When I think of successful entrepreneurialism, I see it as intricately connected to innovation. Innovation is at the heart of successful business, so as an entrepreneur you need to know how to innovate. And not just once, but over and over again so that you can stay in front of your competitors.
So let’s start with a simple definition: what is innovation? It is a new idea, device or process. And behind every successful entrepreneur is just that: a new idea, device or process.
Innovation drives commercial success by creating new and improved products, new and improved services, and greater efficiency and lower costs. And, importantly, it fills a gap in the marketplace that is valued by customers.
The first type of innovation is disruptive innovation. This type of innovation changes an industry or redefines a sector, and often catches the industry and customers by surprise. We’ve seen a lot of this lately. Prime examples that come to mind are iPhone, iTunes, Google and facebook, but also think about Wotif, Uber and Pizza Mogul. All of these products and services are paradigm shifters.
This disruptive innovation is what usually comes to mind when we think of entrepreneurs, and most entrepreneurs aspire to be on this level. Maybe you have a disruptive idea just waiting to be unleashed…
But not all innovation has to be earth shattering. Innovation can also be small scale and iterative, and concentrate on differentiating a company rather than dominating an industry. These innovations help you stand out from the crowd and provide a unique service offering. They can help you build a loyal following, justify a higher price or help you offer more for less.
Late last year, I discovered a chain of hotels in Europe called ‘twenty five hours hotels’ and to me they were a great example of iterative innovation. They just did things differently to other hotels. They were affordable and yet interesting and quirky. They had a fun theme like the circus in their Vienna hotel and quirky room fitouts like a hammock in my room in Berlin.
You can probably think of your own examples of iterative innovation by thinking of your favourite products and services. And of course, if you are an entrepreneur already, you probably have lots of examples of how you have implemented iterative innovation in your businesses.
But how do we purposefully innovate? Sometimes an idea just pops in to your head… but that is not much of a strategy for a sustainable business. We need to be able to purposefully create new ideas, products and devices.
Here’s my 10 step process for making it happen:
1. Clear your mind of logic and limits
As Walt Disney said, “It’s kind of fun to do the impossible.” Don’t constrain yourself with pre-conceived ideas of what is possible or sensible. This is especially true if you are looking for a disruptive idea. Let go of your perceived limits. Anything is possible.
2. Dream the preferred reality.
Imagination is more important than knowledge so use the power of your imagination to create a vision of your preferred reality. What would you love? What would you prefer for how things operate? What would be the magic solution? And remember: all ideas are good ideas. No idea killers allowed.
3. Write it down
I’m a fan of the traditional notebook and I carry mine with me everywhere I go. This has been a habit of mine since my first day in my first career job. Every meeting, every discussion, every action item gets documented. This way, no ideas are ever lost or forgotten.
4. Research and explore
This is a crucial step. Once I’ve got the idea, I start researching how it would work, if there is a gap in the market at the moment, does it meet a need, what it would cost, how much could we charge, etc.
5. Colour it in
This step is where the idea starts to become real and the vague vision starts to become refined and detailed. If it is a new business or product, I start brainstorming brand names, logos, colour palettes, developing flowcharts and diagrams, selecting locations, etc. Here, I start to get a real feel for the business and product and how people will interact with it.
6. Share your idea with trusted partners
Ok, I have to confess, this step is the one I believe to be the toughest. I am very protective of my new ideas and I don’t like negativity. And unfortunately, most people don’t know how to construct, only how to destruct. So when it comes to sharing an idea, especially if it is a bit fluid, it is really important to share with the right kinds of people. Henry Ford famously said, “If I asked people what they wanted, they would have said ‘faster horses’.” Look for people who know the industry, have an appetite for risk and change, and can understand the research you have done. If you can’t find those people, my preferred approach is to discreetly share little bits of information in an informal way and see what reaction you get.
But eventually, you will probably want to do some formal testing of the idea with a wider crowd, like in a focus group. At this point, you need a crystal clear vision of your product or idea. I suggest making sure you have a succinct and compelling ‘BBQ pitch’ which explains the idea in less than 30 seconds.
A good formula to use is problem > solution. For instance, “You know how kids make a lot of noise and it can be very hard to work at home when kids are at home… well, my product is a noise dampening device, like a cone of silence, that can be placed like a fence around the children that dampens all noise emitted and allows pleasant and quiet enjoyment from even in the same room.” (That there is a brilliant idea and will sell by the billions. You read it here first.) But see how the formula for the BBQ pitch works: I outlined the problem first so that people can feel the need, and then I outlined the solution and its benefit.
One other thing about this step: you need to know what feedback or action you want from the group. Do you want their suggestions on improving the product? Or branding and marketing suggestions? Or their likelihood of purchase? Or comments on pricing?
7. Set a deadline
Once you’ve decided you are going to do it, set a deadline. Most people flop around like fish out of water unless they have a deadline, so mark a date on the calendar and commit.
8. Develop an action plan
And now, write a list of everything that needs to be done and work out what is on the critical path. Who is going to do it? When does it need to be done? How much will it cost? Put together a detailed action plan and allocate responsibilities. Get it done.
9. Launch (and shoot the engineer if you have to)
In new product development, there is a saying “Sooner or later, you have to shoot the engineer and put it in to production.” I love this phrase, especially because I work with so many engineers and the idea of shooting some of them has crossed my mind.
But seriously, the ideal situation in new product development is to be first to market and within budget, while the worst case scenario is to be late to market and over budget. The ‘engineer’ refers to the product engineer who wants to release a perfect product, with all the bugs ironed out, every new feature that could be imagined etc. And while this is a noble principle, in new product development perfection is danger. The longer you take to get the product to market, the more it costs and the more market advantage you sacrifice. It is far better to launch the first version and continue improving the product through subsequent version releases. So launch the product, even if it isn’t perfect.
10. Listen, adapt, persevere
And the last step is continually listening, adapting and persevering. When I think of my businesses, each of them is so totally different to how they started. Different business models, different delivery models, even different services. As business operators, we’re in a constant state of evolution.
These 10 steps give you a process for structured and proactive innovation, which can help you launch new businesses, products and services, and keep your existing businesses evolving and adapting.
Good luck innovating and feel free to post me a comment or a question.