How to encourage innovation.
In business, innovation can help you to grow and to remain profitable. To innovate means coming up with new, original or better solutions to meet market needs or break into a market.
You can be innovative by developing different products, services, technologies or ideas, and by making a commitment to adapt to industry changes.
Assess your attitude to innovation.
It's important to consider how receptive you are to new ideas, especially those that could change the direction of your business. It's your attitude to new ideas - which you convey in your everyday business dealings with your staff - that will determine if 'great ideas' will ever be put to you.
Look at how many ideas your employees have submitted to you over the past month or year. Ask yourself if you're threatened by new ideas or if you welcome them? Are you more open to new ideas when things are not going well? Do you dismiss new ideas when business is booming?
If you operate a business where people aren't afraid to experiment and perhaps fail, you're more likely to foster a creative environment. However, fear of failure is a sure way to extinguish creativity.
Develop a formal process for evaluating new ideas.
It's important to set up a formal process for evaluating new ideas, rather than accepting or rejecting ideas on an ad hoc basis. It's not enough to say, 'That's a great idea, we should try it!' Too many ideas simply disappear that way because good intentions are not a substitute for action.
A more formal idea evaluation process will allow you to assess and allocate the resources needed to bring innovative ideas to fruition. Some ways to do this are to:
- Set up a system to collect and process good ideas through to completion, along with action deadlines
- Appoint a new idea champion who is allocated time each week to champion new ideas and explore ways to generate ideas, for example:
- Hold new idea/brainstorming meetings every quarter
- Delegate employees to research online for a designated number of hours each week
- Encourage fact-finding travel or visits to similar businesses
- Encourage employees to learn new skills and develop through training programs.
- 'Mystery shop' your competitors for ideas or gaps that you can fill
- Think about joint ventures with complementary businesses
- Work on new ways to improve your business systems
- Monitor changing market trends and needs
- Explore new marketing promotions
- Provide a budget for research and development and market testing
- Commit to new ideas by allocating funds to them, otherwise they just remain as ideas.
Foster creativity & innovative ideas.
To foster creativity, think about how you can make your business more open and receptive to innovative ideas. Focus on new ways to harness the creativity of your employees, for example:
- Allow your employees to come directly to you with an innovative idea, instead of going through a supervisor who might take the credit for the idea
- Put processes in place to encourage a constant flow of innovative ideas from your employees, as small, incremental innovations can contribute significantly to the success of your business
- Keep records you can use as a benchmark to determine if the flow of ideas is increasing or decreasing.
Evaluate new product ideas.
You may have an idea for an innovative new product/service and if so, here are some key points to consider when evaluating the idea:
- Have specific criteria in place to assess ideas that should be continued or dropped
- Consider using a SWOT analysis to assess opportunities for the product and any threats. You can use the SWOT analysis guide on the business.govt.nz website
- Work out exactly what it is that the product would offer, as this is what will set it apart from those of your competitors
- Look at current market trends and make sure there's a market for your product and that you can capture a worthwhile share of this market
- Think about how you'd position the product in the market, versus how your competitors position their products
- Consider how you'd make the product, meet product laws, and price the product
- Think about what marketing you'd use to promote the product and how and where you'd distribute the product
- Test the idea/get input on the new product idea from people outside your business. You can do this through your website, online communities, and social media channels, or by using online crowdsourcing services. This includes crowdicity.com/en/, an idea management platform. Read more on crowdsourcing at www.innocentive.com
- Think about how you'd protect the intellectual property in the product. Find out about patents, copyrights, or trademarks on The Intellectual Property Office of New Zealand website
- Look at how you'd finance the new product. There are pros and cons to every type of financing, so make sure you do your homework. Check out Westpac's business loans1, or talk to Westpac's Debt Capital Markets management team for advise on how to raise capital. You can also visit the business.govt.nz website for advice on finding sources of capital
- Assess if you'd need to invest in research and development for the product. You can find out which grants and incentives are available on the business.govt.nz website or if you're looking at exporting a new product, read how to research and develop your product or service on NZTE's website.
Things you should know.
1 Eligibility and lending criteria, terms and conditions apply. An establishment fee may also apply.
The material on this webpage is provided for information purposes only and is not a recommendation or opinion.
We recommend you seek independent legal, financial and/or tax advice.
Links to other sites are provided for convenience only and Westpac accepts no responsibility for the availability or content of such websites.