Why Innovation is More Important for Growth than Ever Before
Make no mistake about it. Innovation has always been critical for business growth and moving society forward. Yet no company that achieves success can retain that success indefinitely.
Our highly competitive marketplace, uncertain business environment, the rise of impact investors and the global entrepreneurial movement are just a few of the factors that indicate innovation is more essential for growth than ever before. And companies that use innovation to develop new markets, outperform competitors and enhance the prospect and customer experience are better at responding to change, opportunity and challenge. They not only survive; they thrive.
Here are just a few business reasons innovation matters so much:
Innovation Increases Business Value: An innovative business far more attractive to shareholders, mergers and acquisitions. The ability to successfully attract capital and buyers can be greatly enhanced by making innovation core to how a company operates.
Innovation Increases Workforce ROI: A company’s most valuable assets are often its employees. A culture of innovation inspires the workforce to create, invent and develop better products, processes and systems, as well as teaches them how do things differently more quickly when needed. An engaged workforce practiced at pivoting enables the company to profit much more from the capital it invests in talent attraction and retention and, of course, payroll.
Innovation Combats Disrupters: Successfully responding to industry disrupters is fundamental to growth. Increasing market share, gaining new markets, extending the product lifecycle and other growth strategies rely on a company’s ability to compete during times of disruption and turmoil – and, to do so, a company needs to have innovation in its DNA. When business growth occurs as a result of scrambling rather than strategy in the face of change, it’s called luck.
Innovation Increases Profitability and Sustainability: An innovative company is, by its very definition, consistently breaking new ground and, in the process, increases ROI, productivity, efficiency and therefore its ability to sustain itself even as conditions change.
Unfortunately, many companies only pay lip service to innovation. They want to innovate, the leadership team considers new possibilities and they may even encourage their workforce to share ideas. But they don’t do these things with intention and structure.
What they fail to realize is that their visionary competitors are not simply “thinking up new ideas.” They have made innovation strategic and systematic. They have built a culture of innovation, developed a solid innovation strategy and they actualize new ideas and directions using a well-conceived implementation plan.
So what do companies that recognize the importance of innovation need to do?
First, it’s important to demystify innovation. It isn’t magic. It doesn’t “just happen.” In fact, it is and has a process. At its core, innovating is creative problem solving – and, fortunately, there are models and tools for guiding the creative process, as well as facilitators and consultants expert at teaching teams how to use them.
Second, CEOs need to accept that innovation starts at the top. It’s not that the new ideas need to (or should) come from the top, but that without leadership’s full commitment to a culture of innovation and strategy, even the most creative employees will end up frustrated – and the company at a dead end. This means that a CEO who understands the importance of innovation proves it by investing real resources.
Finally, companies that wish to innovate need to clearly communicate priorities to employees. For example, when efficiency is incentivized there is a tendency for employees to stick with what’s already working. Requests for innovation go unanswered because leadership is rewarding a culture that resists innovation, perhaps unknowingly. Which takes us right back to you, the CEO.
If it’s not your intention to promote the status quo, examine your culture, policies and procedures and ask yourself whether various aspects are in support of or obstacles to innovation. Then, make the necessarily shifts in your own thinking and within the working environment to ensure your company can leverage the power of innovation for growth.
While becoming an innovative company is not easy, the payoff is very tangible and, therefore, worth the effort you and your team will put into it.
Above all, remember that if you’re not focused on innovation, there’s a good chance your competitors are – and they will be the ones reaping the rewards.
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