Many companies refer to themselves as offering new and innovative services. However, the problem is that most businesses are not built or designed for innovation. In most cases, the focus of a business (rightly) is to focus on making profits and so it is incumbent upon it to find the least cost method of making sales and deliveries to clients.
The most common problem with innovation is that the metrics are difficult. For instance, just as soon as you start, and sometimes before, the forecast for Return On Investment (ROI) is typically negative. Especially if you are innovating in a new area that your business operates within.
It is difficult as you are most likely to compare against a known known that has already been pared to the bone. There are also political issues. In small companies, it is often harder as we can look at innovation as a process that reduces earnings in real terms.
For these reasons most innovations come from new entrants, businesses that are driven by passion, and as a result this makes innovation look cheap. The flip side, if you consider all the money spent on business incubation, is that innovation can look expensive as few win through. Either way, it’s not an especially good look.
There’s a lot more running against innovation too.
Yet the real world constantly revolves, client needs change and competitors arrive, market share reduces and eventually the business that was is no longer. This is so well known and expected it is defined and depicted in business as a bell curve. A curve that many know too well. The classic curve is to incline, followed by a peak and potential flattening then a decline.
In spite of this, the fascinating truth is that most companies pay people to make sure that costs are trimmed and this stops innovation, even though companies might state the opposite, the truth lies in what they actually do.
There is a solution and it is in insurance. The whole idea of insurance is that you pay a fee to provide cover in case of an emergency. Yet all the while you pay for the cover the best result is that there is never a claim and at the end of the year the money is lost and written off as sensible security against adverse loss.
Innovation should be seen in the same light. Except with innovation, there can be a range of upside opportunities. When mastered, innovation works more like a saving scheme than insurance. In other words, you pay money in, a little over time, continuously. You choose the amount and every now and again you review progress and decide to spend more or simply continue at the same rate. At some point, good results can occur.
The result may prove that a certain direction is not worth pursuing – and that can be huge. The process should lead to deeper customer relationships. Experimental results can be amplified and play well in a number of areas. Over time, substantial or incremental breakthroughs will add to the longevity of your business area. Your leadership credentials will improve and new found differential will ultimately lead to richer and longer lasting successes.