5 ways to make your company more innovative

Five areas where you could make your company more innovative


Most companies, by definition, are conventional in almost everything they do. And that works pretty well, otherwise they would would change things. But sometimes, while most of us remain unaware, norms become ruts.

James Dyson’s experience with the vacuum cleaner exemplifies this. He noticed they stopped working after a while, which he then realised was due to the bag filling up and stifling the suction. Most of us were probably aware vacuum cleaners frequently didn’t work. But it’s something we just dismissed as a fault. Dyson didn’t and invented a revolutionary solution, on the back of which he has built a thriving business. Not only has he made a personal fortune and contributed still more to the country, he has genuinely improved some people’s lives.

In some ways, he’s the Sir Clive Sinclair of the nineties – an inventor turned good businessman. And that feels wonderfully British. As a country we’ve always had a tradition of inventing things. But most of you aren’t like that, you’re serious business people.

Just as interesting about Dyson, however, is the way he runs his business. His innovation goes well beyond the product concept, and encompasses many aspects of his company. And that’s the real lesson – you don’t need to invent some incredible new product to be able to benefit from innovation. Better still, much of the innovation you could bring to bear in your business wouldn’t cost anything at all.

Innovation is basically the application of a different approach. And there are plenty of examples of companies where this has enabled or enhanced their success. People often think innovation is restricted to new product ideas, but there are many ways your business could benefit from within through, say, new thinking in sales, marketing, and HR.

Take NatWest, for example, which reversed conventional wisdom a few years ago and started opening new branches, marketed with the slogan ‘another way’. Or Ann Summers, which found a way to grow sales significantly before its shops were accepted on most high streets. First Direct, too, went against popular thought with its marketing campaign, using very striking white on black advertising at a time when everything around it was full colour.

Frequently, what starts out as innovative gets taken up by the rest of the world, if it works, and becomes the new norm. Hopefully, the rest of this article will encourage you to con- sider if there’s any scope to do things differently with all sorts of aspects of your own business (or simply apply some of these ideas directly). And we’d bet that some of the best possibilities lie within areas you’ll probably pass over initially, thinking there’s ‘no scope there’.

Product development: Ryanair

How can you undercut competitors, but still make a decent profit? Ryanair proved that going lower isn’t always as difficult as it may first appear

Ryanair founder Tony Ryan and his chief executive Michael O’Leary knew that, in a fundamentally functional industry, there would always be a market for those who want the cheapest possible deal. And by delivering it, a whole new customer base would be able to afford foreign and domestic travel. For that, they rightly believed, the customer would be prepared to make sacrifices.

At the time, though, British airlines were still trying to out-do each other on luxuries and routes. Despite the strategy, O’Leary would have shut down Ryanair given half the chance as he couldn’t find a way to deliver those plans. The company was already undercutting its competitors 13 years ago, but losing serious money. His trip on Southwest Airlines, a low-cost airline in the US, changed that.

The solution, he realised, was turning around the company’s planes far quicker. By doing it in 25 minutes as opposed to 45 minutes or an hour he could squeeze two more flights per day from each aircraft. This meant he would get more from pilots and cabin crew, spread the cost of airport taxes and carry higher volumes of passengers every day.

He went against convention by targeting ‘secondary’ airports and cutting out travel intermediaries in favour of buying direct online. He also moved fast by capitalising on the opening of Stansted airport, and securing space and flight slots for less, before other airlines had showed an interest. And the cost of fares depended on when the passenger purchased their ticket.

Ryanair eliminated business class, in-flight ‘extras’ were sold rather than being given away, and more seats were crammed on board when others – BA and Virgin, for example – were boasting greater leg-room.

And when profits rocketed, O’Leary consistently resisted the temptation to change the model or offer a more comfortable service. No shrinking violet, he has also made sure everybody knows about how his company compares with competitors on price and has actively criticised his largest competitor – British Airways.

Innovation lesson: Rethinking new price and volume models can grow markets dramatically .

Sales: Ann Summers

What can you do if you know there’s a need for your product, but there are serious barriers between your business and its customers? Answer: you take the product to them

Sex shop chain Ann Summers began in 1970 with a single store in Edgware Road, London, shortly followed by another in Bristol. But immediately there were problems for its founder and a year later the shops and the name were bought out by entrepreneurs Ralph and David Gold. They turned things around but, due to the nature of the products and the reluctance many customers had in admitting to purchasing them, the focus remained mainly on the mail order business. It wasn’t until nine years later that David Gold’s daughter, Jacqueline, found a better way to get to its customers.

She discovered Ann Summers products were being sold along with ladies clothes by another company at private parties. After attending one of these get togethers, Gold was barraged with requests for her business to host a similar event. Proving that listening to your customers is at the heart of many innovative ideas she decided to do what they advised and begin hosting parties in the homes of people she knew. They were a great success and she eventually persuaded her father and the rest of the board to let her “run with the idea” by recruiting customers to hold their own parties.

Today, Ann Summers has a network of more than 7,000 self-employed women on its books hosting parties for a 30% cut of everything sold. It also has close to 100 stores across the UK and a turnover of £100m, reflecting the liberalisation of views on sexual and erotic products. Without the parties though, the business would not have its current level of awareness to capitalise on and may not even have survived. Jacqueline Gold’s innovative thinking has transformed Ann Summers from a brand that people associated with something sordid into one to be proud of.

Innovation lesson: Find new ways to reach customers if obvious routes get blocked.

HR: Richer Sounds and B&Q

How can you ensure you get people with the right skills and keep them? Here are two companies with different solutions, but the same result: a high-quality happy workforce.

Staff benefits

Julian Richer of Richer Sounds has a reputation as an inspirational boss. His company is rated in the top 20 firms to work for in the UK. The reason for this is because he’s recognised that, without his salesforce, his Hi- Fi retail business wouldn’t exist, so he makes every effort to ensure a department traditionally notorious for having a high turnover rate feels rewarded and valued.

They pay quite high salaries for the retail industry, but Richer goes further by offering use of the company Bentley, short holidays for staff after five and 10 years of service, and prizes such as helicopter rides or luxury train trips on the Orient Express. There are subsidies for quitting smoking, recreational activities and a medical scheme that permits staff to get a second opinion from a Harley Street doctor. As a result of these initiatives company turnover is pushing £90m on the back of staff turnover of just 16%.

Recruitment

DIY retailer B&Q, which is part of the Kingfisher Group, also knows the value of holding onto its staff. That’s why it has taken the exceptional step of encouraging employees to work beyond 60. Flexible working options are provided for staff approaching this age along with information on investment and health. But B&Q hasn’t stopped there and has actively been recruiting those at the upper end of the age bracket.

This is not just a politically correct measure but, because the company anticipated the effects of demographic change, with people working longer. It also understood the value older staff, as ‘trade experts’ (plumbers, carpenters or builders), could bring in terms of their customer service. Coming at a time when their active days were no longer feasible or desirable it had the impact of making these staff feel truly valued. So by tapping into a section of the workforce many other businesses had simply ignored, B&Q has been able to provide a better service by retaining vital knowledge and expertise.

Innovation lesson: Great staff make a huge difference. New ways of recruiting and retaining them can reap rewards.

Customer service: Amazon

How do you encourage customers to use new technology to buy your products? By going to great lengths to convince them of the quality of your service.

Amazon didn’t invent shopping on the internet, but it might as well have. When Jeff Bezos started the business seven years ago he had one mission – to transform the way people bought books. Now the company has a new raison d’être – to be the world’s most customer-centric company. “We are relentlessly focused on offering a unique service for each of our customers,” reads its mission statement.

Today, online shopping is a much more conventional use of our leisure time but in the past few of us would have dared to purchase via the web. Fears over security and the credentials of the companies involved in any such transaction were the main barriers to success. Amazon changed all that with a dedication to customer service and today there’s almost nothing we wouldn’t consider picking up in cyberspace.

It’s achieved this thorough investing in technology, but with the focus on what benefits such advances bring to the customer. Reduced shipping times and order tracking, encouraging feedback and offering personalised customer service email responses to enquiries, and smart software that automatically makes product suggestions operate alongside simple functions, such as the ability to change your shipping address, cancel items from your orders or update order forms.

This focus was key to Bezos’ grand plan to make the internet a more comfortable place to shop, one where the customer felt in control and happy their vital order wouldn’t disappear into cyberspace. Such is the confidence Amazon has managed to instill in its customers many high street operators, such as Toys ‘R’ Us and Borders, who might well have been competitors, have chosen to partner with them rather than develop their own offering.

Innovation lesson: Using tools, such as technology, and a personal touch to enhance customer service can lead to happier customers.

Marketing: skoda

Skoda’s story is about addressing the perception of your company, thinking around it, turning a weakness into a strength.

What do you call a Skoda with a sunroof? Answer: A skip. The Czech car manufacturer was the butt of many a joke during the eighties, but today you could say it has had the last laugh. It’s now one of the fastest growing car makes in the UK motor industry. How has this been achieved? By using an innovative approach to reposition the brand.

When VW took a stake in the company supposedly epitomising Eastern Bloc design (cheap and ugly), it started to produce models that were well-received by the trade press. But this failed to boost sales. In fact Skoda’s first VW-backed marque – the Octavia – sold just over 6,000 models and the company’s own research revealed 60% of people would still never consider purchasing one, despite the improvements.

VW resisted the temptation to scrap the Skoda brand altogether. The reasoning was that at least consumers were aware of it, more so than almost any other in fact, even if it was for the wrong reason. Instead, with the launch of the Fabia, it took the innovative step of addressing the consumer’s negative perception of its product head-on rather than simply ignoring it. A marketing mix highlighting the company’s new, sleeker designs and the slogan, “The Fabia is a car so good you won’t believe it’s a Skoda” yielded impressive results and by the end of 2000, more than 11,000 Fabia models had been sold and even Octavia sales began to see an increase.

Skoda’s multi-award winning marketing campaigns have continued to evolve along these lines and, while it’s true many still need convincing, sales have continued to increase and the jokes have stopped.

Innovation lesson: A negative image can be better than no image at all. Don’t ignore your customer’s perceptions, convince them otherwise and don’t take your brand too seriously.

How to encourage innovative thinking

? Challenge the established norms in meetings. A predictable structure will usually deliver a predictable outcome

? Always ask what in your business could be done better, especially when things seem to be going just fine

? Make a point of thinking hard about those areas of your business that are normally just taken for granted. How could they be improved?

? Ensure everyone feels they matter and can put forward any idea they have to someone who can propose it to a decision-maker, however large the business

? Reward staff who come up with good ideas that get implemented

? Never criticise ideas, even bad ones

? Run customised games where your staff form teams from multiple departments, and need to come up with a business idea or plan similar to your own, but different. This can be great for team-building, as well as encouraging off-the-wall suggestions which might just work

? Change the working environment so it stimulates creativity, whether it be bean bags instead of chairs or whiteboards next to the water cooler or break out areas

? Whatever the approach, it has to come from the top, so don?t just pay lip service to new ideas, live and breath innovation

? Remember: lots of small innovations can combine to make radical difference to a business

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