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Seven views on innovation - Building a culture of innovation, Enrique Beltranena - EY - Global

Seven views on innovation

Building a culture of innovation

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This interview provides more information on the topics discussed in our report Innovating for the next three billion: the rise of the global middle class — and how to capitalize on it.

Founded in 2005, the low-cost airline Volaris has taken a highly innovative approach to air travel in Mexico. Primarily aimed at lower-income passengers, Volaris has captured a 14% share of the domestic market and is now the second-largest airline in Mexico. Here, Enrique Beltranena, CEO of Volaris, discusses the importance of building a culture of innovation.

What would you say are some of the important points for companies to consider when innovating in rapid-growth markets?

One of the most important things is to make sure that you adapt your systems within the company so that they are appropriate for these opportunities. You often can’t simply transfer processes and systems from developed economies and expect them to work in an environment where levels of affordability are lower. This is also true of some of the big software applications. These are built with developed markets in mind and are therefore very far away from what you need to innovate and implement strategies in rapid-growth markets.

In what ways do companies need to think differently about creating products and services for this market?

When companies in developed markets think about innovation, they typically focus on sophistication and on adding features. But this is not the approach you need in rapid-growth markets. Rather than consider how to make services more complex or sophisticated, we need to work out how to make them more simple. This is a very different mindset and requires different skills from marketing and product development teams. In our business, we have focused on how to sell a ticket to get people from A to B in the simplest way possible. That requires innovation, but it is a different approach to the one that many companies in developed markets are accustomed to.

How do you maintain an entrepreneurial culture in your business as it grows?

This is a huge challenge for any company. As the business grows and becomes more established, you inevitably add more procedures and the danger is that you create a bureaucracy that slows down innovation. It’s important to offset this more institutionalized structure by creating a culture of innovation where people have the opportunity to discuss ideas with senior management. At Volaris, for example, we have put in place incentives that encourage our employees from any part of the business to put forward new ideas. Legacy carriers used to give their employees free tickets for air travel; at Volaris, people earn them by putting forward innovative or entrepreneurial ideas. If someone comes up with an idea that we want to take forward, we put them in something that we call a development group. That group has a specific sponsor from me and from the board, which helps the idea come to fruition.

How important is it for companies to learn from their mistakes?

It is vital. We often find that some of our most innovative ideas emerge from challenges or failures that we have faced in the past. When something goes wrong, we conduct what we call a "forensic meeting" to discuss how the problem occurred, and how we can resolve it. Often, these discussions lead to new ideas and enable us to transform failure into success.

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