Michael Meyer, Chief Risk Officer (CRO) and Chief Security Officer (CSO), MRS BPO, LLC
Think quick, what company comes to mind when you think of a company that embodies innovation? Did you think of Apple, Amazon, Google, Microsoft, Tesla or another technology company? Why do most people consider the large tech companies to be the most innovative? Is it because we can see the changes happening frequently each year with new product models they produce or is it their impact on our lives? Or could it be the number of patents granted recently? If it was the number of patents granted recently, then as an example in 2015, the top five companies receiving patents in order would be Samsung, IBM, Canon, LG Electronics, and Google. Were you surprised by how different our general perceptions are of who is the most innovative and who obtained the most patents? Interestingly the top five companies receiving patents has not changed much in recent years other than their order. So, what could be a better way to determine and define innovation? Moreover, why has innovation received so much attention and gained importance especially in the last few years? Let us explore further into this and find out why.
There is a wide variety of views about what innovation is, how it is defined, and the many ways innovation can be categorized. So, to make a bit simpler, I distilled the essence of these diverse and disparate views of innovation into the most common seven categories by combining them where it made sense to do so. The resulting categories are: Disruptive or Strategy based (for example replacing an existing product or service); New Product, Service, or Process; Business Model Change (for example changing to selling online only instead of in a store); Increased value (for example by making something more affordable or valuable); Increased product, service speed or ease of use (for example FedEx or Uber) Market creation or enhancement (e.g. like an iPad or Google Glass); Multiple changes or enhancement (e.g. to an existing product or service).
Most companies believe that if their innovative product or service falls into one or two of these categories then it is a true innovation and it will succeed in the market. I believe that for an innovation to succeed like the most innovative products and services of today, it needs to match or fall into at least three or more of these categories. Let us look at a few examples.
Most companies believe that if their innovative product or service falls into one or two of these categories then it is a true innovation and it will succeed in the market
First up, consider the Apple iPhone, it was disruptive because there wasn’t anything like it on the market, it was a new business model and service (Phone, Apps and App Store), it provided great value in time savings, it was very easy to use and it created a new market as well as strengthened the brand of Apple. Needless to say, it was a huge success! Next, let us look at Uber. It was disruptive because it uses technology to replace an existing business, it was a new business model, it provided significant time savings, it was straightforward to use, and it increased convenience and as a result created a huge market value for itself and its competitors.
Likewise, think about Amazon, Google, Microsoft, and Tesla, how many of the above categories of innovations did their (first) product or service fall into? They were all three or more. Steve Jobs said, “Innovation distinguishes between a leader and a follower” and “Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It is not about the money. It is about the people you have, how you are led, and how much you get it.”
Both of these quotes capture the essence of why innovation is so important (to any business) and then clearly articulate what Steve believed was necessary for innovation to take place. His innovative vision and attention to this process, is why Apple is often cited as one of the most innovative companies in the world. Furthermore, this innovative vision and process allowed Apple to set the technical standards and lead their industry. The competition tries to emulate and catch up to their products as soon as they can.
So how can you develop an innovative vision and process like these companies? First, you have to realize that ideas can come from any direction like customers, competitors, employees, vendors and so on. Second, you have to work with your management and staff to be able to surface and capture these ideas. Then a team needs to vet the list of ideas, prioritize them and assign small teams to see if the ideas make sense to become a reality. This ideation process could also be flipped around the opposite way. Instead of casting a wide net, you could take a known business problem and communicate it out to everyone you work with (partners included) to solicit ideas. Then vet the ideas, prioritize them and test them to see if they will work.
If you do conceptualize an idea for a unique innovation, that means others may have it too. So, the company that wins is the company or team that can translate this new idea into clear plans, execute it first and then keep iterating to make the developed innovation outstanding. Ideally, as a general rule, you want to test ideas out to see if they have merit, have them fail as early as possible in the process (when they are low cost), before they get too large and expensive. Innovation is important, because companies have realized that completion is intense and increasing, so innovation is the only way to survive.
Furthermore, what happens when companies stop or do not innovate? Eventually, they are replaced by other businesses that are either constantly or consistently innovating. Sometimes innovations appear out of nowhere like Uber or Apple’s iPhone to disrupt an industry that has not changed in decades. Sometimes innovation occurs more slowly, and everyone sees it coming even a decade or more in advance like with self-driving or electric vehicles or even reusable commercial space rockets.
In the end, as the old saying goes, “if you are not growing you are dying.”
So, to survive in the future—you need to innovate or acquire those who are…