Innovation: what choices help you as a business?
Whether or not to innovate is not a choice; organisations that do not innovate cannot justify their existence. How and when you innovate in your business is a choice, however.
You can make decisions about how and when you innovate in your business.
- Do you make small alterations to what you already have?
- Or are you going to go in a totally different direction?
And there are also various options for the time when you set that innovation in motion.
Gijs van Wulfen is a professional speaker and renowned author in the field of innovation. This year, his book ‘The Innovation Maze’ was voted best management book of the year. In this book he cites two significant occasions when a great deal of innovation takes place.
- When a product, brand or organisation is still in the growth phase. the Growth phase.
- When a product, brand or organisation is in decline. the Decline phase.
In the first situation, the growth phase, a company’s reasoning is based on the concept: “I want to innovate”. During the decline phase, your reasoning is more along the lines of: “I need to innovate”. There is something to be said for both routes, as both occasions are used a great deal to innovate as a business.
Innovation during the decline phase
The pressure is on during the decline phase. If your idea for arresting the decline of your business is not succeeding, you have to develop something new very quickly. Along with this need-t0-innovate approach come greater risks. What you often see is that innovation during this phase leads to incremental innovation. Small alterations to current products and services are the preferred option. In most cases, companies would rather play safe and don’t go for major, ground breaking innovation which is very different.
You can see an example of this incremental innovation in the sugary, soft drinks market Coca Cola realises that there is increasing demand for a healthier alternative to sugar, and with Coca Cola Zero they launched a variant of an existing product onto the market. This is just about enough to reverse the decline. But this approach is not always enough to guarantee your organisation’s existence is justified.
Innovation during the growth phase
Many businesses therefore give preference to innovation during the growth phase. This is however the most difficult variant. Because you are already experiencing growth, you are usually busy with many other things. You come up against growing pains. There’s a lot going on and you are constantly having to adapt and refine your business. But it is also a safe route. Because each time you can grow ‘on top of’.
Imagine you have a product which is experiencing growth. In the meantime you launch a new product, which also achieves that growth. In this way, you are creating growth on top of growth (exponential growth). Many organisations realise that it is difficult to innovate during the growth phase. That’s why they make the conscious choice to allow that growth to come from a business unit, an arm within the company, which is separate from the rest of it.
Google has such a department, as does Facebook. Major successful companies such as Unilever and P&G also use such separate departments which perform that role. Naturally, this is not without good reason. They realise that it is difficult to grow within the organisation. So they set up a team which has all the freedom and scope to experiment and do new things. They ensure that in your innovation, you are not restricted by the rest of your organisation.
The smart thermostat Toon is a nice example of ‘want to innovate’. Energy supplier Eneco saw that the energy sector was undergoing change and as a result and chose a new direction with Toon. To achieve this, Eneco worked in partnership with technology company Quby. Opportunities to innovate also sometimes lie outside your own product portfolio.
Businesses which adopt this approach to innovation in the growth phase structurally are more successful. It delivers more for them. In order to grow at this stage, you also have to look further ahead. You have just thought of something new and already during that product’s growth phase, you have to come up with something else new. If you want to look so far ahead, you need a good understanding of the future: Foresight.
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