Driving continuous innovation: 6 lessons for business leaders

As they aim to build sustainable, high-growth companies - and avoid stalling growth - companies need to invest in innovation. It is not enough to rely on yesterday’s products, services, or even on historical competitive advantages. Even the most advanced technologies will eventually be copied, imitated or outdated. Companies that neglect innovation are often the first to fail during gloomy economic times or acquired for a fraction of the market capitalization they once enjoyed.

Nurturing continuous innovation presents inherent challenges for the organization. In a KPMG study, 60% of respondents said their companies are still engaged in ad hoc innovation or still have emerging programs, while only 2% believe their innovation programs have been optimized.

How, then, can business leaders embrace innovation to ensure the future success of their companies? Here are 6 lessons to keep in mind.

Invention is the creation of something new, and innovation is the creation of something that sells. That is why companies like Apple and Google are recognized as very innovative, even though Apple did not invent computers, and Google did not invent search engines. Instead, both brands used the power of innovation to dominate their markets.

In order to focus resources effectively, it is crucial to understand this difference between invention and innovation. It is not necessary for companies to invent something new. Instead, they can embrace innovation by looking for ways to make a product, process, or service better by applying new techniques and processes to create incremental value.

The advantages of the first drivers imply that they would gain market share at a speed that no competitor could achieve. However, it is often more difficult for the first initiators to achieve success than for those who follow them quickly. As a first mover, you may need to create a new market and educate consumers while investing in R&D. But this leaves room for quick companions to take advantage of work already done. Most of the world’s most successful companies are fast followers who have invested in innovation; they took products, processes and categories that had already been developed and made them better. This includes brands such as Spotify, Netflix and Starbucks.

There are benefits for first-time companies, including establishing themselves or their products as industry standards, developing economies of scale, and creating high switching costs for consumers. But being the first mover is not a guarantee of success.

When younger, smaller companies outperform industry leaders, it is often because they lack agility. McKinsey’s older partner, Aaron De Smet, defines agility as “The organization’s ability to renew, adapt, change rapidly and succeed in a rapidly changing, ambiguous and turbulent environment.” Startups understand this intuitively - in order to succeed, adjustments are needed in order for product innovation to properly adapt to the market. But as companies grow and become successful, bureaucracy and the feeling of “we’ve always done it this way” can hinder an organization’s agility.

To foster a culture of agility in your organization, foster an agile organizational structure by changing the way teams work. A successful and agile team will be led by flexible leaders with an open mind and astute ability to listen, learn and grow. Agility also requires providing better resources. Companies should revise existing processes and tools, simplify, simplify, and then introduce new technologies as needed.

John Chambers, a former president and CEO of Cisco, once invited his senior management team to a conference room and reminded them that “We have some of the smartest people here at Cisco, but we don’t all smart people. “It is a mistake for an organization to limit ideas to internal research and development (R&D).

He stated: In a world of widespread knowledge where the boundaries between a firm and its environment have become more permeable. Companies cannot afford to rely entirely on their own research, but should purchase or license processes or inventions from other companies.

Through global open innovation, Cisco has been able to reduce research and development costs, increase corporate development, and partner with and invest in entrepreneurs and startups to acquire new technologies and business models that would not otherwise be available to them.

Businesses need to engage with their innovation ecosystem to foster an innovative culture within their organization.

The spirit of innovation is often broken by the fear of failure. In the corporate world, there is little room for failure, so great minds are distracted from thinking outside the box. But people learn from mistakes, so it’s important to create a culture in your organization where failure is acceptable and even encouraged. Progress is made by experimentation, but in the real world most experiments fail. Persistent innovation requires iterative experimentation and spontaneous attitude. Failure should be understood as an important aspect of learning.

Cass Phillipps took this concept to a new level with a series of FailCon conferences, during which speakers were encouraged to share their biggest failures along with lessons learned. Learning from failure builds trust within the organization, helps to gain a better insight into how the company works and increases the chances of successfully introducing innovations.

People, not products, need to drive your innovation process. Instead of looking for the next big thing, companies should be obsessed with customer needs and create a culture in which everyone - from the management team to the front line workers - has the task of understanding the customer and striving to meet customer needs today and in the future.

Airbnb and Uber have figured out how to leverage technology in new ways to create value for customers and have simply leveraged innovation to solve the problem of trust people have had in their markets. If they had focused on product launches instead of meeting a real need, neither would have seen the kind of devastating success they had.

Encouraging continuous innovation is the process of organizing to introduce new ideas, workflows, methodologies, services or products. Every organization is different in most aspects - from the technologies used, to the applied policies, from the culture and demography of the staff, to the creation of new organizational structures. Even organizations that produce similar products and services often differ uniquely in their business model, the way they execute their internal processes, or how they target a particular market.