Continuous innovation is one of the drivers of the economy. It is also one of the factors that play a critical role in determining whether your organization will thrive or will fail. In this blogpost, I give you 5 tips for a better innovation strategy.

This is Why Innovation is Mandatory

I don’t want you to be innovative just because it is inspiring, though that would be reason enough. I recommend being innovative because the success of your business will depend on it. Whether you run the risk of being outperformed by a direct competitor, a new industry player or a virus … Being a flexible and innovative organization will definitely increase your chances against these threats.

However, a quick look at some results from our research (the innovation Readiness Benchmark) among almost 200 organizations shows us that most organizations are not at all happy with their own innovation performance and have difficulties in creating a well-defined innovation strategy and roadmap.

There is not one magic formula to thrive with innovation. Sometimes a moment of creativity or a shrewdly taken business opportunity is enough to be a winner in your industry. Yet, one can raise the odds of success by creating the right conditions, though. In my assessment, there are 5 important conditions for building an innovative organization:

1. Form a Growth Team (even legacy companies do it)

Innovation is 25% (digital) technology and R&D, and 75% organization, culture, leadership, and – this is the most important – the right skilled employees with the right mindset. They are the change agents of the organization. Changing direction is not possible for an organization without employees who understand the way ahead. So, if you want to embrace growth through innovation, you should search for people with up-to-date innovation competencies. In particular, search for people who are curious, flexible, and want to learn new things.

Another step is to form a growth team: a set of employees who constantly look for ways to innovate. The poster children of innovation (LinkedIn, Facebook, Hubspot, etc.) all deploy teams such as these. Legacy companies, like Essent, AEGON and ING, didn’t want to miss the boat and formed teams as well.

Growth teams really work. Take for example Canva. Their terrific growth team created a process by which they improved the user activation rate by 10% on a recurring basis. This resulted in tens of thousands of new active users every month.

So, ask yourself: do your employees have what it takes to drive innovative growth? Or do you have to find them elsewhere? If you have identified the right people, create a growth team!

2. Data is the New Oil, So Drill for it!

Having access to data and analytics are the drivers of innovation. Sometimes christened “the new oil,” data presents many possibilities. For example, analyzing machine-generated data to predict when an action is needed — for example, the replacement of a machine part.

Data really can save costs in a huge way. Take this case study: supermarket chain Tesco collaborated with IBM and analyzed gigabytes of refrigeration data. The conclusion was crystal clear, Tesco’s stores in Ireland were running their refrigerators at lower temperatures than needed. The win: the cooling costs were cut by 20% across 3,000 stores which generated a savings equivalent to €20 million.

So, you have to ask yourself: “what kind of data does my organization have in its possession?” Do you have machines that generate data? What about the insights and value this data can bring with the help of analytic solutions? Apply data driven insight to improve cost competitiveness but don’t forget about the opportunities data presents in providing a better customer experience!

3. Do the Googly Thing: Embrace Scalability

Most innovative companies start small; sometimes, just with a great idea. Of course, they don’t want to remain a small business. That’s why they should code the ability to grow right into their DNA. This will be accomplished through scalability: the ability for a business to accept increased volume without impacting the contribution margin (in other words, revenue minus variable costs).

Eric Ries, the author of the inspiring bestseller The Lean Startup, has great ideas about scalability. He popularized the concept of a minimum viable product (MVP). I actually prefer the term ‘minimum viable solution’ (MVS) as we are not always dealing with products. An MVSP is a product or service with just enough features to satisfy early customers while also providing feedback for future product development. Gathering insights from an MVPS is often less expensive than developing a product with more features.

Even before the “MVP” concept was coined, an MVP mindset was one aspect of what made Google great. “The Googly thing is to launch early on Google Labs and then iterate — learning what the market wants — and then making that great. The beauty of experimenting in this way is that you never get too far from what the market wants. The market pulls you back,” as former Google VP Marissa Mayer once said.

4. Know Your Strengths, Outsource the Rest

Don’t get distracted by non-critical processes. The business of the future is lean and agile. The platform economy will help you accomplish this. Use online workplaces like Upwork or Fiverr to hire freelance specialists. It is a great way to save on hiring costs, avoid administrative hassles, and give great workers from around the world a chance!

This approach seems risky but is becoming an established alternative more and more. Take the company that produces one of my favorite collaboration tools, Slack. They hired design firm Metalab to redesign their logo and improve their website and app. Founder Stewart Butterfield and his team then had the freedom to concentrate on their own strengths: Slack’s core development and usability.

Of course, every step in your work process is important and should be respected, but try to focus on your critical processes and hire outside help to do the rest.

5. New Ideas Cannot be Centralized: Reduce Hierarchy

The daily demands of running a company are huge, especially in the COVID-19 era. Traditional corporates know how to accomplish this. But are they able to identify the most important hazards and opportunities early enough? Do they know how to formulate new initiatives and implement them in time?

To really innovate, you need a less hierarchical workplace where everyone is allowed to speak out. This will fuel more diverse opinions that will reduce the risk of missing the boat.

Some successful organizations have even chosen an all-out, flat management model. Automattic, the company behind WordPress, is a flat organization where individuals can start initiatives on their own. Likewise, companies like Google and Adobe stimulate creativity by allowing employees to work on their own ideas.

The most important thing is to create an environment in which knowledge is shared, and managers receive workplace feedback. New ideas cannot be centralized, so innovative organizations cannot be hierarchical.

What Will the Future Bring? You Decide!

As Apple taught us, “the people who are crazy enough to think they can change the world are the ones who do.” That is why the future belongs to those who dare — those who dare to innovate, who dare to think differently.

At RevelX, we know how to capture new market opportunities and develop innovative business models. We develop and implement winning growth strategies which are insightful, innovative, and practical.

Interested in the innovation power of your own organization and how that compares to the best in class innovators? Participate in the Innovation Readiness Benchmark and get a personalized report on your innovation power and areas for improvement.