Now, more than ever, innovation should be your number one strategic imperative. Businesses that fail to innovate rarely survive, especially in times of great change. We are entering just such a time right now. Huge technological changes will alter the business landscape almost beyond recognition in the years to come.
Here are four reasons that you must refocus your corporate goals on innovation.
A technological shock is coming
A great technological shaking is currently under way that will impact many market sectors. We have seen the rise of block chain currencies, but the impact of block chain applications in areas such as smart contracts and data tracking is just emerging. Tesla introduced the first usable and practical electric car, and it turned out to be better than most luxury saloons available today. Many manufacturers are now scrambling to catch up. Tesla is not the only new entrant to shake up an entire sector. Air BnB have change the hospitality sector. Uber have revolutionised taxi rides and changed the way we think about transport. Self driving artificial intelligence (AI) will bring even more radical changes to our transport systems. Technological change is accelerating at such a pace that what we are seeing now is just the tip of the iceberg. A combination of global interconnectivity, massive data storage, AI and robotics will impact every corner of the world in ways unimaginable today. The internet revolutionised business in the 1990’s but it took perhaps 10 years to evolve and mature. Technology is emerging and maturing much faster now which is creating a technological shock. Businesses that don’t innovate effectively and keep their finger on the pulse will not survive in the coming years as new entrants completely change markets.
Employees are an untapped creative opportunity
Employees are your best asset, but they are not given time or space to contribute to innovation. For most organisations a job description hardly, if ever, includes a requirement for employees to contribute to innovation. Employees are expected to do their job, usually under pressure, and innovation is a tertiary afterthought. We must change the way we think of employees, instead of resources, they are creative and imaginative beings with capabilities that go beyond their job description.
Some employees, if sufficiently motivated, might contribute to innovation goals, but few will participate if the time is not made available and the rewards not forthcoming.
Employees bring with them vast experience of different competitors, industries, education and culture as well as personal experiences. Working collaboratively, they are potentially your best innovators and your best chance of keeping pace with market change. Offering employees time, space and financial incentives to innovate also provides them with an intellectual outlet that goes beyond their day job. Helping them to express their creativity, implement their ideas and watch them grow successfully is highly motivational, as well as profitable. As more automation enters the workplace that creative force will be pushed out unless it is encouraged and exploited (for want of a better word!)
Reduce cost but prioritise revenue opportunities
Many innovation initiatives will focus on reducing cost, bureaucracy and waste in organisations which is all very will, but it won’t help them survive in the long term. Cost reduction can also be demotivating as there is invariably an impact on employees. While it is important to maintain an efficient business, it is not as important as providing products and services that continue to be relevant to the marketplace. Cost reduction is limiting and there is only so much cost and waste that can be driven out of a business. On the other hand, using innovation to create new product lines, discover new markets or recreate markets has unlimited potential. By prioritising innovation to help your business grow revenue you are creating a more sustainable business model. Organisations that focus too much effort on cost reduction will ultimately implode as they leave no room to grow or evolve.
Changing demographic preferences
We have all heard that millenials have different preferences and needs in life, but actually it goes beyond just one age group or generation. Demographic preferences are changing across the board as people become more educated and informed through an abundance of information. Loyal customers have been replaced by informed consumers, who will switch supplier if they can get a better deal or experience. The accumulation of things is being usurped by the pursuit of experiences. Information is no longer poured over in the form of newspapers, research or documentation. Video, pictures, snippets and blogs now provide people with what they need to know without unnecessary and burdensome text. As markets are saturated with cheap products, that are easily available from inexpensive global suppliers, consumers are starting to seek out quality in place of cheapness. The revolution in information is creating new consumers and driving new markets. Companies must innovate to continue to appeal to these consumers as they have higher expectations and lower tolerance. Providing incentives that respond to demographic changes will help customers remain loyal, but more importantly, it will help to maintain and grow revenue.
The changes occurring right now are not only technologically driven, but also driven by societal and attitudinal change. Information has created a paradigm change in the way people think and view the world. Companies must innovate effectively to survive in the face new market entrants that will emerge in large numbers in the not too distant future.
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