First Published in Innovation Aus

Anyone who has read enough self-help books will know that happiness is not something that you can ‘do’.

But if you do a whole range of things, like keeping healthy, doing something you love and having people you love in your life, it’s odds on that happiness will be the result.

It’s much the same with innovation. Businesses can’t ‘do’ innovation. But they can do a whole lot of stuff that will result in genuine innovation.

And while much of the talk around innovation these days focuses on start-ups and big business, the companies that are best placed to put together the kind of stuff that results in innovation are SMEs.

We are in desperate need of innovation in this country. A massive shift in the global economy has made it more important than ever that Australian businesses look for better ways to do things. Disruption means many industries are changing forever – basically because what customers want and how they want it has changed. The businesses that don’t catch up will die.

It’s clear that if we want to impact our lives for the better these businesses are going to need to be the change makers.
The massive growth of economies over the past 20 years has largely benefitted the big end of town and they have not really left the country in better shape than they found it.

Coles have been punished for the way they treated their suppliers and the Commonnwealth Bank is embroiled in an investment scandal, to name just a few.
So why do small and medium businesses suddenly have an advantage?

There are two reasons.

Given that the next phase of innovation is the digital revolution, it’s significant that the tools required to operate and succeed as a small business are numerous, cheap and fully functioned. They are also quick and easy to deploy. Basically, there is no barrier to accessing the tools and software SMEs will need.

Second, the owners and shareholders of these businesses have the ability to create or be anything they want. They are not beholden to a board or shareholders.

In contrast, big business is addicted to expensive enterprise products that take a long time to deploy and are very expensive. They are not in the position to do anything they want. They have too many stakeholders to really make a change.

And at the other end, while start-ups are inherently all about innovation, the hard truth is that most of them will fail. For every start up that hits the headlines as a success, there are countless others that never made the cut.

So if you are running an SME, how do you jump on the innovation bandwagon and make it work for you?
There are four things you can do right now.

1. Create an Innovation System

It’s possible to do in 90 days. The world’s best innovators work relentlessly in this manner.

There are two types of innovation. Those things you might do that add value to your existing customers and those you could do to attract new customers. These will be your buckets.

Start with a list of possible projects for each bucket then allocate the resources to each project within the buckets.

Innovation comes from collaboration, so create a multidisciplinary team and ensure this team has the time and space to do the work. This is critical. Too often, innovation gets tagged on to people’s day jobs and as such, is doomed to fail.

Next step is to give the team enough time to do high level research that can establish the real opportunity for each of these ideas.

Talk to existing and potential customers – and really listen to what they say (see point three). Then work with the required stakeholders. Basically, this is anyone who can help either kill the idea or give a sense of the opportunity. You’re not looking for certainty at this stage. It’s too early. But you do need some rigour around the process so you know early on whether to keep going on each project, or to bin it and move on to something else.

At the end of the month your customer knowledge and research should be at a stage where can make a decision on the ideas worth progressing. Agree on the owners for each project and work for another month on these ideas.

Next, you create a team to review those projects and every month you make a decision on whether to stop or continue each one. Be quick and deliberate in accepting that something that is not going to work. The projects that are going to work are the ones that need the resources.

It’s important to understand that “innovation is a process not a thing. The thing, the outcome of innovation, is the invention.”

2. Think about the big picture

The eccentric CEO of adventure wear retailer Patagonia has built a successful global business based on his ability to innovate in his category. The company has been at the forefront of the ultra competitive technical wear market since 1973. They have innovated every single component of the business from the materials they use to the way they treat staff. His philosophy is instructive:

“If you’re making decisions based on meeting your earnings-per-share number and not about the long-term health of your company, its employees, the environment, and the community you’re operating in, then you’re probably making a decision that isn’t good for the long term.”

3. Listen to your customers

This is crucial and we are talking here about really listening. It’s easy for businesses to say they are listening because they run focus groups and get feedback from the sales representatives. Neither device is enough. I just completed a journey map of the automotive retail experience and 18 dealerships all failed at the same point.

I became a customer of one of the new energy companies and I can tell you no one there is listening to the customer.

It is true that it’s not easy. Your customers are changing. They’re under different pressures and often don’t have any insight into what is driving their behaviour.

It used to be popular for companies to make their staff spend a day a month out in their branches. It’s a good start, but it’s not enough. You have to get into your customers skin to the point where your perspective changes. You are then in a position to think about new ways to deal with the customer. In the Book the Road to Reinvention the writer talks about dogfooding – the process by which employees are made to use the company’s systems, services and products.

Until you can do this, your ideas and plans will always be constrained by the ingrained assumptions that have driven the past – and that’s not enough for the future.

4. Build collaborative partnerships

In a recent Harvard Business Review article called Breaking out the innovation box, points out:

“What’s certain is that, in an increasingly complex world, the biggest growth opportunities will come more often at the intersection of multiple companies than from single visionaries acting on their own. It’s important now that companies break out of their innovation boxes and find ways to link their innovation efforts. In the years ahead, the greatest corporate innovation may arise in the innovation process itself.”

Start to work with others outside the business on your initiatives, work closer with manufacturing partners, industry groups, innovation hubs and accelerators.

Large companies like Procter and Gamble have been on this journey for years and now have a huge pipeline of innovation.

None of this is easy, none of it is certain but companies that don’t put the structure and thinking in place will miss the opportunity.

If you are a small to medium business owner, and you are not in change of your own future, who is?