By Kenneth Sanginario, Founder, Corporate Value Metrics, LLC
Maybe space, as the Star Trek saying goes, truly is he "Final Frontier." For those of us whose "Enterprise" is a business rather than a starship, innovation might seem as vast an undertaking as space exploration is to the starship Enterprise. However, we lack the starship’s warp speed to close the gap. What do we do? Most often, we just revert to doing what we’ve been doing for decades and simply wait for things to get better. But, does it have to be that way?
Is innovation truly out of our reach? Unless we have unlimited access to capital, a lot of free time, and a whole team of creative thinkers, it often seems so. But, what exactly is innovation, anyway, and is it even important in the way that we most often think about it? A recent article in the September issue of Inc. magazine, "You’re Not That Innovative (And That’s Ok)", suggests that innovation is not as important as most people think, at least not in terms of pure product development. However, innovation seems to have different meanings to different people, so let’s clarify the term and then decide whether it’s important, and if it really is out of our reach.
Innovation is defined (dictionary.com) as "something new or different introduced" and also as the "introduction of new things or methods." Notice the ambiguous terms of "something" and "things" used in the definitions? Notice the absence of limiting terms such as "products" or "services?" That’s because innovation encompasses a broad spectrum of anything "new." New internal processes, new market positioning, new growth strategies, new training programs, new pricing models, new customer communication programs, and, yes, also new products or services … they’re all innovations.
All "things" new are potentially innovative, and all innovations move your enterprise forward. They either succeed, and your enterprise makes positive strides, or they don’t, and your enterprise learns from the process and gets stronger going forward. The important point is that innovation is not only within reach, but much of it is right in front of your nose, waiting to be recognized and exploited. The awesome power … the warp speed … of innovation is all around you in your own enterprise, and all you have to do is unleash it. You don’t need a lot of capital, you don’t need to disrupt your entire operation, and you don’t need to change the world with every innovation. What you do need is the drive to move your enterprise forward, rather than sitting back and waiting for "things" to get better.
Instead of thinking about innovation only in terms of new product development, think about it in terms of a continuous process of improving any and all aspects of your enterprise. Internally, that means infrastructure… business strategy, systems, processes, procedures, employee development, equipment, facilities, etc. Externally, that means market positioning, market branding, market penetration and development, customer and supplier relationships, community standing, and so on.
Most innovative initiatives don’t require a large financial investment but, rather, just an investment of time and team. Add a little structure to the mix in the form of a facilitator and you may find your enterprise boldly discovering new worlds that you never thought possible. Innovation is Not All or Nothing
There’s no need to think about innovation as an all-or-nothing endeavor. Small innovations, consistently developed and implemented over several years, will add huge benefits to your enterprise as their cumulative effects take root. After awhile, the process will become cultural for your organization and the effort will become less daunting because it’ll just be the "way we do things." Furthermore, the benefits will begin to manifest in your growth and profitability, and even pay for subsequent and, sometimes larger, product innovations.
Twelve months ago, a client decided to "pull their heads out of the sand" (their words, not mine), and begin to innovate their future. They engaged the MassMEP’s Value Opportunity Profile® process (VOP®) to help them develop a roadmap for growing their enterprise. After an impressive effort of regular meetings among the management team, they were able to develop a very achievable and highly effective Innovation program.
What was the big product component of their Innovation program, you ask? …NOTHING. Instead, the VOP process resulted in innovating their customer interaction process, their market positioning, their mission statement, their employee development program, and other intangibles that have collectively had a giant favorable impact on their growth opportunities, on their customer and employee relationships, and on the overall value of their enterprise.
By the way, their new mission statement is, "to find a better way…for our customers, our employees, and all of our stakeholders." Every employee lives and breathes that mission statement now, in every daily task they perform. Energy and morale in the company have never been higher, customer relationships have never been stronger and, in 2013, the company generated 20% growth in revenue and 60% growth in profitability. Now, that’s what I call innovation.
So, if innovation still seems unimportant, or seems like the unattainable Final Frontier, then I have only one comment for you…ENGAGE!
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Kenneth J. Sanginario
CPA/ABV, CVA, CMAP, CTP, MST, MSF
Ken Sanginario is the founder of Corporate Value Metrics (www.corporatevalue.net), and developer of the Value Opportunity ProfileR ("VOPR"), a web-based application designed to help advisors to maximize the value of their private company clients. Ken has more than thirty years of experience providing executive leadership to middle market companies, valuing businesses, developing performance improvement and value creating strategies, turning around distressed operations, managing M&A transactions, and securing growth capital. He has authored numerous articles and is a frequent speaker at national and regional conferences. Ken currently serves on various boards of directors and advisors, including the board of advisors to the MidMarket Alliance, and is also the Board President of Solutions at Work, a charitable organization focused on breaking the cycle of recurring poverty and homelessness.
