Now more than ever, business success often depends on how quickly an organisation can adapt to changing market conditions, emerging technologies and new buyer behaviours. At the heart of that agility and flexibility is the need for innovation.
15 November 2019
Despite innovation’s importance many companies get stuck in their ways because they are afraid of change. It’s one of the reasons why such noteworthy brand and company names have fallen by the wayside in recent years. So in our November Breakfast Club session we discussed how businesses can effectively encourage and manage innovation in their operations.
Defining Innovation
Innovation points to something new, it can be a product, a service or a new process that has been implemented to help in streamlining a task or an activity. It’s often associated with finding approaches that lead to greater efficiency and productivity.
John Bessant, Professor Of Innovation And Entrepreneurship at the University of Exeter argues that Innovation means creating value from ideas. He says people often confuse ideation with innovation. For example, having a business idea is only the first step. You still need to convince a lot of people (such as investors, suppliers and customers) that it’s a good idea and that they will be happy with it. The process of turning the idea into a successful reality is innovation.
The Office for National Statistics is currently compiling the results of its latest Innovation Survey. This collects data from businesses about various aspects of their innovation-related activities over a 2 year period.
The survey deems a business to be ‘innovation active’ if it does any of these 3 points:
- Introducing a new or significantly improved product (good or service) or process;
- Engaging in innovation projects not yet complete, scaled back, or abandoned;
- Creating new and significantly improved forms of organisation, business structures or practices, and marketing concepts or strategies;
Results from last year’s report painted a mixed picture of innovation activity across UK businesses:
- The proportion of innovation active firms had fallen slightly to 50% (in the previous survey it was 53% of businesses)
- This fall was the result of a decline in innovation activity among small and medium-sized businesses. In fact Large firms were more likely to have innovated than small and medium enterprises (SMEs). 63% of large firms were innovation active, compared to 49% of SMEs
- The proportion of process or product innovators rose, with nearly a third of businesses (31%) introducing new products or processes during the survey period.
It’s often felt that smaller businesses have the edge on larger ones when it comes to innovation and can innovate at a greater speed. Perhaps these figures are suggesting change is afoot?
What helps and hinders innovation
In our group discussions we drew on the experiences and observations of Business Club’s members to explore what helps and hinders innovation in a business. Key points which came out of the discussion were:
| What helps innovation in a business | What hinders innovation in a business |
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Having a roadmap and creating the right atmosphere
It’s therefore important for businesses to have a roadmap for the innovation journey, and a strategy that lays out where and how innovation is going to help the organisation get to where it needs to be.
Businesses benefit greatly when they create an atmosphere where creativity is welcomed – for example, by maintaining an open dialogue between employees and upper management, encouraging them to share creative ideas, and not forcing people to innovate.
Collaboration
It’s also crucial to collaborate. The need to build links is nothing new, but today it’s called “open innovation” – which means networking with people inside and outside the organisation. It’s important to listen to users, the market and even collaborate with competitors.
Habits of highly innovative companies
We then looked further into what habits aid companies to be innovative in the current climate. Out of a list of 5, here’s how the Group ranked them in importance, with 1 being the most important.
| 1. | Listen and say yes! – address the communiction gap between leadership and non-management employees. Listen to employees and reassure them they've been heard. |
| 2. | Fail fast. Fail forward – allow experimentation and learn from failures. |
| 3. | E-nnovate – become better at using technology to monitor the changing business environment and improve systems and processes. |
| 4 | Accept recognition is the new reward – employee reward schemes to motivate innovation need to reflect changing employee attitudes |
| 5. | Rethink the space – conventional office structures, layouts and meeting formats may not be conducive to idea creation and innovation. |
Summary
Innovation will continue to be a key survival skill and strategic priority for UK businesses as they navigate the uncertain times ahead. Fostering innovation is largely dependent on the approach the leadership of an organisation takes, but there are helpful financial considerations to support innovation. Support like R&D Tax Credits, timing new equipment purchases to make the most of capital allowances and getting help to access the right finance can make a real difference.
If you would like to further discuss:
- R&D Tax credits and other reliefs for innovation
- Planning and organising for innovation
- Accessing funding for innovation
…do contact the Shipleys’ Godalming team for more information.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary, if you would like advice or further information, please speak to your usual Shipleys contact.
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