Presented by CIBC
It seems like everyone is talking about innovation—it’s the subject of business books and magazine articles, and companies from Patagonia to Netflix to Square are praised for their innovative business practices. There’s good reason for that: new services, products and even internal processes can boost revenue, cut costs or save time. Of course, innovation isn’t just about doing things in a new way or investing in new technology. For a change to really be innovative, it must drive growth. But it’s not always obvious just how companies can create a culture of innovation. Here, we offer four practical tips for companies that want to innovate but aren’t sure where to start.
1. Find your focus
According to Greg Elcich, Vice President, Enterprise Innovation at CIBC, figuring out where you should focus your innovation efforts is key to success.
And since “innovation” looks different at every company—Amazon’s efforts are focused on shipping logistics, while Apple puts its resources toward designing boundary-pushing products, for example—it’s important to remember that what a competitor does may not be what your company needs.
Instead, “it comes down to two keys areas: aligning your overall business strategy with your innovation agenda, while gaining a deep understanding of your clients’ evolving needs,” Elcich says. “This understanding is paramount in identifying your company’s biggest areas of opportunity to ‘innovate’ upon.”
That’s why companies shouldn’t think only about huge, structural changes. If the new ideas your company would most benefit from are more specific than sweeping, all the better, he says. “Innovation doesn’t have to be big and complex. In many instances small, simple, incremental changes can prove to be critical for both a business and their clients.”
2. Make sure your people managers are on board
“Innovation requires three things to succeed: ideas, investment and empowered leadership,” Elcich says. And that last one is one of the most important factors for success, because “[even if there are] an abundance of new ideas and the right amount of funds to invest, without leadership’s buy-in and encouragement, your innovation efforts will struggle to succeed.”
In fact, a McKinsey & Company report found 94% of senior executives say people and corporate culture are the most important drivers of innovation. That’s because “leadership at all levels must celebrate both innovative successes and failures, and focus on building an innovation culture. This must be embedded in employees’ everyday work experience, equipping them with the right innovative knowledge, skills, toolkits and frameworks to succeed,” says Elcich.
More importantly, they must create an environment where innovation thrives—which means embracing risk, investing adequate resources (which means both time and money) and tracking outcomes closely.
3. Don’t get too hung up on progress
The most inventive companies implement new ideas quickly—innovation can only occur through experimentation, after all. But it’s equally important not to get discouraged by setbacks or ideas that don’t come to fruition. “Although momentum is important, it’s also necessary to acknowledge that innovation doesn’t happen overnight,” Elcich says. “Having the right teams and talent in place who are empowered to continuously learn and ‘fail fast’ ensures you ultimately don’t invest in things that may not result in meaningful benefits.”
You’ve likely heard the maxim, “fail fast, fail often,” especially in the start-up space. There’s a good reason for that. Failure is an important part of innovative processes, which is why it’s important to counteract people’s natural inclination to avoid it. In a blog post for Harvard University’s division of continuing education, Phil Swisher, the founder and CEO of Trevian Wealth Management and the previous global head of innovation at Brown Brothers Harriman, argued that “many small failures can lead to a big success,” which is why a leader’s most important task is to “keep the organization trying, failing, and learning—and acting on that learning—as quickly and effectively as possible.”
4. Hire diversely
“Diverse teams working in an inclusive environment are more innovative, make better decisions and deliver the best in class results for clients and shareholders,” Elcich says. Experts agree—in 2019, the World Economic Forum published an editorial that argued the business case for inclusive hiring, and one of the top reasons was the correlation between diversity and innovation. It cited a Boston Consulting Group study that found “companies with more diverse management teams have 19% higher revenues due to innovation.”
It makes sense; a diverse group of people that represents a variety of genders, ethnicities, sexualities, classes and abilities will naturally come up with a wider and more creative range of ideas, something that’s key to successful innovation.
“That’s why it’s critical to build a culture that’s inclusive, collaborative, and agile. This empowers teams to be creative, share ideas and take ownership to improve and create the very best client experiences possible.”