The key to surviving in a competitive marketplace is innovation.
There are core principles of innovation that all companies can benefit from if they are followed. The CEO’s challenge is to carefully balance the cost of innovation with the potential gains or pitfalls. For innovation to occur, it is important to create a culture that rewards it at every level. Once this culture is established, innovation will naturally occur.
Here are four core principles that will help you become and stay innovative in a competitive marketplace.
1. Remember that leadership is key to innovation. It doesn’t matter the size of a company; what matters is who is leading it. The right leadership is essential for the success of any company. Once the CEO has embraced innovation, it allows for the culture of the company to naturally fall into place.
2. Encourage new ideas, even if they don’t work out. Employees need to feel free to experiment. Don’t punish failures, but rather celebrate the attempt at innovation. Encourage managers and employees to speak their minds. Too often, people feel they need to be politically correct or are afraid they will show up a manager. You need to know everything that is on their minds. The best ideas don’t always come from the top.
3. Calculate the risk vs. the investment. With risk comes reward. Some of the most successful companies today are the ones that allocate the most dollars and resources for research and development. It doesn’t matter the size of the company, there needs to be a certain percentage of revenue, profit or other number you feel comfortable working off of reinvested back into the company for innovation purposes. If you don’t have the dollars to do so, you probably haven’t been innovative. With no investment made for innovation, innovation and profits will probably be lacking.
4. Be patient. The farmer plants the seeds and waits patiently for the rain to fall. He is not in control of this element. We must do the same with innovation. Once we have done our best, our customers will determine if our calculated risk was in the right place.
Innovation isn’t easy. You have to invest the time and money to make it happen at all levels of your organization. But once you have the culture established, new ideas and new revenue streams will constantly present themselves to you. Carefully weigh the risks and rewards, then start reaping the benefits of being part of an innovative company.