Innovation a cornerstone for future business success

A start-up mindset, breaking down silos, collaboration and capital allocation are the bedrock of innovation.

Executive summary:

• Innovation is essential for modern businesses, requiring a start-up mindset and a focus on creating new or improved products and services.
• Large organisations can promote innovation by gaining board-level support, allocating dedicated funds, and establishing resource allocation frameworks.
• Collaboration and agile approaches are key to fostering innovation, breaking down silos, and successfully navigating the journey of change.

Agility and innovation have become indispensable parts of doing business in an increasingly connected world. Even though many organisations across industry sectors might be resistant to change, adopting the mindset of a start-up will be a core component of injecting these aspects into their business operations and remaining competitive.

But what does it mean for an organisation to be innovative? Simply put, innovation is the process of creating something new or improved that better serves a business. This can include a new product or service, a workflow improvement, or anything else that improves the business in a new way.

Of course, infusing a ‘start-up mentality’ into the vast, intricate systems of a legacy environment is not without its challenges. Historically, concepts like Lean Six Sigma and similar strategies offered solutions. For instance, many companies have been using Lean Six Sigma principles to improve customer profiling, optimise supply chains, and eliminate wasteful services.

However, a lot of innovation is happening in the back end without customers even realising it. This is where things like performing data analytics at scale to identify ways to optimise service offerings and even meet broader societal challenges such as driving financial inclusion (for financial services providers) or reducing emissions (for logistics companies looking to optimise route planning). A subtle change in a customer-facing app might be a monumental technological shift. Of course, there’s a balance to be had. Companies want to impress with innovations but not at the risk of alienating long-time customers who are slow movers when it comes to change.

Traditionally, many large organisations operated in silos. But innovation thrives on collaboration. Here's where the agile approach shines, promoting cross-departmental collaboration to solve problems swiftly and efficiently. By breaking tasks into manageable chunks and focusing on the immediate next steps, we can accomplish a lot even in the face of tight schedules.

Three steps to organisational innovation:

1. Garner board-level support:

This journey begins at the top. Board members must appreciate the value of innovation, even when most initiatives might not hit the mark. It requires a balance of ambition and acceptance of potential failure.

2. Dedicate funds to innovation:

Having a designated 'innovation fund' can have a profound impact. Such funds streamline the path from concept to a minimum viable product, allowing ideas to get off the ground without unnecessary bureaucracy.

3. Establish a framework for resource allocation:

Tap into various resources across your organisation. Encourage initiatives such as Google's approach, where employees dedicate a portion of their week to passion projects. Some of these ideas can turn into significant revenue streams. Employee incentive programmes can further stimulate innovative thinking. Whether it's a hefty prize for the best idea or a ‘Dragon’s Den’ approach, such incentives can fuel creativity.

Given the regulated environment in which many organisations operate, decision-makers should consider experimenting with emerging technologies in a ring-fenced environment, testing new products and features before gradually introducing them to the market. They also need to observe start-ups which aren't initially bound by rigid compliance requirements, learning from their freeform approach.