It’s that time of year to create a winning plan for next year. As part of the Annual Planning process, you will be reviewing last year’s success and failures. As part of that exercise, I encourage you to do a detailed analysis of your products or services and the margins on each. It’s good if you compare this to last year’s analysis to see if your margins are beginning to slip or if they are stable. If you are not introducing enough fresh new offerings or incrementally improving your existing offerings, you will most likely see your margins eroding. I would also ask you to do an audit of how many new products or services you brought to market successfully last year and what percentage of your total sales they make up. Hopefully, it’s at least 5-10%. If not, there is an opportunity for improvement.
Rhythm Blog | Innovation
by Patrick Thean and the Rhythm Team
It is that time of year again when I am developing a workshop for our annual Breakthrough Conference. This year, I am working on a topic that is near and dear to my heart. I think that is why I asked was asked to create and deliver the workshop. The title is “Create a Culture of Innovation to Improve Your Competitive Advantage.”
I recently read about a museum of failure, a new exhibition. The Museum of Failure is located in Sweden and showcases high-profile product failures. Some of the items on display include Google Glass, Harley-Davidson perfume, and BIC for her.
When I read about the companies' responses to being featured in the exhibition, I was intrigued to learn that most of them were comfortable with their failure. They had tried and they had failed, but that was okay; it was all part of innovation.
I came across a video on YouTube titled "Steve Jobs on 'Think Different' - Internal Meeting Sept. 23, 1997." I believe any company that has hit the growth ceiling or is in the midst of a turnaround situation should watch this. The video is only sixteen minutes long and is very inspiring. As you may recall, Jobs was forced out of Apple in 1985 and returned in 1997 when Apple purchased his company NeXT. Steve had only been back with the company for ten weeks before presenting this vision to his team.
“Creativity is a muscle. You have to work it continually. If you do, it will get stronger and easier to use.” Tom Kelley, Partner at Ideo
I glanced through the latest issue of American Way on my flight from Detroit to State College, PA last week, and came across an interesting article on discovering that “Ding” moment of creativity. The author had interviewed Tom Kelley, a partner at Ideo - one of the best known design firms in the country, to gain insight into the creative process. I am always interested in finding new techniques to fuel creativity and like what Tom shared.
If you have ever downloaded any tools or other resources on our site, you know that we usually ask you about your Biggest Business Challenge in our forms. In response to your feedback, we are featuring a blog series on your biggest business challenges! This post is a response to the challenge “establishing processes that scale and add value."
With all of the process improvement tools and methods available, it can feel like a big and difficult undertaking to even begin to contemplate standardizing and documenting your processes. Most small companies have very few documented processes, and this is one thing that helps them stay nimble, adjust quickly, and remain flexible and successful. But, as your company grows and you approach a ceiling of complexity, you will inevitably find that what used to work just isn’t working anymore. Once multiple people are involved in a task that used to be relatively simple or straightforward, you will probably find that you need some more formal processes in place to manage your business effectively.
Startups are amazing businesses. They find a problem that isn’t properly solved in the marketplace and try to resolve that problem in a better, faster and/or easier way. They are one of the biggest innovation engines in the world economy today. They attack problems with a fervent energy that makes incumbent businesses nervous about disruption in the marketplace. But what if we could take some of the principles that startups follow and use them in our existing business? What if we could get the innovation mindset and combine it with the benefit of already having an established business? We need to remember that having an established customer base is a huge advantage that can be leveraged to an established company’s benefit.
"Learning and innovation go hand in hand. The arrogance of success is to think that what you did yesterday will be sufficient for tomorrow." ~ William Pollard
The above quote is perfect for fast growing companies and quick moving teams. I occasionally wonder if I shock company leaders when I tell them that in three years – with no personal growth – that they won’t be qualified for their current position. Of course, that presumes that the position will still exist! One conclusion I form, based on the occasional shocked reaction, is that many leaders at fast growing entrepreneurial firms don't feel personally responsible for being innovative.
Do you encourage your employees to fail? Doing so can produce some breakthrough ideas and products.
I am reading Exponential Organizations, a book written by Salim Ismail and one that anyone in the technology field should read, although applicable to all businesses. One concept that rings loud and clear in the first 100 pages is fail fast, fail often, while eliminating waste.
“Innovation is seeing what everyone else has seen and thinking what no one else has thought.”
- Albert Szent-Guorgi, 1937 Nobel Prize for Medicine
How many new products or services do you introduce a year? Where do you gain your insight on what those products or services should be?
In order to continue growing your business profitably, you know that you have to constantly introduce new offerings that allow you to compete on value, not price, in order to maintain the highest possible margins. To accomplish this, it is necessary to find opportunities in the market and provide solutions your competition has not considered.
If you have read any of my previous blogs on innovation, you already know that I am a big fan of 3M and the resources they put into innovating new products each year. Their goal is to earn 30% of their annual revenue from sales on products introduced in the past five years. One of my suggestions as you gear up for annual planning and budgeting this year is to make sure you have a key initiative around innovation and a line item in the budget to support it. Once you have done this, you need to have a strategy for coming up with those new ideas.