Innovation. What do you think of when you hear the word innovation or innovate? By definition innovation means a new device, idea, or method. However, I, like many others, would say: Innovation, in business terms, is something that is tied to creating a new product, which is different from anything else on the market. The iPhone, for example, would be an innovative product. It changed the way we (humans) communicate with one another and interact with technology. Everyone now has instant access to any information they desire, hundreds of thousands of applications that can perform any task and/or can "socialize" with a person(s) of their choice whenever and wherever they like. This would be considered a radical innovation.
Innovation is most commonly tied to tech-based companies such as Apple, Google, Microsoft, Twitter, Samsung, Netflix, Amazon, etc. Top 40 most innovative companies in 2014. Companies that are driving how the consumer engages in their day-to-day lives. Think of all the innovative products these companies have brought to the market in just the last 5 or 10 years. Everything from iPhone, iPads, Google Glass, Samsung Smart Watch, Smart TV's, Nest, etc., and who knows what the next product will be. The truth is technology, the way we know it today, is just in its infancy and will only become more advanced and integrated into our lives as time goes bye.
The above are all undoubtedly innovative companies and products, but does innovation only apply to these major companies or just in technology? I'd argue most definitely not. There are many other ways to innovate across all business units, and it does not apply only to a product or service. Innovation can occur or be applied to anything from customer service, marketing techniques, business models, company culture, or overall strategy.
Customer Service is something all companies offering a service or a product engage in, no matter what the industry. A company dealing in B2B or B2C must offer some form of customer service otherwise they would be unable to retain customers or garner new ones. Take for example Time Warner's new customer service model - the one-hour service windows. We all know the hassle of the four-hour service window and how inconvenient they can be. In the past if you had a service inquiry you would get a time between 9am and 12pm or 1pm and 4 pm, and many times the technician would show up late or worse not at all. This has caused a dramatic decline in their customer retention. Well, to rectify this Time Warner has launched the one-hour campaign. While this is only an incremental innovation it still is considered innovative. Another example would be the banking industry. I recently went out to inquire and compare small business bank accounts and found that the big three (Chase, Bank of America, and Wells Fargo) offer vastly different options, most of which are differentiated by monetary and customer service (incremental innovations).
Marketing techniques can also be innovative, and most of the successful brands have utilized this to capture market share and disrupt industries. Think about all the advertisements we see on a day-to-basis. Some studies have that number at anywhere from 250 to 3000 per day, depending on age group and where one lives. This is astounding. It makes one think how can a human brain digest and retain this mass inundation of advertisements? Well, I'd argue it can't. So how can a brand create a campaign that actually sticks in our minds and eventually persuades us to make a purchase - through innovative marketing techniques! A brand that comes to mind (that is not considered a major global brand) is the Dollar Shave Club with their innovative and memorable ad campaign and video. Although they did not recreate the wheel so to speak, they did use an innovative approach with a serious yet tounge-and-cheek style video, which intern caused the video to go viral and gain brand recognition.
Business Models, or how the firm plans on making money, is yet another way a company can innovate to gain a competitive advantage. This to me is the most effective way to compete in a highly competitive globalized market place. Not everyone has an idea nor the funds to create and implement a radically innovative product, however, if one can develop and implement an innovative business model they would have a fighting chance - even if they are offering the exact same product or service as the competition. An example of this, again outside of the obvious major corporations, would be in my previous industry. I worked in the music industry for over 6 years, and as we all know, the music industry is one of the most competitive and most effected by the advent of the internet, therefore competition is fierce with saturation on all fronts. So how does one enter the market place and cause other, more established competitors, to notice? By having an innovative business model. There are a few that come to mind: one being Jingle Punks and the other Music Dealers. Both of these companies entered the industry in 2008 and are now two of the most recognized in the industry. What was their innovative business model you ask? Well, they implemented a 50/50 business model where the artist splits the gross revenues 50/50 with the company. Granted this is not a sustainable business model for any business in any industry; however, it enabled them to build their catalogs with above average content quickly - thus enabling their competitive advantage when marketing to and courting clients.
Company Culture is something that has been misunderstood and underestimated in the past, however, has made a rapid resurgence - becoming one of the most important factors for a business to succeed, garner market share, and attract top-level talent. By definition company culture is the values and behaviors that contribute to the unique social and psychological environment of an organization. Many companies use minor incremental (sometimes radical) innovations in their company culture as a competitive advantage and to court and retain talent. A company that comes to mind is Zappos. They are known for their innovative cultural design which empowers all employees, encourages change and personal growth, creates a fun, light and positive environment, has an open horizontal structure, and has a list of core values that all employees adhere to. Their CEO Tony Hsieh has even written a book based on the importance of company culture called Delivering Happiness. Checkout their core values here.
Overall Strategy is something that all company's must consider, preferably prior to launching into the market, and should be monitored constantly and adapted as necessary. By definition strategy is the quest to gain and sustain a competitive advantage. Sounds simple enough, right? Well, you'd be surprised how many companies (small and large) are lacking an overall strategy and are just "winging it" day by day. A strategy is not just "let's make money". It is the managers theories about how to gain and sustain a competitive advantage; How a company differentiates itself; What to and not to do, etc. Furthermore, strategy is a combination of all of the aforementioned topics, and an innovative strategy is what separates a company from the competition. A good and obvious real world example of this would be Google. Google is by far the most dominate search engine with over 68% of the overall market share. This is despite competition from Yahoo!, Microsoft Bing, and the Chinese search engine Baidu. How can Google maintain such a dominant position in an industry where billions of people use the service on a day-to-day basis? Innovative overall strategy!
As mentioned above, we are now operating in a highly competitive global economy and innovation is considered the most critical aspect of business moving forward. It is no longer just a buzz-word, it is essential across all business units and industries. If you're standing still, you're falling behind exponentially.
As always, I'd love to hear your comments on this topic, so please leave comments if you desire.
PS - If you are in need of any Business and Marketing consultation for your small to mid-sized business/start-up feel free to shoot me an email at: modernbizstrategy@gmail.com.
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