The mind-blowing simple strategy 99% of your competitors ignore that can catapult your business

All your competitors are competing day in day out to get more business, more customers and granted, at your expense. We all get that, right?! But how many businesses actually and perfectly meet the expectations of their investors, stakeholders, and their customers – all at the same time? A very fine minority in my experience.

You see, a lot of businesses hit some kind of target. A lot don’t hit any. And most, don’t hit all their targets simultaneously – leaving their stakeholders disappointed, at best.

I’m not going to go through all the reasons why businesses fail, otherwise, we’ll be here for days. What I want to shed light and really zoom in on, is the ultimate reason businesses fail over time and how you as an owner or a business leader change the game forever.

The number 1 reason businesses fail whether on day 1 or 10 years later, is lack of innovation.

Sounds trivial? There is a lot to it. Why is innovation so important? Because it’s the only proper and fundamental way to deal with the disease of competition. Innovation is what truly catapults your business over the years. You can have the best sales and marketing capabilities in the world but if your innovation sucks, you are losing and losing fast.

So, what Is Innovation?

More often than not, when we think of innovation we think of technology. And with everything from Apple computers, Alexa, Google Home, to TVs and fridges all being released regularly into the marketplace with brand new innovations that are designed to entice consumers – it’s easy to see why the link is so prominent. However, innovation doesn’t have to be about technology. And many businesses do in fact innovative in a variety of ways across various disciplines.

There are two main spectrums to look at when you want to understand innovation: areas of innovation and degrees of innovation.

Areas of Innovation

You can innovate in every aspect of your business. Innovation can take place in areas that range from product innovation to services innovation, business model innovation and technology innovation. Then we’ve also got organisational innovations which affect how the companies operate and inspire employees to be more productive and social innovations that include things like education and equal opportunity. Last but not least, we’ve got environmental innovations which include environmentally friendly products and operations. And again, each of these falls into a “type”.

Degrees of Innovation

There are four main types of innovation; Incremental and Sustaining which are both lower on the technology scale, and Disruptive and Radical; high on the technological scale.

Incremental innovation is the process where companies work to improve products they already have on the market. Every day, something new comes into the marketplace – and if companies want to be one step ahead of their competitors, this type of innovation will ensure they do so. This allows for gradual and continuous improvements with lower risk and budget as compared to disruptive innovations. The next product release is just a little better than the last one. Products might be smaller and easier to use, or they could be larger and have more features. Television is a good example here. The first electronic television was created in the 1920s and it was only some 60 years ago that TV was starting out in colour. And year on year, improved televisions were introduced to the marketplace. By 2005 we had flat-screen TVs, 2010 3D TVs and a few years later, Smart TVs. Incremental innovation doesn’t generally gain a whole new following for a brand; but it does allow for price increases and people who are loyal to the brand, like Apple or Samsung, are happy to pay more for the extra features.

Disruptive Innovation is a product or service that creates a new value network; it enters an existing market for the first time or creates a brand-new market that it seeks to take over. This is usually one of the most challenging and rewarding types of innovation. Disruptive innovation can introduce companies into ‘blue oceans’ and new exciting territories including new customers and demographics. This indeed doesn’t come without a level of risk. Disruption, wherever it is, can bring levels of resistance and pushbacks. Many businesses that pursue disruption will face some challenges along the way and may even never see their products come fruition. In fact a large portion of what the funding, time and effort that go into R&D never materialise. However, it only takes one idea, one product and one successful business model to be a game-changer. Disruptive innovation is a fast-paced environment and if you are to operate in this space, you need to adopt an agile and speed-to-market culture that allows you to capitalise on your innovations.

Sustaining Innovation is the opposite of this. It already exists in the market, but there are constant improvements that satisfy the customer’s needs. A great example of this is the Apple iPhone which is re-released every year with better, more outstanding features; such as higher resolution photos; or greater voice control. The new and improved version is generally more expensive, but loyal customers are going to pay it because they want the latest technology in the market. Apple has become somewhat of a cult following as well – and people are even sleeping out on the streets for days in advance to be the first to get the latest phone or computer. Sustaining innovations basically work with the same market, but work on increasing profits.

The final main type of innovation is Radical Innovation. Working on the same premise as disruptive innovation, this type of innovation also uses a new business model on top of the new technology. This is the least common type for businesses, due simply to the risks involved. They take a lot of time and energy to develop, but if successful – they can change the world. All products start out as a Radical Innovation, it’s just that some – like the computer, internet and phones, have been around for many years and have now become incremental or sustaining.

Keeping Ahead Of The Market

In such a fast-paced global economy that we are in, if you want to compete in any marketplace, you need to be ahead when it comes to innovation and those who fail to do so, tend to decline and get wiped out sooner rather than later.

A great example of how a company used innovation to take over their industry, is the battle between Yahoo! and Google. When the internet first came to the world, Lycos, Excite and AskJeeves were the most popular search engines available. By the late 1990s, Yahoo! was the leader and purchased the other search engines for a great price. In the year 2000, Yahoo! had 56% of all search engine referrals. The same year, Google had 1%. The following year, Yahoo! began to use the search algorithm of Google, based on page rank, competing for a share in the market. Google introduced a more efficient search engine and by 2002, it had increased its share from 1% to 31.8%. In 2002, Yahoo! had decreased. And this continued. By 2010, Google had more than 65% of market share, while Yahoo! had dropped to just 16.1%. By 2019, Google has 74.75% market share around the world, with 94% market share in Australia. Yahoo! currently holds just 3.94% of the market share.

Innovation is a great way to overtake your competitors, but you have to always stay one or two steps ahead. In this case, Google does this by constantly updating its algorithms which raises the bar and improves the experience of ‘Googlers’ or internet searchers. But if you think outside the search engine realm, the company innovate and computes in a large range of area and industries and innovation is a key integral part of the culture and operation.

How Do You Measure The Success Of Your Innovation?

There are many ways you can measure the success of your innovation, depending on what it is, and what your company does. These measurements can determine where your company stands, and where it’s headed into the future. Here is a breakdown of typically what Fortune 1000 consider and monitor:

• Annual R&D budget in annual sales
• Number of patents filed
• Total R&D headcount
• Number of active projects
• Number of ideas submitted by team members
• Percentage of sales from new products

You can also measure innovation by measuring the new features and offerings your products and services offer year over year. Depending on your size and industry, there is no right or wrong when it comes to measuring innovation.

Although these do cover many aspects of the business, they also leave a few important components out which should be taken into consideration:

1. Return on Investment: this helps to recognise the value of initiatives, programs and the total investment in the innovation.
2. Organisational capability: are the approaches to invention sustainable, and can they be repeated?
3. Leadership: do the senior managers and leaders in the business support the initiatives?

 Inspire Your Team

Innovation is the product of culture. There are many ways to inspire your team to add to your creative and innovative efforts but it all comes down to giving them a reason to care. If your culture doesn’t promote and breed innovation at its core and at the most granular level, the chances are your innovative output is not going to be where it needs to be. Sense of inclusion is a huge success factor in innovation. Your team will often have ideas but might not feel they are worthy of being brought up or explored.

People also need to firmly believe in the mission of your organisation and why you do what you do. Regular proactive requests for input can certainly help the process. This could be during meetings, but also outside meetings. The medium through which you gather ideas is quite important too. Having a slack channel for ideas or an email address to which people can communicate their ideas – is a great start. An open-door policy and a culture where people are proactively encouraged, incentivised and recognised for sharing and collaborating on ideas and thoughts can make all the difference you need.

And finaly...protect Your Innovations

Finally, there are five ways to protect your innovations in a legal sense: patents, trademarks, copyright, trade dress unfair competition, and trade secrets. If you need legal advice and to find out which is the right protection for you, get in touch today!