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The Experts

Redefining innovation

The Experts
Monday, October 27, 2014

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by Tony Nimac (Head of KPMG's Private Enterprise group in Sydney)

Everyone’s always talking about innovation. But it can be challenging to find the right approach to generate, harness and benefit from innovative thinking. For mid-sized companies, with time and resource constraints, the will to overcome these challenges and find a workable paradigm for innovation can be difficult. That’s why it’s important to understand what real innovation is and have a clear and relevant framework for your business.

The first step is to understand what innovation is not. “It’s not confined to technology and it’s not just about efficiency,” comments Julian Fogarty, Director, Innovation, at KPMG. “While technology is an important enabler, and efficiency one important outcome, innovation is actually far broader.”

There are different types of innovation: incremental, evolutionary and revolutionary. Depending on what your objectives are, the approach, risks and resource requirements will differ.
 
Changing your mind
Innovation should be described as new thinking – finding ways to create growth and differentiation through new products, services, operating models and processes. It encapsulates speed to market, finding funding and a willingness to fail and learn fast. “We use the term ‘pragmation’ – pragmatic innovation – to describe a philosophy that is all about dynamic action working within the constraints of a business,” notes Fogarty.

Central to the concept of innovation is actual business and revenue growth.  “Making your business operate more efficiently is great, but real innovation moves your business forward.” And central to that outcome is one key reality: innovation is as much about the execution (and ways to execute) as it is about the idea. “Ideas are easy, but consistent execution is hard,” says Fogarty. “Once you have the idea, you then need the commercial nous to sell your concept, get the resources you need and push through the natural barriers you’ll encounter.”

Building a culture of innovation
Culture is key, so how can businesses build a culture of innovation? The key components that we’ve discovered really work are:

Be pragmatic. Challenge the constraints of your business but be realistic too.  Before you go to your main market, consider launching an idea within a smaller subset.

Seek external perspectives. Look outside your own four walls for inspiration, assistance and feedback. For example, alliances, partnerships, co-creation and connections/collaboration with the entrepreneurial sector.

However, you’ll also need the following ingredients that are essential to success:

Have a top down and bottom up approach. You need inspiring leaders (ideally at the executive level) to endorse and drive innovation, to elevate its importance on the company agenda and provide the mechanisms to tap into your staff. Be open minded and make sure you don’t shut down ideas. If the ideas aren’t hitting the mark, provide constructive feedback and, where appropriate, the resources to back an idea.

Develop innovative thinking in your staff. Spend time helping your team to develop new ways of looking at old problems. You can engage external parties to help with these sessions where needed. 

Recruit innovative thinkers. When you’re hiring, be on the look-out for people who can think laterally and have an entrepreneurial mindset.

Recognise and reward innovation. Put an incentive program in place to reward staff who engage, put forward ideas and take the initiative to execute ideas.

Be prepared to ‘fail fast’. Create a safe environment with acceptable boundaries where people can try and explore without fear of recrimination where their ideas don’t succeed.  Learn quickly from mistakes and keep the ideas flowing.

For companies that don’t have the luxury of a dedicated innovation team, sourcing external groups to help run innovation programs, or divide up responsibilities for fostering innovation can assist in the goal of building a culture of innovation. “With cloud based offerings you can tap into various crowds and manage ideation quite easily, you can take the first step to bring out the best ideas from your employees, customers and wider ecosystems”, comments Fogarty. Of course, the key to success still remains the commitment to be bold and take the best ideas to execution.

Tony Nimac is part of the expert panel for the Directing Growth Program, developed by Australian Institute of Company Directors and KPMG – a one-year program that focuses on four key areas crucial to sustainable growth: risk and compliance; strategy and growth; the director journey and improving performance. Find out more >

Published: Monday, October 27, 2014


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