Innovation is the key to unlocking business confidence and growth, writes Charles Orton-Jones
At an event for entrepreneurs at the British Library, an audience member asked why venture capital is so hard to get in Britain. Panellist Tom Allason, founder of eCourier and Shutl, pointed out that part of the reason is there are so few billion-pound exits from UK venture-backed firms. There was Mike Lynch’s technology company Autonomy and social networking website Bebo was pretty large, although not quite a billion. But it’s a short list. In Silicon Valley, however, the roll of honour is vast and growing.
The solution is not more venture capital. It’s more innovation. With economic growth barely troubling the scorers, we need our entrepreneurs, business leaders and senior management to get fired up, and commit to creating new products and business models, embracing new ways of doing business. First up, let’s annihilate some of the myths holding us back.
It’s expensive. In fact, brain-power and inspiration cost nothing. Even development costs of apparently sophisticated products are much lower than you’d think. Take Sugru, the miracle product taking the DIY world by storm. Sugru is a sort of plasticine which sets hard after 24 hours and is heat resistant from -60C to 140C. Sugru’s uses are so varied it is spawning websites so users can share their brainwaves, from creating new lid-nobs for Le Creuset casserole pots to iPhone cases. Creator Jane Ní Dhulchaointigh conceived and researched the prototype material herself using a £35,000 grant and the assistance of the materials department at Queen Mary, University of London. The business was launched using £100,000 in funding. Following rave reviews in WIRED and the international press, Sugru has sales in the millions and export marketers queuing up to stock it.
It’s risky. The risk involved must be counter-weighed against the dangers of not innovating. Consider that in 1958 corporations on the S&P 500 stayed in the index for an average of 61 years. By 1980 that had fallen to 25; today it is 18 years. Even the biggest firms get squashed if they don’t innovate.
We need to commit to creating new products and business models, embracing new ways of doing business
Ideas must come from within. Not in the internet age. The world is waiting to help you. Crowdsourcing allows businesses to access the thoughts and ideas of potentially millions of people. Unilever wants to reinvent the bathroom shower to reduce water wastage, so it is offering cash prizes through the crowdsourcing website Eyeka.com for the best ideas. Anyone can enter.
Some firms cannot innovate. Piffle. Innovation consultants such as Paul Sloane can introduce staff to techniques with proven track records to transform their ability to innovate. For example, he advises holding “divergent” meetings where only positive thoughts and wild suggestions are permitted. “I have been in meetings where we used water pistols to squirt people who found fault with ideas during the divergent phase,” he says.
It’s the wrong time. Well, there are two ways of punting this objection into touch. The first is to point pessimists in the direction of CIM’s Marketing Confidence Monitor. The green shoots of recovery are unmissable. Now is the time to invest. Alternatively, it is worth pointing out that great firms grow no matter what. The Real Business Investec Hot 100 ranking of the UK’s fastest growing firms is bursting with companies achieving four-year compound sales growth of more than 40 per cent – not easy to sustain. The number-one UK firm is residential care home provider Potensial, which has grown by an average of 146 per cent each year to a £15.2-million turnover.
Innovation is restricted to product. Take a look around your firm and you’ll see that every single department can innovate. HR can adopt growth-centric policies. Think of Google’s policy of mandating employees to spend 20 per cent of their time on hobby projects. Gmail was born from this policy. Or finance. Is your team using the latest software, which can offer real-time cash-flow dashboards, identify late payers and give you insight on sales patterns? Is your marketing team familiar with real-time bidding (auctioning ad space per website, per page and per viewer, for a price dependent on the algorithmically forecast value of the view) or data-mining to produce a richer picture of customers.
These are the only myths. Alas, there are others. Creativity is hard. It takes effort. And it’s corroded by a long list of toxins, from cynicism and poor working practices to single-client dependence and downright fear. You’ll need to overcome them all to become a super-fast growth firm.
One thing ought to be indisputable. Innovation lies at the heart of growth. Embrace it and you stand a great chance of getting rich, and having a ton of fun while doing so. Convinced?