“Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.” – Peter Drucker (Writer & Consultant)
Without innovation, businesses would lack the opportunity to survive, grow, create wealth, and influence the direction of their industry. Therefore, innovation serves as a powerful weapon in competitive markets enabling companies to not only take on a leadership position that favors them most but also put their mark on the evolution of businesses worldwide.
Please note that this is much easier said than done. Although organizations could gain a leadership position momentarily, to consistently maintain it is much more difficult to achieve. Plus, no business should expect to release an innovation expecting the market to reward them with sustained growth and success. Instead, companies must follow up with a series of radical innovations capable of leading the marketplace.
To me, many entrepreneurs don’t realize that how they innovate will determine what they innovate. Rather than leave the success of their innovations to luck, executives must use a combination of effective strategies based on fundamental rules.
With this in mind, I would like to share with you the interdependent rules of innovation that’ll help you redefine your industry:
Rule # 1 – Strong Leadership
Innovative companies have strong leadership – period. To illustrate, just look at Apple and how Steve Jobs turned the company around when he returned with creative innovations, such as the iPhone and iPad, that changed our world. When Jobs passed, Apple seems to be taking a turn for the worse under the leadership of Tim Cook and their latest two iPhone 5 (C+S) releases yesterday failed to entice the marketplace, thus causing stock prices to tumble ~5.8%. Therefore, it’s imperative that your organization exerts strong leadership on innovation strategies, including portfolio decisions. Remember, clear directions from the top of the organization permeates throughout the firm to motivate, support, and reward the innovation.
Rule # 2 – Integrating Innovation Into Business Models
Successful organizations incorporate innovation into their mindset and business models. These entities live and breathe innovation and ensures that its an integral part of the way a company operates daily. By incorporating innovation into business models, including research and development (R&D) and new product development, entrepreneurs will increase their odds of innovative success for years to come. Remember the adage..out of sight, out of mind? Well, it’s true so keep innovation in sight at all times while working to achieve organizational goals and objectives!
Rule # 3 – Determine Innovation Required For Your Business
Every business must determine the amount, including type, of innovation required for achieving the firm’s mission and vision. While innovation is the foundation of long-term success, it’s not necessarily required at all times depending on the competition, market situation, product-life-cycle (PLC), timing of last innovation, and business strategy. Keep in mind that more innovation is not necessarily better. Therefore, entrepreneurs must determine the amount and type of innovation required that aligns with their overall business strategies and resources.
Rule # 4 – Balance Creativity With Value
To be successful, companies must be creative while delivering value. This means developing creative innovations that provides value to stakeholders continuously. The more creative and beneficial the product or service is, the better it’ll do in the marketplace. So how do you balance between the natural tension of creativity and value? Remember that too much emphasis on value could stifle the creative process and vice versa. You start by developing a balanced and structured creative process capable of determining which managerial practices act as a creative stimulus and which practices hinders it. Once determined, you could use those management practices to design creative products and services filled with value.
Rule # 5 – Neutralize Threats
Entrepreneurs must also be aware of the numerous threats facing an organization’s innovation abilities. Here’s a list of some of the common threats to innovation that must be neutralized and addressed:
- Senior management that’s complacent and resistance to change.
- Opposition from others because it’s a radical innovation that goes against the status quo.
- Organizational culture lacking the courage to change, explore, and innovate because of the leadership at the company.
As we’re aware, innovation necessitates change. Therefore, companies must not only neutralize threats but also foster an innovation-friendly organizational culture that continually questions assumptions, along with looking for alternatives to improving the overall business.
Rule # 6 – Build Networks
One of the main foundation of innovation is networking with people inside and outside of the organization. By doing so, not only would you gain a network of crucial knowledge for continuous improvements but also strong partnerships that could help you achieve your innovations. For example, employees could help you improve business models; customer feedback could help you improve products or services offered; other businesses could help you innovate and streamline your business and distribution channels. Remember, successful organizations are very effective at building networks and using a vast array of resources to achieve capital gains, goals, and objectives. You don’t have to take my word for it…just look at all the acquisitions and mergers lately!
Rule # 7 – Setup Metrics & Rewards System For Innovations
To ensure innovation success, organizations must also incorporate systems that properly measure, motivate, and reward creative individuals. Whether positive or negative, everyone reacts to stimuli and your organization’s innovation is no exception. In essence, you’ll never reach your innovative goals if people are not properly rewarded for their efforts.
So do your best to create a carefully designed system that not only measures the success of innovations but also rewards innovators with incentives for their hard work. Failure to do so would ultimately result in a discouraging environment lacking motivation, innovation, and a structured process for guiding the development of ideas and concepts.
So why did I list strong leadership as Rule # 1 while listing metrics and rewards as the last rule for innovation? The answer is simple. Innovation requires change and that starts with the leadership of the organization. As for metrics and rewards, it’s listed last because it helps to close the cycle, measure innovation results, and provides motivation to the remaining rules.
In the end, Steve Jobs summed it up best when he stated “innovation distinguishes between a leader and a follower.” By embracing innovation and incorporating it into the firm’s mindset and overall business strategy, organizations could not only become a leader and redefine their industry but also create new ones where the rules are in their favor. Although the innovation process is unique to each company, what remains constant are the 7 rules listed above. So follow these guidelines to become a leader in your industry and begin innovating today!