In This Chapter

Innovation can mean a number of things to small business owners. To some, it means inventing new products or services. To others, it means making changes in the way you do things in your business. Even seemingly small changes can have a tremendous impact on the success of your business.

For small businesses, the best definition for innovation is this: a commitment to constant, never-ending improvement. It’s the “how can we do it better” mindset that helps you to improve your own internal processes and the end-result experience you offer to your customers—or, preferably, both.

Today, more individuals than ever before are using smartphones—mobile devices that enable users to access their e-mail and websites and make and receive telephone calls. If you have an e-commerce site that’s based on business models that date from the period before large numbers of people had smartphones, innovation means figuring out a way people can use these phones to access your website and make purchases. It also means finding ways to use your own smartphone to more efficiently manage your website, your marketing, your customer service, and your business as a whole. There are great ideas out there. Why wait for your competition to come up with them, refine them, and implement them?

This chapter gives you ideas for building, sustaining, and benefiting from a culture of innovation in your organization.

In this book, we’ve shared scores of best practices for your business. Some of them may fit your company perfectly. Others may not seem to apply to you. However, the most critical best practice—regardless of your business size, and the one that is definitely relevant to your business no matter what its focus—is to look constantly for new opportunities to innovate.

Innovation allows you to accomplish the following for your business, all of which lead to increased profits:

Creating a culture of innovation can lead to significant breakthroughs for your businesses and for you personally as the owner of that business. Your challenge is to find a way to make innovation in your business something other than a one-time event or an occasional priority.

Here’s an interesting experiment to conduct. Look once again at your strategic plan (see Chapter 7), your value proposition, and your mission statement (see Chapter 5). After you have read through those documents, ask yourself: “Where do I envision this business being 5, 10, or even 15 years from now?” The pictures and events this question summons up should excite you. (If they don’t, you’re probably not cut out to be an entrepreneur.) Now ask yourself: “What will have to change to get there?” The right answer to this question for virtually all business owners is: create, reward, and support people who innovate on behalf of your company.

You want every one of your employees to be innovative. That not only means making innovation part of their working day but also providing them with the support and resources they need to be innovative in the first place.

Your people may need space—both literal and figurative—in order to be able to be creative. Ask your employees these questions to get them to start thinking a bit more creatively:

Whenever your employees come up with good answers to these questions (or even try to), you must find some way to reward them publicly for their effort, whether that effort seems large or small to you. The rewards don’t have to be expensive, but they do have to involve some form of authentic public praise that correlates to the effort and results generated. Any of the following make great rewards for your employees:

No doubt you can think of many others!

Of course, you should never, ever punish or belittle an employee for suggesting a new way of doing things!

You may have heard the term appreciative inquiry, which supports many innovation-related best practices discussed in this chapter. The appreciative inquiry concept helps you to be innovative by challenging you and your employees to make a conscious effort to look at all the good things your business does, and to focus on ways you can work together to enhance those areas.

Constantly encourage employees to think of new ways to do the job better or to provide ideas that will improve products and services. We know of one small business that employs about a hundred people that exemplifies this best practice. At the start of a new year, the business challenges their employees with the following: think of a way to enhance one of the business’s products to open up new markets. The employees could work either alone or in teams. The winning employee or team would be granted two extra weeks of vacation the following year!

Be as clear as you possibly can about the specific areas where you are willing to reward innovation. It’s easier for businesses to be innovative when clear goals and objectives are set and progress is measured.

Plenty of consulting firms specialize in working with businesses and helping them to become more innovative. Before you shell out cash for such advice, however, consider instead looking to your employees, vendors, resellers, and customers for ideas.

You’ll also find that, through industry groups and at conferences, you’ll make connections with others who may be great partners in innovation. For example, perhaps you have a product for assessing candidates for certain job openings. You want to make your product available online; currently, the assessments are paper-based. You might seek out an application developer who can help you put your product online—this would be an innovation partner. You might choose to pay the developer for their development, or you might offer a mutually agreeable scale of royalties on every sale of the online product.

In Chapter 1, we discussed how best practices may come from both inside and outside your industry. The same goes for ideas that promote innovation. You should look at a variety of sources for ideas that help you to innovate, and you should be ready to adapt those ideas from settings that don’t connect directly to your business.

Simply by reading blogs, newspapers, and magazines, you can come up with a seemingly endless series of ideas that can enhance your organization’s capacity to innovate.

Don’t hesitate to look globally for ways to innovate. For instance, as a small business with limited financial resources, you may choose to outsource some components of your processes to reduce costs and improve efficiencies. This is something large companies around the world are doing in countless industries. You might choose to outsource manufacturing of certain components to a vendor to lower your costs. This enables your business to focus on other areas. Or you might choose to partner with a similar business to be more competitive with global customers and bid together on larger projects that neither of you could do alone.

We’ve talked about reaching out regularly to your customers and creating a series of ongoing conversations with them. That’s a great way to build strong relationships with them and build loyalty. It’s also a great way to find ideas that help your company to become more innovative.

Through surveys and outreach efforts to your customers, you’ll begin to garner ideas on how to better support your customers and meet their needs.

Vendors, resellers, and other partners may also have some suggestions on how to be more innovative. In addition to ideas for developing new products or services or enhancing existing ones, they might also have ideas for innovative ways to work with vendors and partners or even package and present your products and services.

Ask your vendors and other partners how they work with other customers. Based on their experience with other businesses, do they have ideas in how you might change or fine-tune your processes? For example, one of your vendors may tell you that one of his other customers has an automated system for tracking inventory that sends data directly to his office so he can be sure the products they need show up right before they run out. You might choose to implement that technology in order to improve the workflow between your business and the vendor and lower your inventory costs.

If you’ve been at this more than a year or so, you have likely developed a network of other business owners whom you know. Reach out to these people and talk to them about how they are working to improve how they run their business. What ideas might they be willing to share to improve processes, market and sell products or services, or open up new markets?

There are a number of groups to help business owners share ideas with others, address issues, and brainstorm ways to be more innovative. Consider Vistage (www.vistage.com), The Alternative Board (www.thealternativeboard.com), and Entrepreneurs’ Organization (www.eonetwork.org) as some options.

Remember that innovation does not have to be some huge step toward something completely new and different. Small changes in how you take orders from customers, how you package your products, new ways to bundle your services, or even how you get things done in the office are all examples of innovation, and these kinds of innovations can have a massive cumulative effect. Look outside your industry for little things other entrepreneurs have done to grow their companies, enhance their products and service offerings, work more effectively with their customers, and increase their own efficiencies.

Market forces are perhaps the strongest motivator of all when it comes to innovation. You must assume that your competition is changing and adapting to the marketplace all the time. You need to be doing the same thing if you expect to remain in business!

For instance: You are a provider of custom-imprinted business gifts, and you just read a survey conducted by a local Chamber of Commerce that showed that many small businesses don’t like the low quality of custom-imprinted business gifts. The survey suggests that small business owners nationwide are beginning to look at alternatives to custom-imprinted gifts. What might you do with this information?

You could just assume that you don’t need to do anything, since your own customers haven’t complained. Perhaps your own recent customer survey showed that customers were generally satisfied with your company and its products. Does that mean you should ignore this data?

That would definitely be the wrong decision. You must use this information to enhance the way you do business now. You have an opportunity to gain market share if you can come up with some ways to promote truly high-quality products and compare and contrast it with the competition. This is an opportunity to learn more about the gaps and opportunities in your marketplace and get a clearer sense of the ways you can serve current and potential customers better!

For smaller businesses, it sometimes seems difficult to be innovative while accomplishing everything else necessary to stay in business. The smaller the business, the more hats it seems that you, the business owner, must wear. You may be tempted to complain that the job of identifying new opportunities for innovation is one hat too many. The more important reality, however, is that your competition is ready to innovate in any and every situation where you are not. And, as if that sobering fact isn’t enough, you should consider that, in today’s global economy, your competition is more than just the business a few doors down or in the next town. Your competition could well be another business halfway around the world. Through even small changes in how you do business, you might find new efficiencies in how you manufacture products, improvements in processes for marketing and selling to customers, new ways to serve your customers, and ways to increase your profits and reduce costs.

Tough economic times and intense competition mean you should focus even more on innovation than usual. When your business faces a major obstacle—and it will—gather the team and draw on your organization’s ultimate competitive advantage: the ability of its people to innovate.

Ask your employees to question everything. Why are things done the way they are? Why can’t they be done differently? What if you changed the way you work with customers? What if you changed how you develop products and services? When new employees join your business, task them with looking at how you work with a critical eye. They may have some good ideas from an outsider’s point of view.

Consider new technologies that may help your business, and read articles on the latest trends in your industry. You’ll find plenty of new ideas that connect to innovation.

Innovation provides you a competitive edge by enabling you to do any or all of the following:

By working on innovative ways to do business during tough economic times, you are ahead of the competition when the economy improves and begins to grow again. For instance, imagine your business offers businesses health-care services by partnering them with the right provider to offer medical insurance for their employees. Costs are increasing and your customers want to find ways to reduce their health-care costs. You are getting pressure to help lower their costs. You develop a new line of business, a service focusing on in-house wellness programs. Specifically, you offer seminars and other services to help your customers’ employees lead healthier lives, which leads to lower health-care costs for the businesses you serve.

In the final analysis, innovation means taking the initiative to improve your business. Let’s assume you manufacture paper products. Everyone in your industry has been talking about going green in their manufacturing processes but haven’t really taken significant steps in this direction. Why not lead the charge? Pull together representatives from the industry to develop green manufacturing processes that will benefit the industry as a whole.

When hiring employees for your business, look for candidates who are thought leaders in their field. Check on employees to see how active they are in utilizing social media channels such as Facebook, LinkedIn, or Twitter and whether they blog or not. Individuals who are innovative have an entrepreneurial edge—they are never happy with the status quo and are always looking for new ways to do things.

We know of one individual who had a blog focused on lean process management. An employer was looking for someone to lead innovation efforts in his business. Through a search on the web, the business owner came across this individual’s blog, loved what he read, and made him a job offer! Why not consider snatching up the most innovative people for your own business? That’s one of the best ways to stay ahead of the competition!