According to a recent study conducted by McKinsey & Co, more than 70% of the senior executives said that over the next three to five years, innovation would be one of the top three most important drivers of their companies’ growth. Innovation is related not only to products or services. Innovation also applies to business models and processes, value chains, distribution channels and even the management functions.
How to increase business innovation
To improve business innovation you have to create an organization in which innovation is truly everyone’s responsibility.
· Ensure that your employees have been trained as business innovators. Make the necessary investment in teaching your employees how to innovate
· Minimize the bureaucracy individuals have to go through to get a small amount of experimental capital if they have a new idea. For example, benchmark how long it takes for an employee with a creative idea to get, say, $7,000 to test a new idea to no more than two weeks.
· Incorporate innovation performance in your employees’ or teams’ evaluations. Draw direct links to the compensation.
· Ensure that the management processes in your company helps facilitate your employees to innovate.
· Build a culture where employees feel comfortable taking risks. Celebrate failures, but build in a robust feedback loop where the employees can raise red flag quickly should the things that are being tried are not working out as expected. Create a quick learning loop to help capitalize on the mistakes. Because innovation does not come to people on schedule, create an environment where they are not under pressure and have time to reflect. Allowing employees to spend 20% of their time on exploring new ideas could be an example. Creating small, undirected technology teams is another.
· We also try to look for small companies that we can acquire. Because, often, it's small companies which have the great new ideas. They have gotten started with them but can't really complete them.
· Ensure you have developed a system of innovation at scale: the team is able to work on more than one truly impactful idea on an ongoing basis. Some ideas will be coming to fruition now, some later – at their own pace.
· Because small team size is usually most conductive to development of creative ideas if your company’s products span global markets, encourage good communication between different teams. Divisional and business unit structure so prevalent in many companies often prevents collaboration across teams. Encourage your managers to preserve the informal ties that drive so much collaboration.
· Continue to remind your employees about the company’s vision and values and what's important. Build a shared and open culture. This will help them self organize to tackle the most interesting problems.