4 Rules for Fostering Innovation in Your Business

Innovation is one of today’s most popular business buzzwords.  Most small and growing businesses – and especially startups – say they want to innovate. But most never get there because they are focused only on cost and efficiency, and not creativity, leaving little room for fresh ideas. In fact, many businesses today are actually anti-innovation without even knowing it, says Ed Hess, a business professor at University of Virginia’s Darden Graduate School of Business.

In today’s “do-more-with-less” environment, innovation can be too messy and inefficient to take root. Many business owners seek stability through structure and predictability rather than less-predictable innovation. But the mechanisms that help grow a business are much different from those that simply keep it from falling apart. In order to grow and innovate, you have to be willing to explore a little and put up with some uncertainty and ambiguity.

To instill a mindset of innovation at your business, you’ll need to adopt some different ways of thinking. Here are four “rules” for fostering innovation in your business:

1. Efficiency and scale don’t always rule the day: Typical business management practices in companies of all sizes favor efficiency and avoiding risks.  But being innovative requires taking some risks and trying lots of different things. And that, of course, means that some won’t work out. But those “failures” are like down payments on the things that do work and that will help your business grow.

2. Not everything needs to be certain: The fundamental nature of innovation is that nothing is certain.  Businesses that are best at innovating are dominated by ambiguity and change.  You just have to get used to it and create an environment that allows for experimentation, invention and exploration. It might be nice to talk about achieving near “perfect” performance, but growth experimentation often produces much the opposite. Variance – the enemy of efficient, cost-effective operations – is the norm when it comes to innovation.

If you want an innovative business, be careful about how strongly you insist on efficient, waste-free execution. You can easily end up killing any and all inventive ideas, as the path to innovation is not a straight line.

3. Innovation does NOT have to be revolutionary:  Sometimes, thinking smaller is the best way to foster innovation. All too often, entrepreneurs think that innovations – and just about any goals for that matter – must be big and audacious. They don’t. Get over it.  Setting – and achieving – small, proximate goals and innovations is a better way to keep the ball rolling.  In fact, most innovations are small, incremental things that are close to the core activities of your business – be they products, services, processes or all of the above.

Innovations can and should build on things that have already been done – they don’t have to be revolutionary. Says Hess, “The kind of ideas businesses should want to generate are all about creating new value for customers.”  We shouldn’t care if it’s already been tried, looks like something old in a new package or is borrowed from another industry. What’s most important is that it creates value for your customers that no one else has yet offered them.

Remember:  The best innovators learn how to combine existing things differently or transfer concepts from different industries or domains.

4. Innovation and effective execution can co-exist: Sure, innovation is often a messy process that is prone to failure. But don’t try to isolate it within certain places or people in your business. In other words, don’t feel like you need to segregate innovation from the rest of your business, where you have people who “execute” and others who “innovate.” They can go hand in hand, and the bridge that helps connect them is learning, according to Hess, who is co-author along with Jeanne Liedtka of The Physics of Business Growth (Stanford University Press, 2012). When you encourage employees – and yourself – to learn about new things and avoid “my way or the highway” type thinking, you will foster innovation in your business.

Finally, says Hess, understand that “growth experimentation” is a game of probabilities and the sooner you get customers actively engaged in your experimentation game, the more likely you will be to win.

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About the Author:

Daniel Kehrer, Founder and Chief Content Officer of BizBest Media, is a senior-level leader in digital media, content development and online marketing with special expertise in startups, SMB, social media and generating traffic, engagement and leads. He holds an MBA from UCLA/Anderson and is a passionate entrepreneur (started 4 businesses), syndicated columnist, blogger, thought leader and author of 7 business and financial books.

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