Your approach to innovation will depend on your business strategy, capability and market understanding, as well as how much finance you have available.
There are many approaches to innovation that you could focus on in your business, including:
- continuous product and process improvement
- improving your product design
- upgrading your business model – for example, by offering complementary services or products
- using new technologies to add value to an existing product or service
- exploiting a new technology to create a new product or service
To encourage innovation in your business, you must develop and communicate a clear, simple vision, with a strategy to achieve it.
Good leadership is essential. You will need to manage people and resources, consider any risks to your business and market, and be prepared to be flexible to respond to them. Some innovative ideas may just come out of the blue. However, when planning innovation you should ideally have:
- innovation as part of your business strategy
- a strategic vision of how you want your business to develop – if you dedicate your time to monitoring trends in your business sector, you can then focus your innovative efforts on the most important areas
Innovation will not only improve the chances of your business surviving, but also help it to thrive and drive increased profits. There are lots of practical ways of assessing whether your ideas have profit potential:
Assess the competition
Find out who your competitors are and where they operate. Use the internet and advertising sources such as the Yellow Pages to find out about their products, prices and operating culture. This can give you an overview of their selling points, as well as any areas you might be able to exploit.
For example, if the competition is focused on value for money, you might want to emphasise the quality of your product or service.
Study market or industry trends
Awareness of the climate in which your business is operating will help you to plan.
You can find a lot of information about your industry on the internet. Business and trade magazines will also feature useful articles.
Build a relationship with your customers
It’s not enough simply to know who your customer base is. You need to communicate effectively with them as well. Effective communication involves not only listening to their needs but also actively observing their behaviour in relation to current products and services and generating ideas on how you can make improvements.
Involve your suppliers and other business partners
Pooling your resources with your suppliers or other business partners will help to produce and develop creative ideas. Potential partnerships can also be developed through business networking opportunities.
Next, consider what taking a particular innovative step could mean for your business. Ask yourself:
- what impact it will have on your business processes and practices
- what extra training your staff may require
- what extra resources you may need
- how you’ll finance the work
- whether you’ll be creating any intellectual property that will need protecting
Finally, you should include your vision in your business plan.