Some of the fastest-growing businesses in Australia come out of the small to medium business sector.
Experts advise the importance of continuing to innovate during tough economic times to drive performance, growth and profitability when the economy improves. Winners often emerge out of recessions. They almost always beat their competitors because they have something new.
So, what is innovation?
Business innovation is about creating and successfully applying new ideas within your organisation. This could be in the form of a breakthrough, such as creating and bringing a new product or service to market, or a series of smaller innovations such as finding better or more efficient ways of working and becoming more profitable.
Innovation is more than simply having a good idea. Innovation is about turning new ideas and concepts into something that will create value. Value can be commercial, social or organisational.
Innovation is not just about products
Innovation can occur in any aspect of your business. The four most common types of innovation are:
Developing new products or services, enhancing existing products or services, and technological innovation. For example, introducing a new procedure, including a new technique that will enhance the client experience. Elements of surprise demonstrate that you have put thought to elevate not just treatment outcomes, but also ways that can make a client feel appreciated and supported. It’s not always just about skin treatment results, it could be about improving comfort, enhancing relaxation and improving mood. Think about how you can make that happen in your business.
Applying an innovative approach to improve operational processes in your business, such as procedural strategies e.g. updated consultation process, introduce a relaxation protocol to enhance client comfort and stress management at the beginning of treatment. These subtle changes introduced into their treatment program can be very impacting on your clients.
Focus on promoting your product and services by stepping up their benefits. Make sure your marketing is not overly focused on just sales acquisitions. Share more detail on any new research that validates how they can support skin improvement or better health.
Create new value packages that extend to better health and stress management, not just skin improvement. Include a relaxation and stress management massage within your skincare packages. Launce wellness supplements or nutritional powders to elevate antioxidant benefits, better gut health or minimise inflammation and fatigue.
Business model innovation
Structural and/or financial model changes and innovative business expansions that branch out into new areas of independent, yet complementary services can help differentiate and sustain business growth and the business’s profile in the industry.
Here are some examples that come to mind:
- Issada: Originally a high-quality, mineral makeup range. The new owner Deb Farnworth-Wood purchased the company and formulated a cosmeceutical skincare line to complement the makeup as companion products with the same name.
- MargiFox Distributors: Adding to their Environ skincare distribution business, MargiFox Distributors introduce Jane Iredale Mineral Makeup and during COVID-19 extended their brand by launching Advance Nutrition Program a premium range of supplements that support
Healthy skin and help enhance overall wellbeing.
- ClinicalPro: Innovators in equipment technology, launched their own nutraceutical skincare and in recent times stepped up their training programs by becoming a registered training organisation. In that way they can prove Government-approved national training options allowing business to pursue a full qualification for the services they provide.
Innovation can be incremental or radical
Have you ever made improvements to existing technologies, processes, products or services? This type of innovation is called incremental innovation. It’s the most common form of innovation today and often produces incremental growth, an example could be a salon is purchased and the new owner evolves the business into a clinic through incrementally introducing new equipment and progressively changing the brand to something of a higher standard.
In contrast, radical innovation entails high uncertainty with high risks and has potential although no guarantees for high returns.
The camera industry can be used to illustrate the difference between incremental and radical innovation. Kodak led the industry for years, developing new and improved products based on traditional film. However, these incremental innovations were all based on the same technology. Later, a radical innovation – digital imaging – revolutionised the industry and the way people capture, store and use images.
Incremental and radical innovation which approach do you use?
- Exploits existing technology
- Involves little uncertainty
- Focuses on cost or feature improvements in existing products or services, processes, marketing or business models
- Improves competitiveness within current markets or industries
- Explores new technology
- Can involve high uncertainty
- Focuses on processes, products or services with unprecedented performance features
- Creates a dramatic change that can transform existing markets or industries, or create new ones
Innovation can be closed or open
In your business today, you probably have access to more information that you can use. You do not have to and you should not rely only on internal knowledge or research. You can acquire (buy or license) processes or inventions from other businesses. You can also take outside any inventions that your business is not using internally (selling or licensing them or developing them through a joint venture) to raise additional revenue. This is what happens with franchising.
The availability of information on the internet has been a catalyst for open innovation. In the past, most innovating businesses used closed innovation, keeping their discoveries highly secret.
Closed and open innovation which approach do you use?
- The smart people in our field work for us
- To profit from research and development, we must discover it, develop it and ship it ourselves
- External research and development can create significant value. Internal research and development are needed to claim some portion of that value
- If we create the most and the best ideas in the industry, we will win
- We should control our intellectual property, so that our competitors cannot profit from it
- We will own all results from contract research with universities
- Not all smart people work for us. We need to work with smart people inside and outside the business
- The business that gets innovation to market first will win
- Building a better business model is more important than getting to market first
- If we make the best use of internal and external ideas, we will win
- We should profit from others’ use of our intellectual property (license out), and we should license in intellectual property belonging to others whenever it advances our business model
- We will partner with universities to create knowledge and encourage use outside our field.
Is your business innovative?
You are probably already innovating in your business to be successful but may not have thought about it in these terms.
Could your business be more innovative?
Do you want to boost innovation in your business?
Here are two useful tools to measure your innovation:
- Innovation readiness quiz: This quiz will help you receive a personalised report that highlights your business’s readiness for innovation and identify areas that your business may need to develop.
- To access it please visit the Qld Government website here and search for the innovative readiness quiz in the search bar.
- Business Skill Planning: This is also a valuable tool that is available from the Qld Government website. This section will guide you through the planning phase of establishing innovative changes in your business.
In our constantly changing world, it is important to remember that staying static can only lead to you weakening your position in the market, so innovation is a must for those who wish to survive. As they say, business is not for the faint-hearted.