Innovation and Project Management; Shaken, not Stirred
A common definition of innovation may look like this:
“make changes in something established, especially by introducing new methods, ideas, or products” or “to invent or begin to apply (methods, ideas, etc.)“
Applied to a business, in the beginning there was some visionary, or an entrepreneur who identified a need in the market not covered by any other competitor, or maybe a way to produce current products in a more efficient way and with better quality, even more, a new market open to exploration and development of new needs and a wide range of new products or services to cover such needs. “New”, is a keyword when you build up this business.
As times goes by, your idea would have evolved into stable business well positioned in the market, and you may think is the right time to reap benefits and live comfortably.
The earlier you are tempted to do that and stop generating new ideas, the greater the risk for you and your business to fall into irrelevance.
Evolution (or better, revolution) is more important now that you have a good structure supporting your operations, compared with the beginnings. There are two main ways to deal with evolution and maintaining or increasing competitive advantage in your Company.
- Cost reduction.
In brief, cost reduction is faster, more reliable in the sort-term, but finite, on the contrary, innovation seems risky, difficult, resource consuming, but returns would be higher.
Which one would you choose?
Right. If you recall Maslow’s hierarchy of needs and apply the concept to your business, cost reduction would be a lower level on the on the base of the hierarchy of corporate needs just over basic requirements for corporate survival: needs for resources like capital, human resources, space, supplies, and the like. So, it is necessary, but not enough to achieve success in your business.
You must consider cost reduction as an integral part of your strategy, not as actions to be taken only when times are toughs. As you have greater control over internal costs, it seems that the first element of the cost structure to be analyzed should be employee salaries and benefits. On the long term, this could even compromise business continuity.
A wiser approach to cost reduction would be move beyond such employee salaries and benefits cuts and focus on uncovering cost reduction opportunities by adopting some other continuous improvement approaches such as Lean, 5S, or Six Sigma in order to eliminate waste from processes, plus other interesting business benefits.
Summarizing, cost reduction is not cut expenses, it does not mean reduction in Salaries, personal, etc. but an elimination of those balance items which do not increase competitive advantage.
Once those needs are relatively satisfied, you can focus on upper levels of the hierarchy, and eventually on the other option to achieve a higher level of competitive advantage: Innovation.
Innovation is so important that in a typical Process-Based Organizations it will be located as one of the members of the main group of Strategic and Integration processes that oversee define and decide the shape of the whole organization. Innovation processes will come up after defining Organization Strategy processes.
You may consider, as well, to set up Research and Development process as an additional way to gain innovation in your business, or use feedback captured by a well-shaped customer service to increase chances from an innovative approach to emerge.
There is another interesting way to gain innovation for your business: open contests. According to Anil Rathi, “Fortune 500 companies like AT&T and American Express often sponsor online creativity contests to inspire innovation among their customers, while Kickstarter and other crowdfund platforms have ideas compete to win funding. And organizations can also use competitions to drive innovation within their own workforce.”
By this time, you should be convinced that innovation is one of your best weapons to preserve invested capital (in your business (not only money, but your time, reputation, opportunity costs, etc.)