Should you be more innovative with your business
Many small business owners and entrepreneurs often ask themselves what’s the right level of innovation which is right for their business. It’s easier to be innovative if you have an imminent need for it, but what happens if your business is sailing smoothly? Many SME owners just rest on their laurels and end up being wiped off the map by more innovative and efficient businesses.
Figuring out the right level of innovation is necessary if your goal is to succeed in the long term. It’s one of the dos and don’ts of any business.
On one hand, trying to innovate is expensive – testing things that don’t necessarily work better than the current setups, developing them and optimizing them. If your innovation didn’t go through well, you just shot yourself in the foot. Not only you spent substantial resources, you are now performing worse than you did before.
On the other hand innovation is what makes the world turn ’round. Needless to explain that some of the world biggest and most successful organisations are driven by innovation. Google, Amazon, NetFlix and the rest of the bunch are innovation-oriented businesses, or are they? I would say they gained their foothold in the market but being innovative and applying it perfectly, but nowadays they are as focused on the day to day operations. Amazon’s biggest challenge has nothing to do with it websites or the incredible system it has set up, it’s about logistics and regulations. Same goes for the bigger internet companies that are now spending more resources fighting laws than building new products. Innovation is still a major part of these young companies’ DNA but at one point in time even Elon Musk spends his time in the Tesla Factory.
So the obvious definite truth is that unless you are a new well-funded startup, you need to spend less than 100% of your time, capital and energy on innovation, but this number is surely to be more than 1% because you know that with the rapid pace of technological advancements, not moving forward will end up in your staying behind the pact.
So we are now left with our original question – how much innovation is really needed? I cannot give you a straight answer on that because this is highly individual but here are some points to consider while making this decision.
1) your industry and competitors – how much innovation is there in your industry? It doesn’t mean that if there’s no innovation you should be sitting stale, but it does give you more leeway to move forward at a slower pace. Just remember that a few years ago the business financing industry (very old-fashioned industry back then with no innovation of any sort, dominated by banks) did not anticipate the entrance of online lenders like Prospa, Capify and GetCapital which are providing 1-hour business loan which is something no one thought would exist. So you have to always look out to new competitors too.
2) how much can you gain from innovation – if you think there is a lot to gain by innovating, it means you already have the idea and all you need is the resources to take it forward. This is a good indication that you should go and pursue innovation, even at the expense of other things. The best innovation comes from within the industry, and if you have a clear idea what to do, it’s probably a good idea. Whereas, if you don’t think innovation can gain you much or have no concrete idea of what the improve, then you should devote less resources into innovation.
3) how “innovative” is this innovation – if you have industry competitors who are already considered quite innovative and are doing something that is easy to replicate, perhaps you should consider it seriously. There is a huge difference between real innovation and copying and modifying and existing idea that has already been tested in the market. The ROI is much quicker with building things that have already been built before (whereas the potential is usually more limited).
4) can you be innovative while maintain your current business – every single small business owner or entrepreneur is super-busy, it comes with the job, but try to think about your schedule and resources objectively and think whether you can increase the investment on innovation in your business without sacrificing too much. If you have a healthy stream of cash and you are losing just a few percentage, it might make sense to focus on more innovation, but if your business is struggling you might want to stabilize it before delving into long term prospects.
To summarize, there is no clear cut answer in regards to how innovative you should be. A lot of it depends on your character and skills too. There are a lot of consideration when making such a monumental decision regarding your business, and we hope our guide has shed some light on the subject.