There are few things as important as innovation in business today. All are striving to gain the upper hand, getting a competitive advantage over their rivals by new and better offers –typically by offering greater benefits or bigger discounts in an effort to draw clients. The typical response to the challenges in the market is then either through product differentiation or innovative marketing efforts, facilitated through R&D budgets.
R&D budgets are equally important in HR, training, purchasing and logistics functions as they are in product development and marketing. He reiterates that companies are just as likely to find the elusive competitive advantage in any of these functions as in product development or marketing. Every organization must prepare for the abandonment of everything it does.’ So do not restrict your vision of innovation to products. Some of the most powerful innovations you can make are in business methods and customer services. If we look at companies like Dell, eBay and Amazon we see that their great innovations were with their business forms and models rather than in new products. There are three pointers to innovation that ties in with the previous arguments:
1. Look at what is not working for customers in your industry – what are their unmet needs.
2. Changing business models – turning established assumptions on their head. (e.g. Why do we need branches for banking).
3. Finding an emerging technology. There is a technology aspect somewhere in the equation that allows you to address the first two issues mentioned above.What does this have to do with benchmarking? It is often the case that we use the market leader as a measure of success.
We seem to think that benchmarking is such a great idea. In Tom Peter’s book, this is rather stupid. He comments that we typically embark on a 5 year plan to be as good as the industry leader 5 years ago! He claims that you cannot be remarkable by following somebody else who is remarkable.Where does this leave us? Considering the viewpoints mentioned above, it would seem rather appropriate to approach innovation holistically, not ignoring any person, section or department as a potential source of innovation and thus competitive advantage.
Be prepared to innovate, following your own dream, accepting the leader in the market as just another competitor and not an idol to be followed in every respect.
This brings me to another pet subject – creating the correct climate for innovation.Innovation will most likely not be found in an environment that is not conducive to taking risk. A supportive climate, recognizing the inherent danger of failure, will also communicate the freedom for honorable failure. In this respect, Soichiro Honda, the company’s founder said, “Many people dream of success. Success can only be achieved through repeated failure and introspection. Success represents the 1 percent of your work that results from the 99 percent that is called failure”
Hence, nothing good can happen to a business unless people working for the business value the importance of innovation.