INNOVATION

Use innovation to grow your business

The successful exploitation of new ideas is crucial to a business being able to improve its
processes, bring new and improved products and services to market, increase its efficiency and,
most importantly, improve its profitability.
Marketplaces - whether local, regional, national or global - are becoming highly competitive.
Competition has increased as a result of wider access to new technologies and the increased
trading and knowledge-sharing opportunities offered by the Internet.

This guide explains how you can make innovation a key business process and outlines the
different approaches you can take. It gives you advice on planning for innovation and creating
the right business environment to develop your ideas. It also outlines the help and support
available to innovative businesses.

● The business case for innovation

● Approaches to innovation
● Planning innovation
● Encourage innovation in your business
● Funding innovation

The business case for innovation

It is important to be clear about the difference between invention and innovation. Invention is a
new idea. Innovation is the commercial application and successful exploitation of the idea.

Fundamentally, innovation means introducing something new into your business. This could be:
● improving or replacing business processes to increase efficiency and productivity, or to enable
the business to extend the range or quality of existing products and/or services
● developing entirely new and improved products and services - often to meet rapidly changing
customer or consumer demands or needs
● adding value to existing products, services or markets to differentiate the business from its
competitors and increase the perceived value to the customers and markets
Innovation can mean a single major breakthrough – e.g. a totally new product or service.
However, it can also be a series of small, incremental changes.

Whatever form it takes, innovation is a creative process. The ideas may come from:
● inside the business, e.g. from employees, managers or in-house research and development
work
● outside the business, e.g. suppliers, customers, media reports, market research published by
another organization, or universities and other sources of new technologies
Success comes from filtering those ideas, identifying those that the business will focus on and
applying resources to exploit them.

Introducing innovation can help you to:

● improve productivity
● reduce costs
● be more competitive
● build the value of your brand
● establish new partnerships and relationships
● increase turnover and improve profitability
Businesses that fail to innovate run the risk of:

● losing market share to competitors

● falling productivity and efficiency
● losing key staff
● experiencing steadily reducing margins and profit
● going out of business

Approaches to innovation
Innovation in your business can mean introducing new or improved products, services or
processes.

Analyze the marketplace

There's no point considering innovation in a vacuum. To move your business forward, study
your marketplace and understand how innovation can add value to your customers. For more
information on analyzing your marketplace, see the page in this guide on planning innovation.
Identify opportunities for innovation

You can identify opportunities for innovation by adapting your product or service to the way
your marketplace is changing. For example, if you're a specialist hamburger manufacturer, you
might consider lowering the fat content in your burgers to appeal to the health-conscious
consumer.

You could also develop your business by identifying a completely new product. For example,
you could start producing vegetarian as well as meat burgers.
You could innovate by introducing new technology, techniques or working practices - perhaps
using better processes to give a more consistent quality of product.
If research shows people have less time to go to the stores, you could overhaul your distribution
processes, offering customers a home-delivery service, possibly tied in with online and
telephone ordering.
If your main competitor's products have a reputation for being cheap and cheerful, rather than
trying to undercut them on price you could innovate by revamping your marketing to emphasize
the quality of your merchandise - and consider charging a premium for them.

Planning innovation
Some innovative ideas may just come to you out of the blue. However, you should ideally have:

● innovation as part of your business strategy

● A strategic vision of how you want your business to develop - if you dedicate your time to
monitoring trends in your business sector, you can then focus your innovative efforts on the
most important areas.
Innovation will not only improve the chances of your business surviving, but also help it to
thrive and drive increased profits. There are lots of practical ways of assessing whether your
ideas have profit potential:

Assess the competition

Find out who your competitors are and where they operate. Use the Internet and advertising
sources such as the Yellow Pages to find out about their products, prices and operating culture.
This can give you an overview of their selling points, as well as any areas you might be able to
exploit.

For example, if the competition is focused on value for money, you might want to emphasize
the quality of your product or service. Search for business listings nationwide on
the YellowPages.ca or Canada411.ca websites.
Study market or industry trends

Awareness of the climate in which your business is operating will help you to plan.

You can find a lot of information about your industry on the Internet. Business and trade
magazines will also feature useful articles.

Build a relationship with your customers

It's not enough simply to know who your customer base is. You need to communicate
effectively with them as well.

Communication involves not only listening to their needs but also actively observing their
behavior around current products and services and generating ideas on how you can make
improvements.

Involve your suppliers and other business partners

Pooling your resources with your suppliers or other business partners will help to produce and
develop creative ideas. Potential partnerships can also be developed through business
networking opportunities.

Next, consider what taking a particular innovative step could mean for your business. Ask
yourself:

● what impact it will have on your business processes and practices

● what extra training your staff may require
● what extra resources you may need
● how you'll finance the work
● whether you'll be creating any intellectual property that will need protecting
 Finally, you should include your vision in your business plan by:

● putting down your goals, both long and short term and detailing how you intend to achieve
them
● linking goals to financial targets, such as achieving a specific turnover by a set date
● reviewing your plan regularly

Encourage innovation in your business

There are many sources you can use to help generate new ideas for the business.

Suppliers, business partners and business network contacts can all make valuable contributions
to the creative process, as well as providing support and encouragement.

Your employees are also a vital asset in generating innovative ideas.

To get the most from them, you need to create an innovative environment and encourage
creative thinking.

Steps to promote innovation

● Make sure you have processes and events to capture ideas. For example, you could set up
suggestion boxes around the workplace or hold regular workshops or occasional company away
days to brainstorm ideas.
● Create a supportive atmosphere in which people feel free to express their ideas without the risk
of criticism or ridicule.
● Encourage risk taking and experimentation - don't penalize people who try new ideas that fail.
● Promote openness between individuals and teams. Good ideas and knowledge in one part of
your business should be shared with others. Teamwork, newsletters and intranets can all help
your people share information and encourage innovation.
● Stress that people at all levels of the business share responsibility for innovation, so everybody
feels involved in taking the business forward. The fewer the layers of management or decision
making in your organization, the more people feel their ideas matter.
● Reward innovation and celebrate success. Appropriate incentives can play a significant role in
encouraging staff to think creatively.
● Look for imagination and creativity when recruiting new employees. Remember that innovative
thinkers aren't always those with the most impressive list of qualifications.
Funding innovation
There are a number of ways you can fund your growth through innovation, either by using your
own funds or tapping into external funding such as loans or equity finance.

However, any route to external funding will need a high-quality business plan that describes
your business and sets out detailed forecasts of where it's going.

Businesses often turn to their banks for a line of credit or loans for additional finance,
depending on their borrowing needs.