Innovative businesses create and develop new products, services, business models or processes that drive company growth. Firms that invest in innovation and embed it at the heart of their operations can improve competitiveness, enhance efficiencies, boost staff retention and increase sales.
Innovation is not without its challenges, though.
It requires buy-in and engagement from stakeholders across the business, which can take time to achieve.
True innovation usually requires extra time and effort. It’s easy for managers and other employees not to feel incentivised or empowered to make decisions, explore new ideas and deliver innovative projects. They might be wary of taking risks and committing budgets to activities that don’t immediately have a positive impact on the business.
More simply, staff might not have the data for why innovation is needed in the first place or lack an understanding of the bigger picture and how it fits into the business’ long term goals.
Why do businesses need an innovation mindset?
Innovation can have many business benefits, including:
- Improved competitiveness: Innovation in your products, services or operations can help you stand out among your competitors and attract more sales.
Research by Nesta found that innovative businesses grow twice as fast compared to businesses that do not innovate. A survey by Lab42 found that 84% of consumers say it is somewhat or very important that the company they buy products from is innovative, and 83% would pay more for innovative electronics products.
- Better staff retention: A company culture that embraces the sharing of new ideas helps to engage employees, improve staff morale and enhance job satisfaction. This means they are more likely to stay working for your business.
- Better efficiency and productivity: Improving processes and adopting new technology can lead to better efficiency and productivity. Government research in 2021 found that businesses that consistently invest in research and development are 13% more productive than firms that do not invest in R&D.
Innovation mindset case study: 3M
Multinational technology, consumer goods and healthcare products company 3M is an example of an organisation that has an innovation mindset embedded across the organisation.
Through the company’s ‘15% Culture’, employees can spend 15% of their time experimenting and thinking about new ideas that interest them outside of the day-to-day work.
The origins of this approach date back to 1914 when 3M general manager William McKnight promoted a philosophy of “Listen to anybody with an idea”. By 1948, McKnight was president of the company, and he established the McKnight Management Principles, which 3M still follows today.
McKnight said:
“As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way.
“Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious as the mistakes management will make if it undertakes to tell those in authority exactly how they have to do their jobs.
“Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have people with initiative if we are to continue to grow.”
The 15% Culture has led to the creation of 3M products, including Post-It Notes, Scotch Tape and an electronic stethoscope.
What do businesses need to consider for successful innovation?
There are several factors you should consider for innovation projects:
Know what you want to achieve and think long term
You should go into innovation with a strategy and know what you want to achieve. It should be linked to your businesses’ overall mission, goals and values.
Innovation isn’t just about quick wins; you should also think more long term. As well as focusing on short term improvements to your business, consider what innovations are likely to be needed to address the challenges and opportunities your business may face in the future to achieve its mission.
One way to do this is by following the Three Horizons framework, a model published in 2000 by McKinsey consultants Mehrdad Baghai, Stephen Coley, and David White in their book, The Alchemy of Growth.
The authors argue that the greatest enterprises survive due to continuous and sustained growth. Businesses, they say, should simultaneously focus on three ‘horizons’ so that future growth opportunities are considered and not missed, while at the same ensuring that current operations are not neglected.
The Three Horizons are:
Horizon 1: This stage is about maintaining and improving your core business over the next one to three years. It covers short term actions such as boosting cash flow, enhancing processes, improving customer experience and making product fixes.
Horizon 2: These are projects and initiatives that could grow your business over the next two to five years. It could be ideas such as new products or services, launching into new markets and collaboration with other businesses.
Horizon 3: This is about long term growth opportunities that could transform your businesses over the next five - 12 years. Activities could include long term research programmes, acquiring other businesses and disruptive new business models.
Get buy-in
Innovation is most successful when there is buy-in from all levels of the organisation.
Your innovation strategy and why you’re doing it should be clear and understandable to all.
Develop an open and honest company culture that embraces the sharing and discussion of new ideas.
Dedicate time to innovation
If innovation isn’t part of the working week, it can easily be sidelined.
Employees should be given time to consider new ideas. Embedding it in the culture of the organisation, like 3M’s 15% initiative, is a significant way to do that, but it can also be done with regular team days out and brainstorming meetings.
Other methods are suggestion boxes or a new ideas section on digital tools like Teams and Slack.
Collaboration is important, too. Employees from different departments should be encouraged to interact. This could be done via job swaps and informal discussions where groups come together.
New ideas should be acknowledged with timely feedback provided. If the ideas are going to be adopted, an implementation plan should be created and communicated.
Don’t be afraid to reject ideas, but do so politely and constructively. An idea on its own may not be strong enough to be implemented, but it could be effective when combined with another idea.
Embrace open innovation
Innovation traditionally followed a silo mentality, with businesses keen to keep their ideas secret for fear of being copied. However, in the 21st century, the concept of open innovation, the process of sourcing ideas and solutions from outside an organisation, has grown in popularity.
Benefits of open innovation include:
- More opportunities to develop ideas including those that the business might not otherwise have come up with.
- Lower costs as collaboration with other organisations can reduce the need to employ your own expensive experts.
- Attract customers and investors by encouraging your community to suggest ideas and widening your network to build connections with influential people.
For more advice on open innovation, read this guide.
What types of innovation initiatives can businesses implement?
There are a multitude of innovation initiatives that businesses can implement, including partnerships with other businesses, giving employees time to develop their own ideas and creating community platforms for gathering feedback.
Here are three examples of real world business innovation:
Northumbrian Water
Northumbrian Water is a leading company in the utilities sector regarding corporate innovation. It has created a deeply rooted and highly impactful innovation culture that encourages internal and external collaboration.
Since 2017, Northumbrian Water has run the Innovation Festival. Individuals worldwide attend the event to discuss ideas on tackling challenges, including climate change, cyber security and water scarcity.
One of the projects that started as an idea at the Innovation Festival is the National Underground Asset Register. Adopted by the UK government, it accurately shows the complex system of pipes and cables to help avoid disruption and injury due to accidental utility strikes.
LEGO Ideas
LEGO Ideas is a platform for fans of the plastic bricks brand to share creations, enter competitions, submit proposals for new LEGO sets and vote on models built by fellow customers.
Several fan ideas, such as a LEGO set of the characters from the TV show The Big Bang Theory, have gone on to be developed as an official product.
Samsung
Mobile device manufacturer Samsung has an extensive range of activities aimed at inspiring innovation both inside the company and externally.
Samsung C-Lab provides employees with support and funding to create their businesses. They are permitted to take time away from their job to focus 100% on their start-up, which can result in a new product or service being further developed by Samsung.
Samsung also has several initiatives supporting external innovation that could benefit its own business. Examples are Samsung Mobile Advance, an accelerator providing grants and mentoring to start-ups developing technologies related to mobile devices, and Solve for Tomorrow, a scheme that supports 16-25 year olds in the UK with ideas for solving global challenges.
Finally, the business has an investment arm which directly invests in other firms and a strategy for acquiring innovative companies, such as the Internet of Things platform SmartThings, which it acquired in 2014.
If you’re looking for space to innovate or want to connect with exciting innovators at the leading edge of their industries, book a tour of a Plus X Innovation hub in London, Slough, or Brighton.
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