Innovation should be at the core of any entrepreneurship venture today. It is not the secret ingredient anymore, it is the foundation of any business enterprise. If no innovation exists, you wouldn’t even be able to launch your business venture, or survive and thrive in the competitive marketplace. But innovation alone won’t make you a successful entrepreneur unless you understand how to apply it correctly. In this article, I share five tips for leveraging innovation for successful entrepreneurship, the five gears of your innovation engine.
Turn Ideas into Money
Innovation is turning ideas into money, that’s the best definition of innovation that I can think of, simply because it’s practical. At least as an entrepreneur the principal motivation behind innovation should be money, because if you can’t turn your ideas into money, your enterprise would definitely fail. Ideas may fail to turn into money for several reasons, but three strike me the most. One is novelty. Either your ideas lack novelty completely or else they are ahead of their time. Novelty could be in the product or service itself, in your business model or your marketing strategy. If you are copying someone else’s idea without bringing any innovation from your side, your enterprise is doomed even before it can take off. You also need to be careful about how innovative you want to be, as you might end up with something that is way ahead of its time and nobody would want it. For your venture to be a success, a demand or at least the possibility of creating one, must exist. Second is feasibility. Your ideas should be agile enough to be quickly and easily built into successful products or services that customers would want, they should be industrialized to scale to customer demands, they should be flexible enough to be customized or personalized to customer requirements and extendible to be improved and be able to evolve with time and changing needs. Third, your ideas should be non-obvious. If your ideas are too obvious, they can be easily copied or duplicated by competitors which would put you out of business before you could recover your investment. A few things to remember, innovation can be expensive if you have to acquire technology and skills. The most cost effective way is to learn the skills and build the technology yourself. There is always some risk with innovation but you can mitigate it by doing some solid ground work, basing your project on proven research and leveraging existing mature solutions to put it together. Having a highly knowledgeable and experienced subject matter expert on your team would also help in making your project successful while reducing risks and unnecessary costs.
Turn requirements into needs
Requirements and needs are two different concepts in the minds of your customers. A requirement is something that is a must to have while needs are ones that would be nice to have. Requirements are important and urgent while needs might be dreams, desires, wishes or wants. They can survive without their needs but they cannot live without fulfilling their requirements. They do understand what they presently require but seldomly know what they need or will need in the future. If your products or services are based on their present day requirements it most likely won’t be innovative enough to succeed because they are already fulfilling their requirements today. You would just be providing them with another option, then at least try to provide a better, improved, optimized or evolved alternative that might interest them or make life easier. But the real magic of innovation lies in understanding what your customers require and then turning these requirements into needs. Henry Ford once said, “If I had asked people what they wanted, they would have said faster horses.” It seemed that people’s requirement was faster horses but what they really required was a faster means of transportation. Thus Henry Ford introduced them to an automobile which fulfilled their requirement for faster transportation while being a novelty of its time. An innovative product they had never dreamed about but made their lives easier and became their need over time. He managed to turn their requirement into a need. Can you imagine your life without an automobile today, whether it’s your personal car or public transport like a taxi or bus?
Focus on your Customer
By building your business based on the inventory of what you are good at and then extending out from your skills, you could run the risk of not meeting your customers’ requirements, let alone their needs. The best way is to start with your customers by determining what they require and then work backwards. However, don’t try to assume what they require, instead listen, understand their requirements and empathize with them. But don’t listen too hard because as I mentioned earlier, they seldom know what they need. Customers generally determine value based on three principal elements: requirement, experience and price. Your product or service should have the functionality necessary to fulfil their immediate requirements or should be ingenious enough to create a need based on perceived requirements. It is also important that you focus on an innovative experience to provide your customers while fulfilling their requirements. Faster horses might have fulfilled people’s requirements in Henry Ford’s time, but with no improvement on the experience side. There are several ways to skin a cat but to be successful you need to dream of the most innovative way and one which will improve experience as well, like Henry Ford’s car as compared to horses. Finally, the price has to be reasonable, not cheap, I am saying reasonable for the functionality and experience it provides. Henry Ford’s dream was to deliver an automobile to every American family’s doorstep and he fulfilled it, although he didn’t invent the automobile, he did manage to manufacture and sell automobiles which were affordable for his customers. I doubt his automobile was cheaper than the faster horse alternative, but it was faster than the customer’s requirement and definitely a more comfortable experience. The product provided a value which was beyond the customer’s expectations, so the price was perceived to be reasonable.
Create a Wow effect
Trying to meet customers’ requirements isn’t enough because you might be falling short on providing an experience your customers are looking for. In Steve Jobs words, “You’ve got to start with the customer experience and work backwards to the technology.” Think about the incredible benefits you can give to your customers and where you can take them. Although this approach might require learning new skills, it would definitely help you build an innovative, interesting and satisfying experience that your customers will like and want. But you could also go a step further by delivering experiences beyond your customer’s wildest dreams by creating a wow effect. Can you imagine the look on people’s faces when they saw Henry Ford’s automobile for the first time? The best innovation normally takes place on both levels, the functionality and the experience level. Smart phones are a perfect example of how novel functionality along with an exceptional experience can result in addictive products and behavior which can transform the industry and society. Innovation without experience is normally doomed for failure, one great example is Blackberry. Their Research in Motion program provided plenty of innovation, but literally no impact on experience. The other way does work sometimes, for example product launching of the first iPhone was totally based on a unique customer experience with most of the innovation focused on it. What made the difference was the wow effect it created, which in turn created a need that didn’t exist previously and price suddenly wasn’t a limitation anymore. People buy smart phones and automobiles at exorbitant prices today, and they have turned into vanity and status symbols. As you can see, price is relative to value and needs can be created.
Never stop Innovating
The last and most important tip is about continuous innovation. To stay in business you need to keep innovating, and there are several examples of those who didn’t and went out of business. In terms of innovation, I would like to break one important myth, most people are confused between innovation and invention and some believe they are interchangeable. However innovation is not invention, innovation involves the creation of new ideas and the combination of existing ideas, to deliver new and/or improved products or services. Quoting Henry Ford again, “I invented nothing new. I simply assembled into a car the discoveries of other men behind whom were centuries of work.” Too often, people get caught up in the idea of inventing something totally new because we have been repeatedly told to “think outside the box” rather than trying to put old things together in new ways. Innovators are brilliant at recognizing how ideas they have seen in another context or industry could be brought forward. If you are planning to enter a particular industry, first study and understand the trends in that industry to be able to build an attractive and interesting use case to implement into a product or service. Secondly, look out for disruptive technologies and try to leverage them in your project, it will help you build innovative solutions. Please don’t compete in overcrowded industries; it’s not sustainable for high performance since you will be competing over the same factors that the industry has been competing on forever, market space and price. The real opportunity lies in creating uncontested market space. Work on a value innovation strategy that lifts buyer value by raising factors which are below industry standards, creating factors that the industry has never offered before while saving costs by reducing factors that provide little value and eliminating factors the industry competes on. This will allow you to open a wider market, create new demand and generate revenue while making the competition and price irrelevant. Cirque du Soleil is an outstanding example of how you can transform even a declining industry. They did this by eliminating unnecessarily expensive and sometimes conflictive factors like star performers and animal performers that the industry had been competing on while creating new factors brought from the entertainment industry like theme and artistic music & dance which the industry had never offered before. Interestingly, they did not compete with traditional circuses by taking customers from the already shrinking demand for the circus industry, which historically catered to children. Instead they created an uncontested new market space that made the competition irrelevant. They appealed to a whole new group of customers, adults and corporate clients prepared to pay a price that is more expensive than traditional circuses for their unprecedented entertainment experience. One thing you should be very careful about is not falling into a competency trap. Many have made this mistake by focusing on trying to improve factors that were already good enough and the customers didn’t really care about. They thought they were doing continuous innovation like BlackBerry who spent millions of dollars on improving their operating system which was already state of the art at that time, building stringent security features, etc. which most people didn’t care about. John Maynard Keynes truly said, “The difficulty lies not so much in developing new ideas as escaping from old ones.”
In concluding this article, I would like to summarize that for successful entrepreneurship you have to be innovative. However your innovation should have lucrative results, it should be based on creating needs, focusing on the customer and making an impact. Most importantly, if you don’t want your enterprise to end then don’t end your innovation, keep it going for the next generation and the ones to come. Henry Ford’s son Edsel who started the luxury vehicle company Lincoln said, “Father made the most popular cars in the world. I want to make the best.” I hope my tips help you build a highly innovative and successful enterprise. All you have to do is turn on your innovation engine and move on by shifting gears. God Speed!