The Importance of Innovation

 

Innovation is critical to business success and usually goes hand in hand with growth, scalability and profitability.

But whilst growth is often the emphasis of both business leaders and support programmes, innovation rarely attracts as much attention and is a much misunderstood term.

The reality is that innovation is all around us, but people tend to think mainly about those big companies that are creating products which we use on a daily basis. Markets leaders such as Apple, Uber, Dyson and Tesla have created amazing products and trillions of pounds of value over the decades but arguably innovation is just as valuable and important for small businesses.

So what is innovation? A commonly used definition is as follows:

‘The successful exploitation of a new product, service or process, organization or business model, which is new to a company, new to a market or new to the world’.

The good news from adopting such a broad definition of innovation is that almost every business owner will be able to provide a positive answer when asked if they are an innovative business, but some businesses are clearly far more innovative than others.

In almost every business both managers and frontline staff are innovating all the time as they find ways to improve products or services or solve problems associated with the creation or delivery of those services. Some people innovate naturally based on intellect and initiative whilst others have to be nudged towards innovation, but in all cases innovation needs to be nurtured and supported if it is to thrive.

The most innovative companies have baked innovation into their recipe so that innovation oozes from all aspect of business operations, from top to bottom within the organization. Toyota is a good example of a business where even relatively junior staff are encouraged to take the initiative to change manufacturing processes, and not as a one off exercise, but as a part of their day to day operations. Examples like Toyota show how important culture is to ongoing innovation, and how management structures need to actively support innovation rather than stifle it.

COVID is a great example of how many companies can very rapidly innovate when required, in this case in response to a completely unexpected and unprecedented economic and environmental situation. At the start of the COVID pandemic who would have thought most staff would be forced to work from home, people would be working and socializing through the medium of Zoom, and international pharmaceutical companies would be able to develop, test and deploy brand new vaccines in months instead of the years usually required for drug development?

So if businesses big and small can innovate rapidly in an emergency, what lessons can we draw to encourage innovation in our day to day working lives? Whilst every business is different, the following tips should help business owners to sow the seeds for innovation.

Innovation Tips for SMEs

  1. Understand the connection between innovation and growth and prioritise innovation within the business:
  • Start thinking / talking about innovation in your meetings
  • Explain what innovation is and make sure everyone is aware of the importance of innovation
  • Adopt an innovation mindset, accept the need for constant change and drive it
  • Recognize and reward existing innovation successes, big and small, and identify areas with need / potential for greater innovation
  1. Link innovation to your strategic goals:
  • Identify what success looks like – what are you trying to achieve?
  • Understand where innovation fits into the big picture
  • Develop a stretchy goal, ‘by the end of 2025 I want to have turnover of ….’
  • Map it out in terms of the key metrics of sales, profitability, people and resources
  • Understand areas that growth will come from – will existing products and services allow you to hit your hit your targets or are new products and services required?
  • Identify the areas where you need to improve and where innovation is required
  • Identify milestones including key innovations

 

  1. Identify what needs to change to achieve your strategic goals – new products, services, systems, processes or business model – and identify the key enablers:

 

  • Will it involve new technology?
  • Will it involve new skills?
  • Will it involve new people?
  • Will it involve new machinery?
  • Will it involve additional finance?
  • Will it involve grants?
  • Will it involve external investors?
  • Will it involve strategic partners?
  • Will it involve additional resources?
  • Will it involve bigger, smaller or different premises?
  • Will it involve new projects?
  • Will it involve academic partners?
  • Will it involve IP?
  • Will it involve R&D and R&D tax credits?
  • Will it involve new markets?
  • Will it involve new routes to market?
  • Will it involve exports?
  • Will it involve new supply chains?

 

  1. Identify the obstacles that will prevent innovation in terms of knowledge, people, cash and time, and resources and work proactively to remove them:

 

  • Develop a plan to overcome those obstacles – develop your strategy – and remember KISS (Keep It Simple Stupid)
  • Seek external support from your local Growth Hub and innovation coaching/new market advice from Innovate UK EDGE as well as international trade advice from the Department for International Trade
  • Maintain focus and pick your battles, prioritise and manage your time
  • Get the balance right between working ON the business and working IN the business

If you have an accountant, they should be your first stop for business advice. If you don’t have an accountant or they can’t help, BuBul has a wide range of experts available. For more advice on innovation, contact our expert* Simon on LinkedIn.

*We’ve picked experts we know and trust who are good at what they do. All of them will give you at least an extra 30 minutes free advice if you contact them and would then charge their normal prices. They don’t pay to be on BuBul and don’t give us any money from anything they earn as an expert.