“Innovation” in a Competitive Startup Economy
Seventy-three percent of U.S. adults agree that we’re living in an age of significant innovation. Indeed, the pace at which new products and services are being developed is truly incredible. In 2014 alone, the U.S. Patent and Trademark Office (USPTO) granted a record 300,678 utility patents – the most issued in a single year, ever.
Meanwhile, 81 percent of executives from across 213 companies globally have reported that innovation is an “important” or “critically important” factor in achieving their organizational objectives. This is an encouraging sign. In fact, looking across Silicon Valley and beyond, I see many companies setting up innovation labs and appointing Chief Innovation Officers, often with the goal of developing new technology breakthroughs and disrupting the status quo.
However, with so many new businesses emerging every year, each aspiring to be the “most innovative,” or the next “disruptive force,” what does the term “innovation” mean anymore? Is it just about creating a new product or service? Or is it more than that?
Putting “Value” Back into “Innovation”
Opinion pieces like this one published in the Harvard Business Review and this one carried by Virgin put a bright spotlight on the idea that terms like “innovation” and “disruption” have become so overused that they either feel empty, or end up being confusing and misleading.
When it comes to innovation, I believe that it’s about taking big, but calculated risks to create new, more efficient, or more effective ways of doing things. Innovation is also about creating value, and effecting positive change on a global scale.
Pixar is an unusual but great example of an innovator, and it has truly gone where no big movie studio has dared to go before. Their movie, “Wall-E,” which was set in a bleak and dystopian world, didn’t even have any comprehensible dialogue for half of its run-time. Then came “Up,” which presented an unflinching look at the sadness of losing a beloved spouse. Most recently, “Inside Out” delved into mental health and sadness. None of these topics are traditionally considered appropriate for a children’s animation movie, but Pixar dared to push the boundaries on what has been done previously. They innovated, they met their business objectives, and they raised the bar on story-telling around critically important topics.
Startups, of course, go hand-in hand with this notion of innovation. But there are some startups – apart from the well-known disruptive forces like Uber and Airbnb – that also personify what innovation is all about.
For example, a company called uBeam is revolutionizing wireless charging with its pioneering ultrasound technology that enables people to charge their phones, tablets, sensors, light bulbs, computers, or even hearing aids anywhere, without the inconvenience and tangle of bulky chargers and wires.
Another example, Flatiron, has its sights set on fighting cancer with organized data. The New-York based startup connects cancer treatment centers across the country on a cloud-based platform, so that researchers and doctors can learn from and make better decisions based on aggregated data collected across millions of cases.
Spire offers a digital health device with a difference; instead of just tracking physical activity like most other fitness devices, Spire also measures your breathing and alerts you if, for instance, your breaths are shallow because you’re stressed. The aim is to serve as your personal coach, helping you achieve a calmer and more balanced state of mind based on your health data.
These are just a few startups that are developing and bringing to market some really exciting innovations. But there’s plenty of room for other ground-breaking products, services, and businesses. So, if you’ve been looking to revitalize your startup’s approach to innovation, here are a few best practices to keep in mind:
1. Make Innovation a Cultural Focus
It isn’t enough just to hire creative people and hope that innovation will happen on its own. Instead, focus on fostering a culture that encourages creativity and problem-solving. It could be as simple as setting aside a few hours every week to nurture the flow of ideas – even if they aren’t work-related. Maybe you’d like to recognize a new innovator every month. The key is to keep the innovation spirit alive and kicking. That, in turn, needs the strong support of top management. When those at the top put the focus on innovation front and center, new ideas and creative behaviors are more likely to flourish across the organization.
2. Be Observant
The best ideas don’t materialize from thin air. They’re born from a keen sense of observation. Oftentimes, great ideas are born when tough problems need to be solved, or gaps need to be filled, or value needs to be created. So, in these situations, encourage your team to be informed and aware. Also encourage your employees to read extensively, talk frequently to your customers, conduct external research, and keep their finger on the pulse of the market. Innovative ideas are everywhere. You just need to have the infrastructure to capture them, nurture them, and help them to reach their full potential.
3. Stay Agile and Dynamic
Amazon realized early on what many other startups hadn’t yet realized – if you want to stay relevant, you have to keep re-inventing yourself. In the two decades or so since it was formed, Amazon has evolved from online bookstore, to e-reader creator, diversified retailer, video on-demand provider, and cloud infrastructure services provider. It is no surprise that the company is successful; it understands that innovation is also about evolution. To stay ahead, you need to be able to innovate faster than the competition.
4. Don’t Just Innovate in What You Do, but How You Do It
In a survey comparing innovation among corporates and entrepreneurs, EY found that “very few of the entrepreneurs were innovating in the ‘back office’ or support functions needed to sustain a growing business.”
This is important because startups tend to think about innovating only in their core products or services. But what about innovating in the way your business is run? Are there creative solutions to get more value out of your finance, legal, or human resources operations and processes?
Take risk management as an example; one of our customers, a leading Middle Eastern aluminum smelter, wanted to significantly improve its risk management program and was looking for innovation. Together, we established a better way for them to identify and assess the top risks in each business unit based on a 3-point estimate. We also mapped their risks to controls for greater transparency, and began running Monte Carlo simulations to calculate their Value-at-Risk. As a result, they significantly strengthened their ability to anticipate and mitigate the risks that mattered to their business. Innovation in risk management has not only helped them to manage their risks better, but also to use risk intelligence to take advantage of new opportunities for growth.
Innovating in the New Year
It’s always exciting to stand on the cusp of a new year; to look backwards at how far we’ve come, and to look ahead to a bright future full of possibilities. The opportunity before us for greater collaboration, more creative thinking, and sustainable value creation is truly immense. On that note, may 2016 be your most innovative year yet.