Where Should You Innovate First?

Current business models are putting companies are risk for failure, according to 80 percent of executives across multiple industries from a recent McKinsey survey. It also reports that 84 percent also believe that innovation is a critical factor for growth and increased revenue.

But despite the concerns, few of the CEOs who worried about the risks presented by their current business model understood how to solve the problem. They recognized that innovation is the key to surviving in an increasingly competitive global marketplace, but what should innovation look like? And where to begin? Businesses in industries of all kinds struggle with the challenges of making the shift to newer approaches and technologies—and confusion about where to innovate first can leave risk-averse companies falling far behind their competitors and jeopardizing future growth.

Develop a Culture of Innovation

Innovation is a mindset rather than an action. And business strategists say that creating a “culture of innovation” within the company is the first step toward figuring out where to begin innovating.

In a culture of innovation, CEOs and other senior leaders can clearly articulate a vision of innovation that includes everyone from senior leadership to the newest staffer. That creates an environment in which any new ideas and suggestions for new approaches can be welcomed, tried and potentially implemented.

In that way, innovation can become organic to the company’s vision—and ideas about where to start innovating can come from anyone, at any time. When anyone in the company feels free to propose new ideas or solutions to existing problems, it’s possible to discover unexpected and unexplored avenues for advancing the company’s goals. An employee with firsthand knowledge of a particular process might be able to identify the place to begin innovating before the company’s designated innovators realize the need.

A culture of innovation also fosters cooperation and communication. It encourages flexibility, creativity and a willingness to embrace risk and the potential for failure. A company culture that supports the idea of innovation can welcome new ideas, reward novel approaches, and view inevitable missteps and failures as a necessary part of growth and achievement.

With that in mind, companies eager to innovate can draw on the perspectives of everyone connected with the company, from staff to outside partners, customers and clients, to gain some clarity about where to begin innovating and how to implement the first innovation initiative.

Taking the First Steps Toward Innovation

Although innovation may be risky, not innovating may be riskier for a company’s long-term health. But when a company decides to embrace innovation, another challenge appears: where to start innovating? And how to implement those innovations in a minimally disruptive way?

From first steps to final ones, businesses of all kinds need to consider what innovation means to the company’s goals. Within a company culture capable of encouraging creative thinking and new ideas, innovating looks different for every business. But key strategies for figuring out where to begin are relevant to just about every circumstance.

Look for “Pain Points”

To determine where to start innovating, consider the company’s pain points—places where customers, clients or even employees have complained or offered negative feedback. Taken in context, those points can reveal reasons a company or service is losing ground to competitors, failing to engage with users and customers, or missing chances to support its workers.

Let’s take rare disease as an example. A major challenge in rare disease is finding patients. This is a great example of something requiring innovation. In the old days all a pharmaceutical company could do would be to educate any physician who may one day come in contact with that type of patient due to the symptom complex. That was costly and ineffective given many rare diseases are ultra-rare and 99.9% of doctors will never come across a patient with it. Now, companies are applying AI in numerous ways to solve this challenge. One example was a project in which the rare disease patients had similar cranio-facial features due to a genetic component. Eularis were able to create a face recognition program to rapidly sort through millions of online photos to find patients quickly. Another example in rare disease is taking patient record data and comparing the diagnosed patient records with the millions of other patient records to find a match for undiagnosed patients with the same condition. In fact, today there are several companies doing this and selling this data to pharmaceutical companies.

 Finding new ways to address these issues can have a ripple effect that leads to innovation in other areas, too. For example, finding ways to address complaints about problems reaching customer support could lead to installing new technologies that not only connect customers with the company on demand, but also create novel ways for employees and representatives to connect with each other and work more efficiently.

Other pain points to consider are those that affect the industry as a whole. Launching an innovation initiative to solve a problem with a wider impact could help a company build its reputation as a leader and foster stronger connections with partners and associates across the industry.

Consider the Competition

Innovation experts say that innovation is the key to becoming and staying competitive in a fast-paced, digitally driven marketplace. In that way, innovation might start with a look at what competitors are doing to meet new conditions in the industry, and exploring ways to adapt those strategies to further company goals.

Rather than imitating a competitor’s new initiative, use it as a springboard for creative thinking and insights about new directions moving forward. The challenge of getting ahead of the competition can also trigger multiple downstream innovations, if a number of different teams and departments involved in the original initiative must make changes of their own to move the project forward.

Take Stock of Current Conditions

Innovation can be incremental, transformational, or completely disruptive, leading to a completely new model of doing business. Incremental innovation moves in small steps and often involves gradual modifications to existing products, services and business models.

For companies new to innovation, a low-risk starting point might be to reevaluate current products and practices for potential improvements. That could lead to a new version of an old offering, or to finding ways to add new features or variations to the existing lineup.

This low-key approach to innovation could incorporate the suggestions and feedback of customers, clients and employees, and poses minimal disruption overall. Reimagining existing products and services to meet the demands of a new marketplace could also lead to major transformation within the organization, as more and more resources are upgraded or changed to accommodate a new direction.

Look to the Past—and the Future

Looking back can point the way forward. Innovation experts suggest that companies wishing to innovate may want to revisit the company’s history for insights about possible innovation initiatives. The time may be right to resurrect a discontinued product or revamp a little-used service for a new audience.

Looking to the future can also provide insights into areas for innovation. Analyzing recent trends along with the changing strategies of competitors can reveal ways in which the industry is evolving, and point to new directions for meeting the company’s long-term goals.

Evaluate Current Models

To figure out where to start innovating, senior leadership needs to take stock of the current business model in light of the company’s long-term goals and the existing business environment.

The evaluation process also includes research into the practical aspects of developing an innovation initiative, such as the state of the company’s budget and staff availability. Evaluating the current model might also include taking a close look at existing infrastructures and determining what parts can support the proposed innovations, and what needs upgrading or replacing in order to move the project forward.

If the goals of trying out a new approach are to advance the company’s vision in a significant way, those first steps toward innovation are likely to lead to others. To move innovations forward, innovators within the company will need to work with its leaders to formulate an innovation strategy.

This framework reflects the company’s priorities and the values of its culture, and sets out a vision that integrates all innovation initiatives into a cooperative whole. In that way, new ideas and proposals can be evaluated in terms of their contribution to the overarching vision that moves the company forward. That helps to unify the efforts of individuals and teams throughout the company, and creates guideposts for the future.

Prioritize and Strategize

Taking an initial look at the company’s needs and ability to innovate is the first step in identifying where to begin a new initiative, especially if the company is newly open to innovation and unsure where to begin. But moving forward with new idea requires strategic planning.

Here, innovators need to review the areas that have been identified as ripe for innovation, prioritize them and create a plan to address the most essential points. This kind of strategic planning can help to minimize risk and bring reluctant staffers on board with the proposed initiative.

Developing a practical strategy for making innovation a reality may also involve making a case for change to CEOs and managers, who are in charge of allocating funds and resources, and who can support a shift toward a company-wide culture that rewards and encourages new ideas and new approaches. That might also include considerations about preparing other stakeholders, such as consultants, contractors and outside partners who might be affected by the new initiative.

An innovation strategy also needs to take into account the “ripple effect” of a first innovation on the rest of the company ecosystem. As an example, if the new initiative involves migrating company computing to cloud-based storage, that would also require time and resources to train staff to use the new software and systems. That could also mean that some jobs would be redefined or even eliminated. It might also remove legacy systems used throughout the company, which would impact every employee who uses company-computing resources to do their jobs.

Strategizing for innovation includes anticipating mistakes and possible failures, and analyzing their potential impact on the company as a whole. Thinking a proposed innovation through from beginning to end helps with presenting it to management and other stakeholders, and also provides for some contingency planning to avoid unpleasant outcomes.

In today’s business world, innovation drives success—but deciding where to innovate first can be challenging. By creating a culture that supports innovation, organization leaders can identify and address the key areas that serve the company’s vision, now and for the future.

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