Here’s what I’ve learned working with small businesses over the last 14 years: Successful businesses tend to nurture a growth mindset and an innovation-oriented or learning culture. That’s because they are solutions-orientated. They work towards finding better solutions to address problems and offer better products and services to their customers.
In two-part video, I discuss six steps you can do today to help you innovate for growth and unlock this secret to business success. I also provide examples of wha successful companies are doing to ensure that you can innovate your way towards success.
In the first part of this series, I discuss the first two steps: understanding the value of innovation, embracing the culture of innovation, and identifying customer needs and pain points.
The goal of innovation is to make things better. It’s to find better solutions to address problems, a better and more convenient way of getting things done, and to make life easier all around. As businesses, our goal is to make our customers and clients happy.
Improvements on how we do things lead to lower costs, which results in better bottom lines.
- Understanding the Importance of Innovation
Innovation is the lifeblood of any successful business. It involves creating and applying new ideas, processes, or products to drive growth, stay relevant, and gain a competitive edge. By embracing innovation, businesses can transform challenges into opportunities.
The Australian government defines innovation as
“changing processes or creating more effective processes, products and ideas. For businesses, this could mean implementing new ideas, creating dynamic products or improving your existing services.”
As I explained in a previous video, we innovate because we want to grow. If we don’t grow, we start to shrink and become irrelevant. More importantly, we grow by finding better ways to address problems or to serve our customers.
Let’s take a look at Codan, an Australian electronics manufacturer that serves government, corporate, NGO, and consumer markets across the globe. It was founded in 1959 by three engineers from Adelaide. Today, it earns hundreds in millions in sales and profits, thanks to its “innovate or die” mindset. They have two main businesses: metal detection and communication.
One of their business goals is to build and nurture long-term relationships with their customers. Clients are loyal to Codan because of superior products: they are sturdy and perform well in rugged, remote environments. Th United Nations use their equipment to support relief efforts in Uganda, cementing themselves as the leading global supplier of high frequency communications to humanitarian organisations. When you serve the kind of clients that Codan serves, you expect that they will have high demands for the products they buy. And why not? Codan helps governments and humanitarian organisations do important work impacting the world’s population.
In order to stay on top of their game, they invest around 10% of their net sales in product development. This is a good example of how you can nurture innovation in your business. Your business might not be involved in high-level tech like Codan, to require a significant amount of investment in product development, but you can invest in innovation in different ways.
You can invest in training and staff development. You can invest in market research. Think of what you need to do to improve your products and services, or how you create or produce your products and services. What do you need so you can develop how you cater to your clients? Identify these steps and determine what you need to invest to make this happen.
- Embracing a Culture of Innovation
Creating a culture of innovation is vital for fostering creativity and encouraging employees to think outside the box. Businesses prioritising innovation as a core value empower their teams to explore new possibilities and take calculated risks.
Your organisational culture impacts how you view innovation and whether you develop an innovation mindset. Is there a specific type of culture that leads to an innovation orientation? The answer is no. In a three-part video series (here are the links for part 1, part 2, and part 3), I explored six different types of company culture and how each nurtures and supports innovation for business success. What they do have in common is understanding the value of innovation and how it contributes to growth.
Consider the case of OzFresh Foods, a family-owned distribution company. Recognising the potential of innovation, they initiated an “Innovation Friday” program, where employees could pitch new ideas and projects. This open and collaborative approach led to the developing a unique line of healthy, ready-to-eat meals. By nurturing a culture of innovation, OzFresh Foods was able to differentiate themselves in the market and experience substantial growth.
This is similar to Google’s 20-Percent Rule. In 2004, Google encouraged its employees to spend 20% of their time working on projects that would benefit Google. Some of the most notable Google products resulted from this initiative, such as Gmail, Google Maps, and Adsense. Other companies like Atlassian have used this 20-Percent Principle with their 20% Time Experiment. This resulted in major improvements in their products and services.
What does this mean? Embracing innovation requires more than developing a mindset and acknowledging its importance. We also need to allocate resources for innovation. This may require investing a percentage of sales or profits, as Codan does, or investing labour hours to conceptualise and implement innovation in practice, just as OzFresh and Google do.
- Identifying Customer Needs and Pain Points
Understanding your customers’ needs and pain points is critical to innovating successfully. Listening to customer feedback, conducting surveys, and staying attuned to market trends can provide valuable insights for innovation.
Cashflow Manager, an accounting solutions provider catering to small business owners across Australia and United Kingdom, is a prime example of a business attuned to their customers. They engage their customers to understand what they need, resulting in a product that their customers deem convenient to use because of its simplicity and ease of use.
To unlock our business growth, it is crucial to understand the value of innovation, embrace the culture of innovation, and identify customer needs and pain points. This allows small businesses to offer products and services that address their customers’ needs and wants. It will also help them grow further because when small businesses embrace innovation, it allows them to continue developing better products and services that their customers will love and use for a long time.
In the second part of this 2-part series, I will discuss three more ways to businesses can unlock growth through innovation.