Innovate or Fail

By: Paul E. Kimble

What is innovation? Survey 100 people and you might get 100 different answers.

Our closest star, the Sun, sits in the sky approximately 93 million miles from Earth. Light from the Sun takes 8 minutes to reach us. So, when you put on your sunglasses, you’re shielding your eyes from something that actually occurred in the past. Likewise, activities going on in your business today are the result of actions and decisions you made days, weeks or even months ago. Managing day-to-day is managing in the past. To stay ahead in today’s fast-paced world, entrepreneurs must innovate.

What is innovation? Survey 100 people and you might get 100 different answers. Type innovation into your favorite internet search engine and you’ll see hundreds of “hits.” According to Peter Drucker, in his book Innovation and Entrepreneurship, “Innovation is the specific instrument of entrepreneurship... the act that endows resources with a new capacity to create wealth.”

You might be thinking, “Sounds great; now how do I go about it?” Glad you asked. First, establish situational awareness. You must assess your own business, take a look at your competitors and determine where you stand in your industry. Do you have an established mechanism for listening to your customers? How do you communicate with your suppliers? Do you have a plan for growth? Have you put together an employee succession plan? Discovering the answers to these questions will help you determine where you are on your business journey. Second, establish a culture of entrepreneurship within your organization. Most often we think of an entrepreneur as someone who starts their own small business. However, many small businesses aren’t innovative at all; they are just copies of a tried and true formula. On the other hand, Starbucks revolutionized the way Americans bought coffee, even though coffee houses have been around since the 15th century. Entrepreneurship exists within some of the world’s largest companies, yet may be absent from a sandwich shop in the newest suburban strip mall. What makes a culture an innovative one? An innovative culture embraces failure. Innovation means doing something new, often resulting in failure. If employees fear retribution for failing, innovation never gets off the ground. Deploy innovation into your company’s performance review process. Have employees identify their own creativity goals and then measure their progress.

“Oh, no!” I can hear you saying. “We went through this empowerment phase back in the Nineties!” To assuage your fears of a TQM redux, let’s look at what innovation isn’t. Innovation isn’t just about an employee suggestion program; ideas must be translated into specific outcomes. Innovation isn’t about throwing new technology at a problem, either. Innovation manifests itself as an outcome, but also as the creative process that brings a new or improved product or service to market. Innovative business owners must discipline themselves to search the environment for new trends, technologies and changes in customer mindsets. When a market shifts, opportunities for a new product, service or approach present themselves. Innovators also examine their own business processes and look for opportunities to improve. People often work around a weak link in a process rather than find a way to fundamentally change it. Redesigning a process often leads to innovation.

You say, “This sounds complicated.” Let’s simplify things. Xerox’s Chief Technology Officer Sophie Vandebroek described innovation in an interview published in the July 27 issue of Fortune magazine. She said, “Innovation has two elements. No. 1, there is the creative piece, the "Aha!" moment. . . . A lot of what we do early on is dreaming and innovating with the customers. The second piece is the "intrapreneurial" role within Xerox, making sure that this creative idea goes through the whole value chain and becomes the right product for the customer.” Dreaming with customers sounds pretty easy, doesn’t it?

If you’re not inspired to become more innovative yet, consider this—research conducted by management consultant firm Arthur D. Little revealed that companies in the top 20% of Fortune magazine’s annual rankings of the most innovative companies produce double the shareholder returns of other companies in their sectors. By contrast, companies in the bottom 20% report shareholder returns that are less than one third of other companies in their sectors.

Bottom line: Innovate or fail!