Innovation is discussed so often in business that it is easy to tune it out. But, if you want to stay competitive, you cannot ignore it. And, that goes for even the most established companies. Support innovation must be a key strategy.
JPMorgan set up an innovation “SWAT team” called Area X to scrutinize and decide on new areas of innovation to pursue. The fact that such an established entity as JPMorgan should be prioritizing innovation shows how successful businesses — from promising startups to industry legends — can never give it short shrift. Wherever your business is in its journey, you need to make room in your budget for innovation.
The Challenge of Innovation Support
Getting everyone on board with that can be a challenge. When everyone has plenty on their to-do lists already, innovation can seem like a nice-to-have at some future date. It can also seem like going off the well-trodden path. When you’re asking to set aside real dollars for something unfamiliar, resistance is natural.
To conquer that, talk about the benefits to the company that innovation will bring. Mere cost-cutting is not inspirational. “Make the case that shifting resources will drive customer satisfaction or drive revenue, not cut cost,” advises James P. MacLennan, SVP and CIO at IDEX Corporation.
Also, emphasize how missing the next chapter in technology history could be disastrous to the company’s prospects. The history of U.S. business is one of innovation. However, it hasn’t been a slow, steady ramping up. Innovation happens in fits and starts with some of the biggest innovation spikes transforming the business landscape in a very short time. You do not want to miss the next wave because your company was caught unprepared.
Support Innovation Strategy
To get the most out of innovation, it’s useful to consider where your company currently is in its journey and prioritize innovation accordingly.
Startup stage: Find the money for innovation early.
Funding is oxygen for innovation. Therefore, your startup should take advantage of every funding opportunity it can. Start with your own bank accounts, then seek funding through family and friends. You can also solicit funding through angel investors and crowdfunding or crowdlending, the last of which is growing massively. Crowdfunding has expanded in China from $1.5 billion to over $40 billion in just two years.
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Government funding is another source of cash to fund your innovation efforts. Each year, more than 5,000 small businesses benefit from the more than $2.5 billion the Small Business Innovation Research Program (SBIR) hands out, either in the form of grants or government contracts. Look for additional funding even after you have enough to get your startup off the ground. You’ll need that money to innovate. Don’t assume you won’t be able to secure funding from a certain source. Instead, take the time to apply for that grant or pursue that venture capital lead. You never know who may be interested in backing your brightest ideas until you ask.
Growth stage: Structure your organization in an innovation-friendly way.
As you scale, don’t lose sight of innovation. You need it to get to your next milestone. If you’re feeling stable and seeing a profit each month, that doesn’t mean it’s time to let up on your innovation efforts. Instead, you need to maintain the level of urgency, to keep funding flowing in and your eye on what’s coming next.
Structuring your company the right way can be one of the best ways to keep your focus on innovation. Uber, for example, built urgency right into the organization of the company. “We pushed decision-making down to the most local level possible, meaning we had city teams setting prices, negotiating deals with sports teams, and doing all kinds of things that in a much more grown-up organization would rightly be centralized,” says Uber’s general manager Beth Huddleston. This front-line decision-making allowed the company to create new service lines and seize new opportunities that a more top-down approach would have precluded.
Established stage: Pursue digital transformation and innovation labs.
As the JPMorgan example shows, well-established companies are not exempt from the need to innovate, and today that typically involves digital transformation. Vijay Sajja, founder and CEO of Evergent, a leading global provider of cloud-based user lifecycle management solutions, advises undertaking this process from the outside in. “Start where you expose your services to the rest of the world, such as your APIs or video catalogs. These edge systems are likely built with newer technologies that will be easier to transfer over to a digital solution. Plus, they’ll make the biggest difference in the lives of your customers,” he notes.
In addition to your digital transformation efforts, consider starting an innovations lab. For example, Visa, Fidelity, Citi, and other major financial services companies are now using those to drive innovation. Such labs are helping these financial giants find new ways to do everything from preventing fraud to enable new mobile payment systems. While investing in an innovation lab will require significant resources, the rewards can make it well worth the effort. For instance, innovation labs have helped multiple retailers keep up with the massive changes sweeping that industry. When establishing your lab, you’ll need to decide whether your company will benefit most from spearheading an internal effort, leaning on external partners, or taking a hybrid approach.
Support Innovation Now
Innovation is not optional if you want your business to continue to thrive. Fortunately, you don’t always need the kind of SWAT team that JPMorgan has commissioned. With changes in how you seek your early funding, an organization structure that promotes nimbleness and novel approaches to problem-solving, and making the most of digital transformation and innovation labs, you can successfully innovate no matter what stage of the business journey you’re in.