When It Comes to Innovation, Go Big or Go Home
Innovation isn't simply a marketing catch-phrase. It's a way of life for many business owners and an absolutely vital aspect of survival and success.
Innovation is sought after by most businesses. It is an aspiration of companies seeking to be leaders and brands of choice. But, the sad truth is that much of what is touted as innovation is often simply a desire to be ahead of the curve and too frequently represents incremental product and service benefits or features rather than real innovation.
Innovation signals that a company is able to break into the marketplace, generate impressive sales and draw top talent and investors, all while continuing to be relevant and successful for the foreseeable future. "Innovation is more than something 'new and improved,' but rather represents a completely different approach to solving a problem or creating a gain," says Patricia Newcomb, director of Ohio's Small Business Development Center at The Entrepreneurs Center.
Equally important, innovation is tied to both attracting new customers and retaining existing customers, particularly with today's intense competition in most every category. "We know if you want buyers to make a change, particularly if they have not purchased from you in the past, you have to provide something dramatically better than the current competition," explains Bruce Hall, CMO of Eureka! Inventing.
Establishing a culture and process to support innovation is one way to prepare a business to compete. "Startup companies are great sources of innovation because they are lean, agile and able to test user and maker hypotheses more quickly," Newcomb says.
Innovation was more than just a possibility to these entrepreneurial ventures – they did it:
- Rent the Runway created a new fashion retail model by offering people the ability to rent top designer labels for one-time use, making haute couture available to a wider audience
- WeWork introduced and popularized social and hip shared workspaces that provide community activities, mutual business promotion and shared services, which have become especially attractive to millennials, freelancers and entrepreneurs
- Teladoc was the first to provide on-demand remote medical care via mobile devices, the internet, videoconferencing and phone, thereby offering greater access to healthcare for the uninsured, people with busy schedules or those living in remote areas
- Kickstarter created the platform for global crowdfunding, which revolutionized fundraising and evened the playing field for individuals and smaller ventures
Failure fuels innovation.
The difference between fostering innovation in small vs. large companies is perhaps best described in terms of the role failure plays in corporate culture, explains Newcomb. Large companies can afford the costs, but often struggle to create an innovative environment, and may take longer to bring new products to market because they have developed a culture intolerant of failure. Small companies, on the other hand, offer a more nurturing cultural environment, but often can't take on the financial risk to truly innovate.
"Most successful businesses try to diversify their offerings by investing in new products and services, but most of these experiments fail because they cannot recreate startup environments. Having limited resources is grueling, but it's also an opportunity to focus, to be ruthless about metrics and to know when to pivot or stop," says Steven Kuyan, managing director of Future Labs at NYU's Tandon School of Engineering.
No less important, while large companies may have an advantage based on depth of talent, cash for investment and access to technology, the cost of doing business in some cases has dropped, which lowers barriers to entry. Small companies can often use the same tools as large companies. For example, Hall points out that concept tests that may have cost $7,500 in the past can now be done for just $400 using online resources.
"Meaningfully unique" opens new markets.
To be considered truly innovative, a product or service must be "meaningfully unique" or be protected as intellectual property, according to Hall.
"Meaningfully unique" is essential for small businesses. Hall explains that large companies like Proctor & Gamble and AT&T can successfully release a new product because they have name recognition and an existing customer base. Small businesses have to rely on free press and word-of-mouth, which is why unique concepts are make-or-break for startups and small businesses.
A few examples of recent "meaningfully unique" business ideas:
- Energous: Truly wireless charging technology that delivers power via radio bands so that you can charge multiple devices at a distance
- Freemie: Hands-free, mobile breast milk pump that you can't actually see when in use
- Saltwater Brewery: Edible six pack rings made from the byproducts of the beer-making process, which sea animals can eat
As a rule, a product must be sufficiently new and innovative in order to be protected as intellectual property. This makes simply owning a patent a cue to investors that your product is unique and worth taking a look at. Recent examples of innovative products protected as intellectual property include:
- Cornerstone Research Group: The No-Oven, No-Autoclave (NONA) composites technology creates a radically new way to make composite materials used to expedite the manufacturing of large aerospace parts and tooling, oil and gas structures, and more.
- Vicis: The ZERO1 football helmet reduces impact severity better than any others on the market.
Ideas aren't enough -- innovation requires speed and delivery.
"Smaller companies need rapid cycle development -- "fail fast, fail cheap' -- because this tactic lowers cost, increases speed in determining viability and offers a greater chance at success in a shorter period of time," Hall says.
Perhaps the most important component of innovation is to deliver. No matter how fabulous or cutting-edge your idea may be, Kuyan advises, you need to be able to get it to customers, market-fit and ready to give your investors a return.
"It's easy in the early stages for a startup to perceive false signals from early traction, especially if the startup is in an industry in which the founders already have a network that is leading to early success," Kuyan cautions. "Delivering success requires a healthy pipeline of inbound sales, where customers are actively seeking out your product or service."
Remember: At the end of the day innovation isn't simply a marketing catch-phrase. It's a way of life for many business owners and an absolutely vital aspect of survival and success.
Entrepreneur Editors' Picks
If You Focus on Problems, You'll Only Find More Problems. Here's How to Focus on Solutions.
Apple Asks This Jarring Interview Question as a Secret Way to Evaluate a Candidate