Businesses Need Innovation

Driving Growth and Overcoming Resistance

Innovation makes or breaks the long-term success of any company. History tells us that companies that rest on their laurels risk falling behind. But innovation is a challenge for any company. It means catching up with competitors. It involves fighting from the brink of bankruptcy. It also requires leading from the front with a staff that became complacent.

Constant innovation ensures to stay ahead or to become a market leader. This can be achieved by creating new product lines. It can also be done by improving existing offerings. Another way is by radically changing the ways to serve customers and interact with them.

Innovation always comes with its own challenges because it requires constant change. My experiences tell me that employees typically are change averse. OCM (Organizational Change Management) is an area that is too often neglected. But keeping the workforce in a change mode is the only way to overcome resistance within an organization. Think about a large software company: every 1^st quarter there are huge reorganizations. It prolongs into the 2^nd quarter until everybody knows what to do. Should’t these reorgs occur constantly? I’m sure there are different opinions.

In this blog, I’ll explore ways of innovation in business. I’ll discuss the process of inventing new products and enhancing existing ones. I’ll also cover strategies for overcoming change resistance.

Turn Ideas into Reality

Imagine a tech company that has built its reputation on producing high-quality smartphones. For years, their flagship models have dominated the market. Competition intensifies, and consumer preferences evolve. The company realizes that it needs to innovate to maintain its market leadership. The leadership team decides to venture into a new product line: SmartHome devices. The idea is to create a series of interconnected products that can be controlled via the company’s smartphone apps, enhancing the overall user experience.

The new SmartHome product line includes smart speakers, smart lighting systems, security cameras, and smart thermostats – all managed through the smartphone app. While the concept is exciting, the journey from idea to product launch is complex since it involves market research, product design, prototyping, testing, and production and marketing. Let’s see how their innovation journey evolves.

Market Research: Customer needs, preferences, and pain points must take center stage during thorough market research. The company must get the personas right. They gather feedback from potential customers, analyze competitors with their offerings and target audiences, and identify gaps within their products. This research helps that the new product line addresses real consumer demands and validates the product concept.

Product Design and Development: Armed with research insights, the company’s product development teams begin designing the SmartHome devices along with the new app for the smartphone. They focus on creating user-friendly and cool products that seamlessly integrate with the new smartphone app. The team also includes robust and sophisticated security features to address the many consumer concerns they got during the market research.

Prototyping and Testing: Early prototypes are tested internally and with a ‘family and friends’ approach they embarked on previous prototype phases. They need to identify as many issues as possible to have these flaws fixed before the official product launch. As you know, any defect coming after the product launch needs 10-fold more effort to fix.

During beta testing, the scope is expanded with a select group of customers to gather more feedback on usability, performance, security, and overall satisfaction. This iterative process helps refine the products before they are launched to the broader market.

Production and Marketing: After successful testing, the company works closely with manufacturers to ensure quality standards are met and that production can scale to meet anticipated demand. Simultaneously, the marketing team develops a comprehensive promotion campaign for the new product line, including product launch events, advertising campaigns, and partnerships with influencers and tech reviewers. Guess which company delivers every year a superb job in marketing? You always can learn from the best.

Innovation helped this smart phone company to open new revenue streams, develop their brand awareness, and strengthen customer loyalty. Of course, besides new ideas, the ability to execute is a key success factor.

Improving Existing Products: Enhancing Margins and Usability

While creating new products is essential, innovation doesn’t always have to start from scratch. In many cases, the best opportunities for growth lie in improving existing products. This approach can lead to better margins, enhanced usability, and increased customer satisfaction.

Margin Improvement: Improving existing products should have two directions: increase margin (and profitability) and make customers happier. With an ERP system, you will have all data at your fingertips to optimize the production process, identify cost drivers and reduce them, and enhance the product’s perceived value, allowing for higher pricing.

Let’s think of a furniture manufacturer who might discover that by switching to a more durable, yet cost-effective material, they can reduce production costs without compromising quality. If you follow (even use) IKEA furniture you could see the move from wood to composite materials over the years: cheaper materials and sometimes even more durable. This cost-saving can either be passed on to customers as a price reduction (to sell more) or retained as increased profit margins.

Another approach to improving margins is through product differentiation. By adding new features or functionalities, companies can justify higher prices. And I have to say that for some industries it’s easier to add features and functions than others. It makes no sense for IKEA to add a fifth leg to a stool. But a software company or a car maker might introduce AI-powered tools into their existing product lines which will provide more value to consumers and allow them to charge a premium subscription.

Usability Enhancements: Products that are easy to use and meet customer needs are more likely to retain existing users and attract new ones. Therefore, a sophisticated feedback channel from consumers helps the product teams to stay on top – and in touch. Staying ‘in touch’ sounds trivial, but I know from the software industry that development and product management is sometimes too far away from their customer base.

Consider a kitchen appliance manufacturer that has received feedback about the complexity of their high-end food processor. Customers love the product’s functionality but struggle with the user manual and control settings. Why on Earth is there still a user manual for the operation of the appliance needed? In response, the company redesigns the user interface, making it really intuitive with no need for manuals. As a backup, they provide video tutorials that guide users through the product’s features. These changes also reduce the likelihood of product returns and negative reviews, ultimately boosting sales and customer happiness.

Customer-Centric Innovation: Continuous improvement requires constant analysis of customer feedback and usage data. Realtime streaming data analysis of the web should search for company-specific products to identify early stage of unsatisfied customers – of course, collecting feedback from satisfied customers doesn’t hurt. Such a customer-centric analysis ensures that improvements are aligned with what customers want, leading to higher adoption rates and stronger brand loyalty.

A car manufacturer notices that customers frequently request more energy-efficient hybrid and plug-in hybrid vehicles. Like Volkswagen recently started a joint venture with Rivian in response to boosting their vehicle software technology strategy, they are now on their way to an “iPad on four wheels”, a car that is controlled 100% by software. Think about an FSD (full self-driving) car: visual traffic recognition is being translated into automatic decision-making and maneuvers of the car, without the driver’s intervention.

Overcoming Change Resistance: The Human Aspect of Innovation

While the need for innovation is clear, resistance to change is a natural human response, especially when it involves uncertainty, new processes, or even shifts in a company’s culture. However, overcoming this resistance is crucial for the successful implementation of an innovation culture.

Understanding Resistance to Change: Various reasons of change resistance can jeopardize an innovation agenda. Employees might be reluctant to adopt new technologies, they fear their jobs go away and they have to be retrained on completely new subjects. Sometimes, they are skeptical about the benefits of the proposed changes. While employees often feel comfortable with the status quo, they may be concerned that new innovations will disrupt their routines or make their jobs more challenging. In some cases, there may be a lack of understanding or trust in the leadership’s vision, leading to further resistance.

Communication and Involvement: Clear and transparent communications is one of the most effective tools to overcome resistance. Leaders should articulate the reasons for the change, the expected benefits, and how it aligns with the company’s overall goals. Early involvement of employees is a key success factor by seeking their input, addressing their concerns, and providing opportunities for them to contribute to the innovation effort.

Town hall meetings are very effective tools for leaders to seek employees’ opinions and concerns. They can explain, for example, how more automation of manufacturing lines will improve efficiency, reduce manual work, and create opportunities for employees to take on more skilled roles. By taking employees’ concerns seriously, the company can build a sense of ownership and reduce fears associated with the change.

Training and Support: Providing adequate training and support is another critical factor in overcoming resistance to change. When employees feel confident in their ability to adapt to new processes or technologies, they are more likely to embrace change. Full-scale and well-designed training programs, workshops, or one-on-one coaching sessions will help employees to obtain the necessary skills.

Incentives and Recognition: Incentivizing and recognizing employees who embrace change can also be a powerful motivator. Positive reinforcement encourages others to follow suit and fosters a culture of innovation. Incentives might include financial rewards, such as bonuses or promotions, or non-monetary recognition, such as public acknowledgment or awards (e.g., lunch with the CEO).

Consider a healthcare organization that is rolling out a new electronic health record system. To encourage adoption, the organization could offer incentives to departments that achieve the fastest and most effective implementation. Additionally, recognizing individuals who excel in using the new system during company-wide meetings can inspire others to embrace the change.

Creating a Culture of Innovation: Ultimately, the goal is to create a culture that values and supports innovation. This involves fostering an environment where employees feel safe to experiment, take risks, and learn from failures. Leaders play a crucial role in setting the tone by encouraging creativity, rewarding innovative thinking, and demonstrating a commitment to continuous improvement.

When a tech company implements an “innovation day” once a quarter, employees are encouraged to work on new ideas or projects outside of their regular responsibilities. Other companies organize “Hackathons” to appeal to the younger staff (Early Talents). During a hackathon, people with computer skills work together to create new software, applications, and features. The best ideas are being presented to senior management, with the potential for further development and implementation. Sometimes, price money or other forms of recognition are awarded.

Innovation as a Business Imperative

Today, innovation is not just a buzzword – it’s a necessity. Whether it’s inventing new product lines, improving existing offerings, or enhancing customer experiences, businesses must continually innovate to stay relevant and competitive. However, innovation also requires overcoming the natural resistance to change that can arise within organizations.

Motivating change and innovation must be a major focus of business leaders. Sometimes, gamification helps to win employees over by giving them a chance to play and compete. Sometimes, methodologies such as Design Thinking help to spawn ideas and brainstorm new ways of thinking. In a future blog, I will explain Design Thinking in more detail as I’m a proponent of this methodology.

By understanding the human aspect of change resistance and implementing strategies such as clear communication, training, incentives, and recognition, businesses can create a culture that embraces innovation.

As the world continues to evolve, businesses that prioritize innovation and foster a supportive environment for change will be well-positioned to lead their industries and achieve lasting success. In the end, the ability to innovate – to think creatively, adapt quickly, and execute effectively – will distinguish the leaders from the followers in the marketplace.