Use innovation to grow your business

Use innovation to grow your
business
The successful exploitation of new ideas is crucial
to a business being able to improve its processes,
bring new and improved products and services to
market, increase its efficiency and, most
importantly, improve its profitability .
Marketplaces - whether local, regional, national or
global - are becoming highly competitive.
Competition has increased as a result of wider
access to new technologies and the increased
trading and knowledge-sharing opportunities
offered by the Internet.
This guide explains how you can make innovation
a key business process and outlines the different
approaches you can take. It gives you advice on
planning for innovation and creating the right
business environment to develop your ideas. It also
outlines the help and support available to
innovative businesses.
The business case for innovation
Approaches to innovation
Planning innovation
Encourage innovation in your business
Funding innovation
The business case for innovation
It is important to be clear about the difference
between invention and innovation. Invention is a
new idea. Innovation is the commercial application
and successful exploitation of the idea.
Fundamentally, innovation means introducing
something new into your business. This could be:
improving or replacing business processes to
increase efficiency and productivity, or to enable
the business to extend the range or quality of
existing products and/or services
developing entirely new and improved products
and services - often to meet rapidly changing
customer or consumer demands or needs
adding value to existing products, services or
markets to differentiate the business from its
competitors and increase the perceived value to
the customers and markets
Innovation can mean a single major breakthrough –
e.g. a totally new product or service. However, it
can also be a series of small, incremental
changes.
Whatever form it takes, innovation is a creative
process . The ideas may come from:
inside the business, e.g. from employees,
managers or in-house research and development
work
outside the business, e.g. suppliers, customers,
media reports, market research published by
another organisation, or universities and other
sources of new technologies
Success comes from filtering those ideas,
identifying those that the business will focus on
and applying resources to exploit them.
Introducing innovation can help you to:
improve productivity
reduce costs
be more competitive
build the value of your brand
establish new partnerships and relationships
increase turnover and improve profitability
Businesses that fail to innovate run the risk of:
losing market share to competitors
falling productivity and efficiency
losing key staff
experiencing steadily reducing margins and
profit
going out of business
Approaches to innovation
Innovation in your business can mean introducing
new or improved products, services or processes.
Analyse the marketplace
There's no point considering innovation in a
vacuum. To move your business forward, study
your marketplace and understand how innovation
can add value to your customers. For more
information on analysing your marketplace, see the
page in this guide on planning innovation.
Identify opportunities for innovation
You can identify opportunities for innovation by
adapting your product or service to the way your
marketplace is changing. For example, if you're a
specialist hamburger manufacturer, you might
consider lowering the fat content in your burgers to
appeal to the health-conscious consumer.
You could also develop your business by
identifying a completely new product. For example,
you could start producing vegetarian as well as
meat burgers.
You could innovate by introducing new technology,
techniques or working practices - perhaps using
better processes to give a more consistent quality
of product.
If research shows people have less time to go to
the stores, you could overhaul your distribution
processes, offering customers a home-delivery
service, possibly tied in with online and telephone
ordering.
If your main competitor's products have a
reputation for being cheap and cheerful, rather than
trying to undercut them on price you could
innovate by revamping your marketing to
emphasise the quality of your merchandise - and
consider charging a premium for them.
Planning innovation
Some innovative ideas may just come to you out
of the blue. However, you should ideally have:
innovation as part of your business strategy
a strategic vision of how you want your
business to develop - if you dedicate your time
to monitoring trends in your business sector,
you can then focus your innovative efforts on
the most important areas.
Innovation will not only improve the chances of
your business surviving, but also help it to thrive
and drive increased profits. There are lots of
practical ways of assessing whether your ideas
have profit potential:
Assess the competition
Find out who your competitors are and where they
operate. Use the Internet and advertising sources
such as the Yellow Pages to find out about their
products, prices and operating culture. This can
give you an overview of their selling points, as well
as any areas you might be able to exploit.
For example, if the competition is focused on
value for money, you might want to emphasise the
quality of your product or service. Search for
business listings nationwide on the
YellowPages.ca or Canada411.ca websites.
Study market or industry trends
Awareness of the climate in which your business is
operating will help you to plan.
You can find a lot of information about your
industry on the Internet. Business and trade
magazines will also feature useful articles.
Build a relationship with your customers
It's not enough simply to know who your customer
base is. You need to communicate effectively with
them as well.
Communication involves not only listening to their
needs but also actively observing their behaviour
around current products and services and
generating ideas on how you can make
improvements.
Involve your suppliers and other business partners
Pooling your resources with your suppliers or other
business partners will help to produce and develop
creative ideas. Potential partnerships can also be
developed through business networking
opportunities.
Next, consider what taking a particular innovative
step could mean for your business. Ask yourself:
what impact it will have on your business
processes and practices
what extra training your staff may require
what extra resources you may need
how you'll finance the work
whether you'll be creating any intellectual
property that will need protecting
Finally, you should include your vision in your
business plan by:
putting down your goals, both long and short
term and detailing how you intend to achieve
them
linking goals to financial targets, such as
achieving a specific turnover by a set date
reviewing your plan regularly
Encourage innovation in your business
There are many sources you can use to help
generate new ideas for the business.
Suppliers, business partners and business network
contacts can all make valuable contributions to the
creative process, as well as providing support and
encouragement.
Your employees are also a vital asset in generating
innovative ideas.
To get the most from them, you need to create an
innovative environment and encourage creative
thinking.
Steps to promote innovation
Make sure you have processes and events to
capture ideas. For example, you could set up
suggestion boxes around the workplace or hold
regular workshops or occasional company away
days to brainstorm ideas.
Create a supportive atmosphere in which people
feel free to express their ideas without the risk
of criticism or ridicule.
Encourage risk taking and experimentation -
don't penalise people who try new ideas that
fail.
Promote openness between individuals and
teams. Good ideas and knowledge in one part
of your business should be shared with others.
Teamwork, newsletters and intranets can all help
your people share information and encourage
innovation.
Stress that people at all levels of the business
share responsibility for innovation, so everybody
feels involved in taking the business forward.
The fewer the layers of management or decision
making in your organisation, the more people
feel their ideas matter.
Reward innovation and celebrate success.
Appropriate incentives can play a significant role
in encouraging staff to think creatively.
Look for imagination and creativity when
recruiting new employees. Remember that
innovative thinkers aren't always those with the
most impressive list of qualifications.
Funding innovation
There are a number of ways you can fund your
growth through innovation, either by using your own
funds or tapping into external funding such as
loans or equity finance.
However, any route to external funding will need a
high-quality business plan that describes your
business and sets out detailed forecasts of where
it's going.
Businesses often turn to their banks for a line of
credit or loans for additional finance, depending on
their borrowing needs.
If you're willing to relinquish some control of your
business to external investors, you could consider
using equity finance. The two main routes for this
are investment from business angels and venture
capital firms:
Business angels are wealthy individuals who
invest in private companies, typically from
$30,000 to $500,000.
Venture capital firms provide higher levels of
investment in return for shares in the business.
Government programs
You may also wish to consider applying for a
government program. This will only usually cover
part of your project, but you will retain control of
the shares in your business. Consult Programs -
R&D and innovation .
Other sources of help
Small and medium-sized businesses can claim tax
refunds and credits on appropriate research and
development spending.
Original document, Use innovation to grow your
business, © Crown copyright 2009
Source: Business Link UK (now GOV.UK/Business )
Adapted for Québec by Info entrepreneurs..