In a world defined by an increasing pace of new business models and technologies disrupting 'business as usual', most industries have understood they need to prepare for change. They understand the need to implement an ever-running organisation-wide innovation process. Businesses that simply let go, risk oblivion and can only hope to be acquired by those who did innovate.
This is however easier said than done. If you're a successful high-gain major player in the market — the nr 1-2-3 — and your ongoing operation profits allow for innovation investment, a board-room decision to start spending on innovation will most probably do the trick. If you're a start-up/scale-up, you probably already received some additional VC investments explicitly towards exploring disruptive technologies and models. VC's certainly understand the power of disruption...
But what if you're a self-funded small-medium-size company with a hard-needed revenue stream, on which shareholders, employees and their families heavily rely to pay their bills? The same market rules apply so not innovating is not an option. But taking a major chunk out of hard-earned revenues to run innovation programmes and suddenly change current ongoing business operations isn't either! Your €5-10-15million monthly revenues are accounted for and business ought to deliver.
In supporting those companies for the last 20 years, here's what we’ve found to be the all-round best-practices, that don't require much funding.
Ideas cost nothing and conceptualising these ideas only requires little investment.
1. Innovation is an ongoing process, led by board and CEO.
Innovation touches the very foundations of a company's existence and should not simply be treated as a casual component of general operations. A constant stream of good ideas and initiatives from co-workers and outside industry experts needs responsive handling from a board- or CEO-led process. If this fails it will never gets the necessary attention throughout the company. This is true for SMB as much as for any other company, government institution or city.
2. Innovation should be budgeted against clear goals.
Innovation starts with good intentions to change and meet a potential-yet-unknown future. These good intentions start becoming actionable when a clear plan is agreed on within well-defined time- and budget-constraints. A separate entry on the company's P&L, as an investment for achieving future-monetizable objectives, we have found provisioning the annual cost of 1 FTE per 100 employees to be generally accepted to fund all innovation efforts during a year.
3. Take innovation out of the daily routine.
Lots of companies think of innovation as introducing little steps, little adoptions to a process. Sometimes introducing a new software tool, with the mere goal to actually improve what already exists.
While there's merit to iterate, and iterate fast, iteration is not the same as innovation. True innovation comes from looking 'outside-in'. From taking transactional and contextual factors related to one's business and implementing the best possible process to run a new business model. Which is sometimes an extension to the current one...but more often, it's not!
It is imperative that innovation initiatives are being conducted out-side the normal business environment, free from habits, chain of command, internal politics… Some companies even make the bold choice of creating a separate organisational entity to avoid the latter, where stakeholders from every part and level of the company reside in.
4. Stress-test innovation with pilot projects.
Innovation can become a budgetary hazard, if not handled through a correct process. Ideas cost nothing and conceptualising these ideas only requires little investment. But planning a full roll-out into production is a very costly endeavour, organisational structures might change with potential new competences that run whole new operations.
One should plan to stress-test ideas and concepts against assumptions made. You have to run real-life pilot projects to understand, measure and iterate any aspect of the project, before you consider to bring it into production.
5. Innovate (and fail) fast and iterate quickly.
Not so long ago, nothing in a company would happen if not cautiously planned beforehand. The reason was the aforementioned cost, and that was as valid for innovation initiatives as it was for anything else.
The cost of innovation has however dropped dramatically, thanks to the rise of general computer development platforms, cheaper simulation systems, affordable market surveys, etc. A new lean/agile methodology has come into play, one where various iterations of new business models are created and immediately stress-tested against a real market situation.
Whether seeking to maintain relevance, to enter new markets or even to provide new offerings, re-innovating oneself should be a constant exercise led by CEO and board. A good innovation partner, that works as an extension to your management committee, will make necessary recommendations and arrangements to that end. He will set proper goals to measure progress. If you take these steps, embrace innovation as part of your ongoing business, out-side your business-as-usual, you will get the best budget-efficient actionable results...