Innovation 2.0 – a spiral approach to business innovation
(As originally published in the Financial Post, January 2013)
By Rob Jolley, Partner, Assurance, and Prairies Director, Entrepreneur Of The Year program, Ernst & Young LLP
Mention the word "innovation" and most people think of extraordinary inventions created by solitary geniuses. However, the majority of business innovations today are quite the opposite. The companies that generate them thrive on collaboration, a free exchange of ideas and regular interactions with customers and other stakeholders. They innovate not necessarily to revolutionize their industry but to meet specific objectives and carve out a competitive edge.
Innovation is a way of life for leading entrepreneurs. It’s what sparked Dr. Alan Ulsifer of FYidoctors and it continues to play a key role in the company’s success today.
A recent Ernst & Young report, Innovating for growth, finds that leading innovators take advantage of changes in their external environment, continually revamp their business models and innovate with an end goal in mind. More than anything, it takes a long-term view.
And perhaps even more important is that innovative companies don’t outsource this function to a department or committee. And they don’t hastily come up with an innovation plan when the corporate strategy calls for it. For them innovation is a way of life. It is what they do.
For the most innovative companies today, innovation isn’t a linear process. Rather, it’s a continuous cycle with ups and downs, inputs from different places, repetitions, failures, and many steps back and forth. We call this a "spiral approach". This loosely structured, circular process allows companies to connect with the various points of the spiral in different ways and at different times, ultimately reaching an innovative breakthrough.
By adopting this approach, innovative companies are able to:
In a global economy, a major setback on progress is being overly protective of your business, when in fact business leaders should be focused on collaboration. Innovation leaders can further economic progress by collaborating with a broader group of peers, including consumers, suppliers and competitors, leading to further innovation in business models.
This also includes building the right mindset and culture. The right leadership mindset leads to an organizational culture that nurtures, guides and supports innovative thinking and practices. Essential elements of this kind of culture include leadership support, collaboration through social networks, cultural diversity, mobility and leading-edge key performance indicators.
- Take advantage of changes in the external environment. Business conditions may not be favorable, but if your company is truly innovative, you will be able to turn a challenging situation to your advantage. Be adaptable. Seize converging opportunities. Turn regulation to your advantage. Look for a universal customer base.
- Continually revamp their business models to achieve competitive advantage. Companies that alter their business model are more likely to achieve a sustainable competitive advantage. Today’s most innovative companies have changed their business models from a set focus on geographies, local markets and products to a dynamic focus on customer experiences, value generation and problem-solving.
- Innovate to achieve specific business outcomes.
Innovative companies are focusing on competitive advantages to achieve five business outcomes including profitable growth, customer engagement, business sustainability, productivity and business agility.
Three steps towards innovation
It's difficult to be innovative in a world where competition comes at you from all sides.
Companies from emerging markets are coming up with breakthrough products and services all the time. Size is no longer important as small players grab market share in niche areas.
Engaged customers, aided by social media, are changing traditional research and development. Yet the spiral approach is a robust process for innovation that can provide both flexibility and structure for companies of all types.
Our research found that these three tactics are essential for the spiral approach to work, as they help companies quickly progress from generating ideas to implementing them:
- Get ideas from everywhere. Having as many ideas as possible, no matter where they are from, is a critical ingredient to thinking.
- Learn to fail. The best way to be innovative is to experiment which may result in failure. However, if you learn from your failures, you can get quick feedback and improve.
- Go to market even if you are not ready. It’s easy to come up with new ideas and become obsessed with perfecting them. Sometimes you have to take a risk and get your products to market quickly, even if it’s not 100% complete.
Leading entrepreneurs possess an unparalleled drive and determination in the face of extreme adversity — and Dr. Alan Ulsifer is no exception. His innovative vision of merging practices and integrating health care, retail and manufacturing into a single entity — the first of its kind in the country — transformed Canada’s optometry industry. FYidoctors now spans 102 locations across Canada.
For entrepreneurs, innovation is about creating something new. Building a better mousetrap or building a new mousetrap. Entrepreneurs jump off the building and figure out how to build the parachute on the way down. It’s about finding a niche and filling it. It’s building something big on a good idea. Or it’s filling a need that people didn’t realize they needed.
Making these strategies integral to your company sets the stage for an innovation-based approach to business. Our research has shown that standout performers thrive in hard times, mastering a volatile environment by focusing on the drivers of competitive success. Innovating with these drivers can set your business firmly on the path to growth.