Finding a Good Way to Determine How Innovative a Company Is | SetSchedule
“If you’re not living, you’re dying,” the old maxim goes — and, in life as in the business world, this rings particularly true. Perhaps rewording it as, “if you’re not innovating, you’re not only stagnant, but you’re also taking a step backwards” would be more applicable these days. That aptly sums up the sentiment of innovation in the business world: Without some sort of innovation, a company will have an extremely hard time attempting to expand and grow.
What Exactly Is Innovation in a Company?
The term “innovation” is bandied about so much that it seems that every company calls itself “innovative.” In its original Latin form, innovate means “to renew.” For the most part, the word has retained its original meaning, and the modern definition is “to improve or replace something, perhaps a process, product or service.” In short, it’s a process in which a product or service is updated by establishing new techniques or new ideas in order to create value.
Why Is Innovation Important?
The goal, of course, in any business, is to be profitable and keep the stakeholders and shareholders satisfied. In the big picture, innovation is important for any company, in order to grow, or to at least stay competitive in the crowded business world. Attempting to keep current, stay relevant and ultimately expand your business is war, and being innovative is a winning strategy. These areas include the following:
Business growth: Business growth equals more profits, which, as mentioned above, keeps the stakeholders happy. Innovation allows you to add value to the company — which increases profits. Not doing so can result in flat sales, stagnation, stumbling in the marketplace, and eventually being surpassed by competitors.
Stay ahead of the competition: Yes, there are competitors to your business. Even if they’re not offering the same products and/or services, they’re still competing for the time, attention or wallets of the same demographic. Innovation can help you keep up with the changes in the marketplace and the industry, both of which never stop moving. By making better products and/or services or doing better than what the others are doing in the same space, or offering what they’re not, you have the chance to gain the competitive edge.
New technologies bring faster (and more accurate) results: Technology has made many things that were difficult in the past easier — and more accurate, not to mention faster. Because both the business world and technology are evolving faster than ever before, there are new and innovative technology products out there that help you make better products, become more efficient, track sales and analytics, or use artificial intelligence (AI), to name just a few improvements.
What Makes a Company Innovative?
Like many other areas of life, companies have a tendency to think they’re unique, have a strong sense of purpose, and are innovative. But, in order to be truly innovative, there are several attributes that indicate whether it’s true or not. Of course, these aren’t written in stone, and are presented below in no particular order of importance. These attributes include the following.
Corporate culture: According to Investopedia, corporate culture is defined as “the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires.” So, a strong sense of innovation at every level is important for any company looking to stay (or become) innovative. It has to be ingrained in the company’s DNA and fostered so that it’s become part of the norm within the company. Having a tangible sense of innovation is important in order to be part of the company’s everyday goal and not just a talking point or a sentence in its mission statement.
Management model that understands: Corporate culture doesn’t end with the rank-and-file employees; it also has to be part of the management’s style. If the management model isn’t in line with the process of innovation that the rest of the company embraces, then it’s an exercise in futility. For example, if the budgets aren’t innovative-friendly, then it doesn’t matter how much innovative technologies are available, as they might not pass that roadblock in the company.
Accountable leaders: Similarly, the leaders in the organization should be as equally innovative minded as everybody else. In fact, they should be more so, as they’re the ones who most likely have the largest sway and clout over what should be implemented and what ideas are worth pursuing.
Real-life innovation metrics: Back to the basic tenets of the business world; if there are no metrics that indicate if (and how much) an innovation is successful, there is little point in implementing it. Yes, it IS often extremely difficult to measure. In these crazy times, when things are changing in a post-COVID business environment, there is no doubt an issue when it comes to presenting accurate metrics on how innovation is working (or not working). But there ARE ways to track how innovative a company is.
What Is a Good Way to Track How Innovative a Company Is?
Tracking how well innovation impacts a company can be a tough slog through mountains of numbers and reports. That’s because the business world is constantly changing, and finding solid numbers can be a wild goose chase, due to any number of external factors. It all comes down to numbers, of course, and historical data from the same period in earlier years proves indispensable.
Yes, but that’s easier said than done. For example, the same time period in previous years could be marred by events like a pandemic, a worker’s strike, or the fact that a new company was acquired after that year’s results, so those considerations have to be factored in. Much of that work is in the domain of the bean counters, those financial professionals who know how to glean these figures from the heap of financial data the company produces.
There are also non-financial metrics when it comes to measuring innovation. According to Inc., the top five measurements of innovation are the following:
Revenue generated by new products
Projects currently in the pipeline
Projects moving from one stage to the next
P&L (profit and loss) impact or other financial impact
Number of ideas generated
Being in a company that considers itself “innovative” requires that innovation be in its DNA. It isn’t simply something that is mandated, a new rule or regulation that the company has to follow. It’s more of a way of life than a mantra that is repeated. But, as we learned from above, successful innovation is trackable, and the end result is growth in sales, market share, or new and/or improved products, services or processes.
Chris Capelle is a technology expert, writer and instructor. For over 25 years, he has worked in the publishing, advertising and consumer products industries.