Innovate Your Way out of a Recession
How on earth can companies compete in a global economy where staff costs in India are a tenth of those in the West and where Chinese companies are now looking to outsource their operations to cut costs further? We can not continuously improve our way out of the current challenges, rather we must fundamentally change what we do and how we do it – in short we must innovate.
Some people think innovation is the generation of new ideas – but we would refer to this as creativity. Creativity is part of innovation but is not a substitute for it! Being creative and coming up with new ideas is all well and good but if no one puts them into practice then they are worth nothing to a business. For us innovation is the “commercial exploitation of ideas.” It needs to be a planned and proactive process.
Innovation is also seen as being synonymous with the development of new products. Whilst this is true to a degree it is only one part of what constitutes innovation. In fact many businessmen and women are put off by the term innovation because they do not fully understand what it means.
There are five generic types of innovation as represented in this Product-Market matrix:
- Process Innovation – Improving how you do what you currently do. The emphasis here is on making the process more effective and efficient rather than changing the end product or service. The aim could be to improve reliability, reduce costs, improve timing etc.
- New Product /Service Development – The creation of modified or new products and services to meet a market need. This can be done through re-engineering existing products, licensing existing products, creating differing versions of present products, running incubator generation schemes etc.
- Market Development – Breaking into extended markets or segmenting an existing market in a new way can often give insights previously overlooked. Market innovation could be as radical as moving into a new geographical market like opening a store in Japan or sub-segmenting your existing market by different age groups.
- New Business Development – As you become more radical, the extent of innovation will increase, and it will become more and more likely that you will need to build or bring in new capabilities. New business may result from taking modified products or technology into completely new markets, or offering new products to extended markets.
- Strategic Change (Business Innovation) – Possibly the riskiest approach to innovation – that of moving the business into a different, unrelated market to capitalise on a new product idea or technology. A strategic change might require a new business model, leadership, merger, acquisition or new branding.
Now is the time for businesses to embrace Innovation Management as a core business process. Link innovation to your business goals and overcome the barriers to innovation, and you stand a very good chance of not only surviving the recession but becoming stronger in the process.
Also by Andy Bruce – The Golden Rules of Innovation
Andy Bruce is widely acclaimed as an authority in ‘Innovation Management’, the author of “Fast Track to Success – Innovation“, and the Director of two specialist innovation companies: SofTools and Project Leaders International.