What is Business Innovation?
Business innovation is defined as the process of completely or partly making new changes to product, service, operations, marketing, sales or any part of the business that can help contribute to company’s growth and goals. It is also not limited to the company’s own benefits, and includes contribution to social and wellbeing causes through innovative ideas and breakthroughs.
Business innovation gives every team or department in a company the opportunity to innovate and improve their own functions, whether it be internal or customer facing or both. This means innovations are welcomed from teams such as HR and accounting that are fully internal, as well as teams such as product, sales and marketing that cater to customer needs above all.
It is important to note that the size and scale of innovation is less important, instead the idea is to keep being open to improvements and implementing them for success. For example, if your email marketing team is experimenting with new ways to make their newsletters more interesting and increasing the open and click-through-rate by readers, that will be as much of an innovation effort as a new product idea.
For continuous business innovation, fostering and nurturing a culture of innovation is the key. Not every idea will be a breakthrough, not every test will be successful, but the point is to encourage employees to keep up their morale and to continue to make the openness to try and innovate.
Key Models in the Business Innovation Framework
1. Products
Innovative products are at the forefront of business innovation. But before you get anxious, it is important to note that product innovation doesn’t mean innovating a completely new breakthrough product. Instead, it is typically built upon previous layers of product innovations. Take the smartphone for example, we did not go from monochrome displays with just dots on the screen to the modern smartphone. There were incremental updates leading upto the phones that could do videos and then the capacitive touchscreen with a new UI was delivered with the first iPhone in 2007.
Basically, don’t be afraid of contributing to the industry through incremental product innovations, which may lead to a breakthrough leap eventually.
2. Services
Innovations are not reserved for products only. You may be a service company, or any company that provides pre-sales and post-sales services to its customers. Many big industry giants have been built upon innovative services that eased customer anguish and provided a delightful customer experience.
For example, live chat is a new type of customer service delivery that has helped customers connect with support representatives live through chat, rather than having to go on a call with them or waiting for replies to emails.
3. Value proposition
Value proposition means how you package your product/ service for sales. This includes pricing, features, warranty, post-sales support etc. Basically it means how your product or product lines is being positioned in the market vis-a-vis competition, to make it more appealing for customers to pick you. Often companies will try to find a sweet-spot deal for a certain type of buyer that requires it, but the rest of the market may not be fulfilling that need.
Value proposition can therefore lead to unlocking sales potential of your existing products/ services.
4. Customer acquisition paths
Customer acquisition paths/ channels vary from industries and companies. Innovation here would mean studying and unlocking a customer acquisition path that can lead to increased leads or sales. For example, a software products company may benefit greatly from moving focus to search engine marketing which it never did before or did it incorrectly. Similarly, another company may try something new in email marketing and hit it big from that effort.
Innovation in customer acquisition also means unblocking these paths. For example, in web-signups for product trials, a company may see a big jump by simply reducing the number of fields required for signing up or allowing for single-sign-on through external app integrations like Google sign-in or Linkedin sign-in.
For encouragement, remember that every marketing/ sales channel is an opportunity for innovation and trying something new that will exclusively ring with your audience.
5. Customers/ user experience
User experience has in recent decades gained a lot of buzz as many online businesses and mobile apps have shown success through focusing on delivering excellent user experiences. However, broadly speaking, customer/ user experience is not limited to just digital experiences or products selling digitally. Customer delight through an innovative and good experience can be as simple as adding a piece of chocolate on the bed and/ or adding some fresh flowers in a hotel room for when the guest walks in for the first time.
The best way to approach innovation in customer/ user experience is to simply ask – is this an experience that brings a sense of ease or happiness, no matter how brief it may be.
6. Operations
When we speak of operations, we simply mean – the day to day work of the teams. This includes how work is done, how team workflows are managed, what tools are used, how cross-functional work is aligned etc. This is also where a lot of innovation can take place. For example, agile work method was co-developed by multiple software developers and as it worked it became a standard for many companies, especially in the software industry.
Not all innovations need to aim for industry standards, they can be simple things like re-aligning how work is assigned and delivered. For example, many companies felt that all or most of their work can be done by employees working comfortably at home and as a result saved millions in office rent or sold their offices to raise more cash. This also allowed them to hire talent across geographies and not be limited to the locations of their offices. All of this is operations innovation.
7. Supply-chain vendors and external partnerships
It may seem meager at first, but vendors and partners across your supply chain can be a big area of innovation. For example, many smartphone brands are successful today and many are not purely based on if they could manage and innovate to ease their supply chains. A great product that cannot meet its price point because of supply issues or because it can’t find the right distribution partners, will not be successful at the end of the day. We have seen many such brands come and go in the last decade.
Business Innovation Process: Key Steps
The business innovation process involves several key steps that guide organizations from the initial idea generation to the successful implementation of new products, services, or processes. Here are the key steps in the business innovation process:
Step 1. Studying the existing landscape
Innovation happens from a place of knowing what is, and realizing what it can be. Studying and understanding the current landscape ensures your awareness of what already is working well and what can be improved upon.
For example, you may feel a new value proposition will be a good test model, but you soon find out that it was tried a few years ago and did not yield good results for certain reasons. Or, a more encouraging example, you may find that older tests overlooked certain aspects and you can continue from there.
In either case, knowing what was already done and is working right now is a great place to start.
Step 2. Generating innovative ideas
Once you have had a good understanding of the current landscape, probe yourself on where things can be improved. More often you will find certain ideas popping in your mind and some of them may be rather valuable and may warrant for a test. Some may in fact be so obvious that it will be apparent that it will be successful in the test.
Step 3. Proposal and approval for testing
Now, make a list of all these ideas and prioratize them based on feasibility and potential for success. Feasibility is an important consideration here because an idea that requires enormous shifts and investments may not get approved, especially if testing also requires too much. Instead, see if there are smaller things that point to the bigger thing that can be tested in phases.
For example, you may feel that a form for web submissions should be changed completely to allow for much more signups. This may draw some resistance from stakeholders as its the final stage of their website signup funnel and is too important to change drastically. In such a case, one may propose to change just 1 form field at a time and see if that decreases attrition/ bounce on that page and results in higher rate of signups/ form submissions.
Step 4. Testing and analysis
To begin testing, be clear on who the stakeholders are other than you, the actual tasks, the workflows, the final deliveries and the duration of the test. Now bring the team involved in this test together and clarify any doubts on how the execution is to unfold.
It may happen that the test requires cross-team collaboration, in such cases, be sure to loop in the team leads from those teams so as to avoid any confusion or clashes around resource management.
As you embark on testing, always set a clear criteria/ threshold for it to be deemed successful to avoid any post-test resistance.
Once the tests are done, match the results to the set criterias. If the results are good and acceptable to the leaders, get approval for launching full scale.
Step 5. Launch and tracking
The final launch or release requires more preparation and stricter deadlines and work schedules, as this will most likely use up much more of company resources. Set milestone dates and regroup the team on these dates to check progress around all aspects of work.
If the innovation is customer facing, ensure to update them on what may be expected and why its a good change to avoid giving them too many surprises. This is especially useful in case of user interface changes, where users may get confused if they don’t find stuff where they usually are. Additionally, prepare some demo videos if that may help convey the message more clearly.
Set clear tracking metrics to ensure you have visibility into post-launch performance across all key measurements.
Step 6. Post-launch
The main task after launching the business innovation is to track and fix anything that may have been broken. Despite quality assurance teams, often small things may slip through the cracks and these bugs or issues will need to be fixed post-launch. However, if the issues are major, make sure to have a roll-back option to fall back on.
Important Considerations for Business Innovation
- Customer experience and happiness expansion
Improving customer experience and happiness today is much broader than it was before, as customers become more aware of what is available and what they deserve. A few years back, the bar was quite low on what customer experience and satisfaction should be. As monopolies dissolved through competition, the value of customers increased.
Innovation around customer experience is not just about a good experience using the product, but encompasses everything from brand perception, company’s social policies and customer support much later into the product’s lifecycle.
- Social innovation as part of CSR
Social innovation is a key part of any innovation-centered work culture. Your employees live outside of your office, they see the world around them and openness to innovation should involve openness to contributing to the well-being of the world as much as possible within the company’s capacity.
Contributing to the expansion in well-being of humans and all animal beings alike should come naturally into the consciousness of company leaders, or at least they should be open to understanding it. A closed mind is also closed to innovative ideas, an open mind is open to a better world and better innovation.
- Culture of innovation = Having openness to new and better possibilities
The term culture of innovation has become popular thesedays, but it also seems that most companies dont clearly understand what it means to have such a culture. A culture of innovation cannot be forced through just policies and mechanisms, infact mechanical structures tend to block innovative thinking. Innovation is not a mechanism, its a allowing of the mind to be open and see clearly. Clarity is where innovation comes from and clarity requires an open mind and an openness to new and better possibilities.
In a way you can say that a culture of innovation is also a culture of openness, rather than rigidness. The reason why bigger companies become more sales-focused and drop in the innovation scale, is because they get defensive about what they have, set rigid structures and begin to block the flow of open and creative thinking.
The way to not do that is to prioratize the culture of innovation and then set only those structures that are necessary and not keep expanding on the structures just because someone else does it or some consultancy advised it. Be careful with consultants, they will bill you and go but your core team will be the one to carry your company forward. We are not suggesting that consultants don’t add value, they certainly do, but they are temporary and are often informed by “standards”. Standards are not a good friend of innovation.
- Unlocking blocked potential of existing products and services
Your existing products and services most likely already hold untapped potential for growth. Through a mindset of innovation and enhancements to customer experience, your company will be able to see what seemed closed earlier. Innovation is a mind and openness centered work, not a brutalist and forceful act. Many companies try to force innovation through brutalist structures and fail. Companies that are softer and more open tend to lead innovation.
As you expand your culture of innovation, the first thing to ask your employees is to be open and see what is already there and can be leveraged much better. For example, you may notice certain blockages such as marketing specific features more clearly or sales teams missing out on connecting the dots between products.
Such things only become apparent and clear when things are observed with a sense of seeking clarity and not involving judgement and blaming.
