Then there are the non-novel innovators, the companies that introduce innovations that are new to the business but not to the market. These can be picked up from competitors or from other industries.
But what sort of processes need to be innovative? The Advanced Manufacturing Co-operative Research Centre, or AMCRC, has an “innovativity” program where it teaches SMEs how to be innovative.
The four day course sets out the kinds of skills companies need for innovation.
First, and most obviously, they are taught how to generate ideas and how to select them.
Creative learning
They are also taught about intellectual property and commercialisation. Other elements include knowing when it is time to patent an idea or when it would be more suitable to keep it a trade secret and how to avoid common pitfalls that allow international competitors to legally steal ideas.
They learn how to license technology and develop licence agreements, how to source funding, develop technology transfer arrangements, create confidentiality agreements with employees, conduct rapid prototyping, feed market information into the development work, incorporate innovation into business strategy, develop a business plan around it and break down strategy to prepare for action.
They are also taught issues around sustainability and international best practice.
In addition, they are shown how to systematically identify market opportunities, how to position the venture to attract interest from VCs and banks, how to fine tune their R&D so that they expedite their most promising products and cut out the less viable ones, how to increase speed to market and reduce the risk of regulatory issues, how to take advantage of university funded research products, how to assemble the right teams and capture global markets.
And they will learn how to research and identify market gaps, how to test and enter markets, how to source talent and expertise at low cost and how to plan and execute profitable exit strategies, either through a trade sale or IPO.
Getting connected
Innovative companies have these skills.
Shawn Smith, who runs a start up web design outfit Hypnotic Zoo, says he gets his ideas connecting with people and networking relentlessly.
“I would have 500 plus on LinkedIn, more like a 1000 and I use that a lot,’’ he says.
He will turn up to all functions and events. It’s not just to get clients but to listen to ideas and take them in. One idea bounces off the other, and new concepts are created.
Deloitte chief strategy officer Gerhard Vorster says companies can only really be innovative when it’s made part of their strategy.
At Deloitte, there is a very clear directive that 30 per cent of the firm’s revenues must come from new, or substantially new, services and offerings every three years.
The reason for that is simple: nothing stays new. Anything novel is picked up quickly by competitors.
Vorster says the strategy actually forces people inside the company to think about new and different services and methods of delivery.
“We are a billion dollar business and that means we are looking for this rolling $300 million of new and substantially different things that need to come out,’’ Vorster says.
“That drives a lot of behaviours.”
“In our business, it’s crucial to have that because we need replacement revenue. Some of our services are just becoming commoditised at the speed of light so you have to have replacement revenue. But you also need growth revenue.
“Looking for growth and outperforming your competitors in a mature market is difficult. For your people, it’s important that they feel they are part of an organisation where ideas are accepted, where ideas are encouraged, where ideas are given a chance.”
Rush to market
Vorster says companies now need to learn how to rapidly scale up ideas. There is a small window of opportunity in today’s market.
He says innovation can also come from collaboration. Smaller companies need to target larger companies for collaboration.
The smaller company has the agility that the larger company lacks but the company has the resources, market depth, customer base and supply chain.
It’s a win-win for both, he says.
“What we are starting to see is that small companies that are smart are actually starting to look very early in their life cycle as to what amplifies their value,’’ Vorster says.
Other ways of innovating, he says, include working closer with customers and developing funding alliances.
Businesses far smaller than Deloitte would do well to implement some of these, not necessarily expensive, spurs to innovation.
