What is innovation and how do companies innovate?

Posted on 11 Dec 2014 by Jonny Williamson

Innovation is a much hyped word, you don’t need to read far in the business press or media to be exhorted to innovate. Ben Rotheray, product marketing manager at Bott Ltd. asks what actually is innovation and how do you do it well?

Ben Rotheray, product marketing manager, Bott Ltd.
Ben Rotheray, product marketing manager, Bott Ltd.

To quote management writer, Peter Drucker: “Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or service. It is capable of being presented as a discipline, capable of being learned, capable of being practiced.”

This quote argues that as the wider environment changes, organisations need to change their offering to match customer requirements, therefore firms need to develop capabilities to innovate and manage these changes.

For Bott, our challenge is to act in an entrepreneurial way, exploiting change to create solutions which satisfy the needs of our customers. As argued in the quote, the actions involved in doing this can be learnt as a discipline and process. The scope of this subject is huge but in this blog we’ll just touch on some of the principles which drive our innovation strategy and give some useful examples of innovation.

At Bott, one of our central innovation approaches is the philosophy of really taking the time to understand customer needs. Whether that need be shorter lead times, additional service support or a very low cost solution, the challenge is to fully understand and then to optimise your operations around that need.

Take for example the quantum shift which is currently taking place in the supermarket business; Lidl and Aldi realised that customers wanted straight forward value pricing along with satisfactory quality – but crucially were happy with a smaller range of products. This key insight pushed them to develop a business model based around smaller stores with lower overheads – allowing the stores to offer lower prices and in doing so, satisfy needs which were not being met by the mainstream chains.

At Bott this approach makes us look at all areas of our business, from process to product to ensure that our operational approach is aligned to customer needs; the ultimate aim being to find better solutions to customer’s problems.

One challenge for any company is that innovation rarely happens with one individual sitting in a room, arguably it’s what happens when connections are made, and an idea germinates in one mind and sparks with another to create something which is more than the sum of its parts. This story is well illustrated by one of the most famous innovations, the Post-it® Note.

The now famous Post-it® Note came to market through a series of events which of themselves did not create value, however the sharing of knowledge and sparking of ideas led to the creation of the world’s 4th biggest selling office stationary product.

The first event took place in 3M’s aerospace adhesive business which accidentally managed to create an incredibly weak, pressure sensitive adhesive. While this adhesive was too weak for aerospace activities it did have the benefit of being reusable and easily peeled off without leaving any residue.

Initially 3M could not think of a good use for the adhesive, however in time the company developed the idea of an adhesive bulletin board, despite some benefits sales forecasts were poor and the product was shelved.

At this point one of 3M’s engineers, Art Fry, sang with a local choir, and was frustrated by page markers falling out of his hymn book, at this point, Art, had a light-bulb moment, why not put the low tack adhesive on the paper not the board? The concept of the Post-it® Note was born. From here one would expect a sure-fire hit, but there were technical and marketing challenges to overcome. Finally after a few failed launches, 3M got it right and the rest, as they say, is history.

This story powerfully illustrates the fact that successful innovation involves managing knowledge, connections and facilitating networks, it pushes us to create collaborative environments in which all can contribute. It also involves gaining a deep understanding of customer needs to make the offer fit for the market, and if we’re honest, there will be a lot of trial and error on the journey to success.

Developing this capability is an ongoing journey for Bott, one in which we continually refine our approach to make sure we continue to develop our ability to solve customers’ problems and in doing so earn the right to win their business.

So, in short, we started by asking what is Innovation? Arguably it’s about finding new ways to solve customer challenges, this happens by seeing the world through the customers eyes, and finding creative ways to solve their challenges, by utilising the full intellectual capital of the organisation.

To achieve this, companies must manage connections both internally and externally to ensure that knowledge is shared and creativity stimulated in order to drive long term competitive advantage.