. This makes understanding your environment and market critical. (This understanding must extend to every single person your SME touches, including customers, stakeholders and suppliers.)
Understanding your environment will ensure that you are able to identify your market’s needs (including the pain-points and pressures driving business) and look for opportunities to address these.
As soon as you’ve found an opportunity, seize it. Remember that a gap in the market will only stay open for a limited time before a competitor closes it. As a SME you have the ability to take swift action and gain optimum market share. Use this ability.
What does innovation look like in the context of small business?
Seeing how other entrepreneurs innovate – and adapt to changing market conditions – can prove extremely helpful if you’re looking for ideas. Each of the below SMEs (all of which have been on our Property Point programme) has managed to find an innovative way to differentiate itself in the market place…
Example 1: Apple Green
In the case of Apple Green, a waste management company, innovation involved going back to the drawing board and coming up with a new product offering that was aligned with its market’s needs.
The SME’s original business plan involved providing a dustbin cleaning service to municipalities. While the service was extremely innovative, the market failed to respond appropriately. Realising that they needed to come up with an alternative plan, the entrepreneurs started paying close attention to conversations in the market around waste and waste management.
With climate change receiving more local and international attention, and South Africa’s new Waste Management Bill being tabled, Apple Green developed a solution that spoke to these needs – while anticipating future ones. It started offering corporate complete waste management solutions, including setting-up recycling bins at office parks, collecting, recycling and managing waste.
By also offering to develop and implement “green” strategies for its clients, it was able to further drive responsible waste management as per legislative requirements.
By innovating out of necessity, and developing and rolling out this solution, Apple Green enabled its clients to respond to the new Waste Management Act pre-emptively. In so doing, it positioned itself as an innovator and carved out a unique space for itself in the market.
Example 2: TMT Cleaning
TMT Cleaning is a cleaning company that provides corporate cleaning services. Because there are very low barriers to entry in this sector, it’s very difficult for companies – especially SMEs – to differentiate themselves.
In engaging with her clients and looking at market needs, the entrepreneur identified a clear opportunity: by adding “green” cleaning products to her offering, she would be able to increase clients’ green compliance, while positioning them as responsible and environmentally conscious. This helped her to differentiate her business instantly.
This is a good example of incorporating innovation into one’s business mindset. TMT didn’t try to manufacture green products of its own. The SME rather used what was already available to enhance its business – and respond quickly to its market’s needs. In this way the business was able to gain substantial market share.
Example 3: Easy Security
Easy Security is a SME started by Smart Kunene in <insert year>. The company provides complete guarding and security solutions for corporates.
Shortly after start-up, the global financial crisis hit South Africa– impacting local business significantly. Smart subsequently made a decision to keep Easy Security’s debt ratio low by financing all business inputs with cash. Driven by necessity, his “cash only” policy created stability for his business in an unstable market.
Smart’s ability to look at his business model and adapt this in relation to the changing market environment thus allowed him to innovate in terms of how Easy Security operates. In this way he enabled the company’s sustainability in very challenging times.
Innovation in practice – steps to take to incorporate a spirit of innovation in your business:
When it comes to incorporating a spirit of innovation in your business, the starting point needs to be understanding your market and identifying the direction in which it’s moving.
As in the case of Apple Green, TMT Cleaning and Easy Security, you should therefore:
- Read and research: keep up-to-date with current trends and the general market environment.
- Network: engage with relevant people in your market. Speak to your clients and understand their challenges and opportunities.
- Capture information: use the information gained from your research and networking and apply it in your business.
Your ability to use your feedback and insights will enable you to identify valuable opportunities to innovate.
As a SME, your business is ideally placed to be a constant innovator within your market and lead among your competitors. Change your mindset accordingly. Consistently listen to your market and use these insights to leapfrog larger players in the space. Above all, remember that opportunity is born from adversity – it’s simply a case of finding the right opportunity and using it.
R&D: Compulsory Homework For Your Business
Why Research & Development are critical to your company’s future.
It’s one thing to develop a technology that everybody wants. It’s a completely different thing launching it, if the legislation or environment aren’t encouraging. Often, the result is companies who have grand ideas and little influence, and this is why it’s essential that you carry out in-depth Research and Development (R&D).
Defining market research
Market research is the gathering and analysis of information, so that organisations can better understand the market, environment, and demand for a new product.
The purpose of this data is to:
- Understand and advise on existing and upcoming business plans
- Develop new products and innovations
- Forecast new developments that could disrupt the industry.
This kind of insight helps business leaders to be educated on factors that can impact their businesses, ensuring robust, up-to-date bases for their decision-making.
The reason you need R&D
The success of a new product depends heavily on its impact on people’s needs. If it doesn’t add sufficient value, it’s not worth the investment. Because of this, your innovations must be in line with the legislative, economic, political, technological, environmental, and social requirements of the people you hope to sell them to.
How R&D has evolved
R&D ensures that your organisation stays viable and sustainable. You can approach it through organic growth, innovation, or a mix of the two.
However, in this new era of the Fourth Industrial Revolution and the Internet of Things, we’re seeing some significant changes to R&D spending. Because these days, people aren’t alone in their connection to the Internet – machines are there too.
In the future, the success of a product is likely to be determined by its ability to connect to the Internet; without that, it will become obsolete. Smart devices will also create new challenges for organisations, as they’ll require entirely new skills and approaches to business, if they are to grow and evolve.
Innovating through R&D
Innovation is not just supported by R&D; it’s also enhanced by it. It’s also affected by:
- Understanding consumer needs
- Your ability to innovate sustainably
- R&D partnerships that allow you to collaborate with others, so you can share the risks and costs of innovation, and speed up the various processes.
An open approach to R&D
One approach to R&D collaboration is through open innovation, where an organisation partners with another party. An initiative like this works well for technological advances, globalisation, and changes to comms technology.
A closed approach to R&D
The more traditional closed approach to R&D is where one company funds and contains the R&D initiatives. And it can be successful too, as long as the initiating company has well-defined and measurable input, throughput, and output.
R&D in an investment company
Sometimes the subsidiaries in a holding company experience poor communication, resulting in divided direction and unhealthy competition. Because R&D can be expensive and resource-heavy, an organisation-wide strategy must be implemented.
Then, when all stakeholders understand the potential ROI and the operational process involved in R&D, healthy competition and an educated understanding of customer needs can be maintained. This is, of course, the ‘win-win’.
R&D is essential to making relevant, strategic, and educated business decisions. And in our global economy, it’s a competitive advantage you can’t afford not to have.
3 Strategies To Implement A Culture Of Innovation In Your Business (Without Blowing Billions)
Learn to think differently, encourage your team to do the same, and innovative disruption could become a part of your company’s DNA.
You’re seeing it everywhere. Disruptive innovation is becoming the new norm, and you’re concerned that your business is merely going through the motions, missing opportunities.
How can you join the Elon Musks of the world, without the corresponding bulging budget?
It turns out that many of the techniques of today’s top innovators don’t require vast outlay. They’re simply about different ways of thinking.
Here are three strategies for enhancing the culture of innovation in your organisation without blowing billions.
1Use ‘Ignorance as strategy’
You’ve encountered the aphorism, ‘To a man with a hammer, everything looks like a nail.’ Similarly, to a banker, the only imaginable approach to banking is ‘the way banking has always been done’. When bankers try to think of innovative new ways of banking, they invariably think of greater complexity.
Along came PayPal
In the April 2016 edition of Harvard Business Review, Reid Hoffman, one of the founders of PayPal, said, ‘All the banking people knew the rules. That prevented them from trying anything that looked remotely like PayPal.’
PayPal was not invented by a bank, just as Uber was not invented by a taxi driver.
To make use of ‘ignorance as strategy,’ try this. Gather a group of strategic thinkers and set the rule: ‘The old way of doing it has been outlawed. How else might we serve the same need?’
Or: ‘We are now our competitors. We have half the budget, but our hearts and souls are invested in one purpose: To topple the original company. We can’t do it the way they do it. So how could we go about it?’
Or: ‘The company has burnt to the ground. We’ve lost everything. We need to keep serving our customers but we need a new, cheap, fast way to do it right now that doesn’t rely on any equipment or systems we used before. What have you got?’
2Use commander’s intent
Imagine: You’re a military commander. You need to move a convoy of trucks through a dangerous canyon. Your intelligence tells you that there is a sniper on one of the escarpments.
There are two ways you could issue an instruction to a soldier:
The first way: ‘Go take out that sniper.’
That’s very clear, and very good. But there’s something surprisingly important missing from it. The ‘why’ is not overtly stated, and for that reason, the mission could actually fail.
Let’s try it again the second way: ‘Go take out that sniper because we need to ensure safe passage through the canyon for our convoy.’
That may sound like a ridiculously obvious addition. Here is why it’s not: In a real, dynamic scenario, things change constantly.
Let’s say your soldier breaks off from the convoy and heads up into the mountains. Very quickly, three things go wrong:
- He can’t find the sniper
- Enemy forces start firing at him, making it difficult to look for the sniper
- His own weapon fails to fire so that he can’t shoot back.
If our soldier thinks only about the literal instruction — ‘shoot the sniper’ — he is now unable to carry it out. But if he bases his actions on the commander’s intention — ‘secure our convoy’ — other options open up to him.
He might draw their fire. He might set a bushfire. Or he might cause a commotion in a different canyon, disguising the movements of his convoy. He might, he might, he might… But only if he is absolutely clear on Commander’s Intent, and not working according to an explicit tasked item only.
Managers love to create detailed rules and procedures. But these can actually stifle innovation. Commander’s Intent is the life hack by which we get the upper hand again, freeing up leeway for creative potential.
3Instead of rules: Imaginative debate
Organisations accumulate rules over time. Problematically, rules can become a form of culture. And there is a better way.
When NASA faced two separate, well-known challenges, their culture at each stage was very different.
In 1970, Apollo 13 was two days into its mission when an explosion knocked out one of their oxygen tanks. The ensuing creative scramble to get the astronauts safely home is the stuff of legend. The creative trial and experimentation that went into rescuing them was formidable. New procedures were made up back on earth, then tested in the simulator, then relayed to the astronauts 200 000 miles away, almost in real-time.
Through this process of creative trial and experimentation, of collaborative inter-disciplinary debate, one by one the issues were resolved and the crew was brought home safely.
At this point in time, NASA’s culture was ruled by imaginative debate. It was an exploratory culture, an experimenting culture, a culture based on learning and evolution.
By contrast, at the time of the Columbia disaster of 2003, the culture of experimentation had given way to one of formalised rules, regimented procedures and rigid hierarchy. NASA had stopped being a learning organisation. It had become a bureaucracy instead.
As Columbia re-entered the earth’s atmosphere, a large piece of foam fell from the shuttle’s external tank and broke the wing of the spacecraft. The shuttle broke into pieces. NASA recovered 84 000 pieces from a debris field of over 2 000 square miles.
The investigation revealed some damning insights about the culture that led to the problem.
During a post-launch review, a group of engineers actually saw this foam dislodge from the rocket. They tried to pass on this information. NASA’s management, which by this stage liked to manage everything ‘by the rules’, had seen dislodged foam before, and, according to their institutionalised perceptions, deemed it to be unimportant.
The engineers tried to argue that it seemed like a lot more foam than usual. It was a qualitative argument, based on human insight and intelligence. But NASA was unable to listen. Dislodging foam was a known quantity, and the voices of dissenters went unheeded.
NASA by this stage was so bound in rules and procedures that, in important ways, it had ceased to be a learning, experimenting culture. And that made it incapable of hearing an idea, to its great detriment.
Imaginative debate allows situational awareness to pass up and down the chain of command. It promotes the opportunity to see innovation possibilities. It shows up problems that fall outside of the capacity of norms and guidelines.
The Israeli Defence Force uses an examination of these two cultures within NASA as a way of perpetuating a learning culture within its own organisation. In Start-Up Nation, Israeli air-force pilot Tal Keinan is quoted as saying that if NASA had stuck to their experimental culture, the way his own air force and military do, they would have identified and seriously debated the foam strikes at the daily debrief.
Debating everything isn’t tedious. It’s illuminating.
Putting rules in place of debate isn’t clarifying. It’s dulling.
Rigid rules enforced by unlearning authority are a recipe for real danger. The use of strenuous debate helps to overcome these blind spots.
Cultures of learning are far more idea-friendly than bureaucracies. And it costs nothing to become one. Merely a little willingness.
To Have An Innovative Company, Let Your Employees Take The Reins
‘In order to clean, they need to get messy,’ serial entrepreneur Justin Klosky tells Entrepreneur’s editor-in-chief Jason Feifer.
An innovative company starts with an innovative team. And what’s the best way to innovate? Give your employees the freedom to run with their own ideas, then manage the chaos later. At least that’s what Reid Hoffman believes.
“If you want your company to innovate, your job is to manage the chaos,” says the co-founder of LinkedIn, partner at VC firm Greylock and host of Masters of Scale, a podcast series examining counterintuitive theories to growing a company.
Hoffman’s theory doesn’t seem too far-fetched either. In fact, he’s not the only person who thinks giving employees the freedom to think and create on their own triggers innovation.
“When [people] have that ability to explore and innovate without the pressure of failing, you’re setting yourself up for a ‘win’ situation, because you’re going to get the best out of somebody,” Justin Klosky, founder of professional organizing company O.C.D. Experience, tells Entrepreneur’s editor-in-chief, Jason Feifer, in a video.
Although, when you’re empowering employees with this much freedom, you’ve got to be hiring people you trust. This can be easier said than done. Rather than dissecting a person’s resume, Klosky recommends digging deeper and asking prospective employees questions that will really open them up – anything from who they are, where they’re going and what brought them here.
After you’ve hired a group of honest, intelligent employees, now what? Don’t tell them how to innovate. Instead, let them figure that out on their own. Allow employees to do what they do best, return to you with their results and from there manage the chaos.
“In order to clean, they need to get messy,” says Klosky.
For more insights and advice about managing an innovative culture, check out the video.
This article was originally posted here on Entrepreneur.com.
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