Six Innovation Challenges to Drive Growth in your Business

What’s holding your business back? Probably you…

Most company leaders are clear about the benefits that innovation brings to their businesses. That’s why it’s such a common strategic objective.

Innovation means access to new markets, new customers, increased productivity, new technology, better communication, improved products and services, greater efficiency, better value for customers and often, improved employee wellbeing and morale.

It’s also true that evidence of innovation and a creative skillset among your workforce can positively influence a multiplier when the time comes to sell your business.

Above all, innovation means lower costs, increased turnover, a competitive advantage, and ultimately, greater profits for your business.

But if the benefits of innovation are so clear, why do so many businesses struggle to change? What’s constraining their creativity? Why can’t every business produce something bigger and more meaningful? Why do companies find it so hard to find new ideas to achieve their growth ambitions?

It’s tempting to point to notorious change barriers such as internal politics, incumbent out-of-date technology, burdensome regulation, and red tape.

But while there’s little doubt these factors do impact change, the reason innovation doesn’t happen is often closer to home and harder to admit:

It’s you.

There are many definitions of innovation, but what is almost universal is that innovation requires the practical implementation of new ideas to create value for the business and/or its customers.

The real limit to change and innovation is often your own biases that distort your perceptions and prevent you from formulating new ideas and seeing new possibilities.

Many of us fall into common cognitive traps which constrain our ability to bring new ideas and opportunities into view. The more common cognitive traps include:

Availability bias: the tendency to substitute available data for representative data

Familiarity bias: the tendency to overvalue things we already know; and

Confirmation bias: the tendency to prefer ideas that align with our existing beliefs

This brilliant graphic by designhacks.co shows all the known cognitive biases.

So how can those responsible for steering the path of their business forward overcome their biases and their appetite for maintaining the status quo? What strategies are there to help company leaders formulate new ideas that will create value for the business and its customers?

We believe that the answer lies in finding ways to challenge your thinking. This involves questioning, exploring, analysing, experimenting, hypothesising, and empathising.

Here we outline six innovation challenges, with examples, that you can try in your business today.

Our aim is to help you sidestep your cognitive biases, to get you past your natural inclination to stick with what you know, to help you to break free of damaging incrementalism and to shake up your thinking…

Innovation Challenge 1: Think Science Fiction

How was Ridley Scott able to formulate the dystopian future world of 2019 for his film Blade Runner that he directed back in 1982?

And how were Robert Zemeckis and Bob Gale able to picture the clear world of 2015 for their film Back to the Future II, complete with hoverboards and flying cars, back in 1989?

The answer is that they weren’t constrained by traditional biases. They didn’t have to conform with prevailing traditions, institutions, beliefs, or behaviours. They could hypothesise, experiment, take educated guesses and, in the case of Back to the Future, be playful.

Our challenge to company leaders who want to bring innovation opportunities into view is to place your own business into a world that will exist in 20 years.

Think about the future of your sector and the many innovations that might impact on it.

For example: How will your business be conducting financial operations in a crypto world? How will you support your sales and marketing function using virtual reality? How will artificial intelligence disrupt your sector which relies heavily on standardised processing that could be done by a computer?

Discussing these ideas collectively can provide a greater clarity and focus for your future innovation strategies, unencumbered by the status quo.

Make your discussions realistic but don’t be a doom monger. Too often businesses focus on the dystopian future (think Blade Runner) and rarely on the realistic but optimistic (think Back to the Future II).

Innovation Challenge 2: Look for Analogies

Analogies from different sectors can sometimes help us make big leaps in our own domains.

The rapid growth of Uber and Airbnb, for example, certainly foreshadowed the emergence of similar ‘sharing economy’ businesses.

Our challenge to company leaders is to search for analogies in other sectors that you might be able to use in your own.

Blockchain is one example of a technology that has applications in many different domains.

Innovation Challenge 3: Learn from Failures

Sony’s MiniDisk was meant to conquer the music world. It didn’t.

Why did it fail? The MiniDisk had the audio quality of a CD with the recording ability and portability of a cassette tape, plus they wouldn’t get chewed up in your car’s cassette player!

But the makers of the MiniDisk could never have foreseen the rapid rise of MP3 and more significantly, Apple’s revolutionary iPod – it helped that they had the creative genius of Steve Jobs.

Our challenge to company leaders is to identify the future innovations that might impact your sector before it’s too late.

Being aware that disruption is often quick and unavoidable can bring new ideas and areas of growth into focus much quicker. Remember, as Steve Jobs once said: “Innovation is the ability to see change as an opportunity, not as a threat.”

Innovation Challenge 4: Question Your Foundation Principles

Don’t be afraid to challenge the first principles on which your product – or if you’re feeling brave – your entire sector, is based.

A good example of this ‘First Principles’ approach is how Elon Musk developed SpaceX’s reusable rocket.

Musk originally wanted to buy discarded rockets from Russia but was rebuffed. Undeterred, he broke down rockets to their basic principles of propulsion, aerodynamics, thermodynamics, and gas turbines. With this analysis, his team found a way to develop affordable, reusable rockets by using simpler commercial-grade, rather than space-grade, components.

As Musk himself said: “In most cases, people solve problems by copying what other people do with slight variations… I operate on the physics approach of analysis by first principles, where you boil things down to the most fundamental truths in a particular area and then you reason up from there.”

Challenging your founding principles can help you to look at how the business might operate if it were designed again from the ground up and offer new avenues for innovation.

As Einstein said: “We cannot solve our problems with the same thinking we used when we created them.”

Innovation Challenge 5: Explore Adjacencies

Exaptation is the evolutionary process by which features acquire functions for which they were not originally adapted or selected. For example, birds’ feathers may have evolved for heat regulation and mating displays but were later adapted for flight.

This biological phenomenon works as well in business as it does in biology.

In business it’s called adjacencies: taking a feature you’ve already got – it could be a product, technology, or internal expertise – and applying it to a new opportunity for which it wasn’t originally intended.

Take Amazon for example, where Jeff Bezos has previously spoken about using adjacencies.

He calls Amazon’s adjacencies strategy either ‘skills-forward’, using existing capabilities to enter a new market; or ‘customer-needs-backwards’, targeting an existing customer market but with a new product that meets their needs.

A good example of ‘skills-forward’ was when Amazon realised that they had significant expertise in distributed computing within the business and, although they realised that they would have adapt to a new market and develop a new customer base, they built Amazon Web Services.

An example of ‘customer-needs-backwards’ was when Amazon determined that their existing customer base wanted an electronic book reader. While they didn’t have the necessary hardware skills, Amazon adapted to build the Amazon Kindle.

Our challenge to company leaders is this: Can you identify alternative uses for your products, processes, internal expertise, or technology? Could you create a new product, process, or feature to meet the needs of your existing customers? Or could you take one of your existing products and use it to enter another market? Look for the adjacencies.

Innovation Challenge 6: Take your customers’ perspective

This final challenge is crucial to innovation but is often overlooked. While innovation is carried out internally by your business, it must be a function of your customers’ needs. You must look externally.

If you don’t take account of your customers’ needs, then it’s impossible to create something new and valuable for them.

So rather than always thinking of issues from your own perspective, reframe the issue to consider the problem from your customer’s perspective, not your own.

Here’s an inspirational example: When Van Phillips lost his leg below the knee at age 21, he was surprised to find that prosthetic design hadn’t really changed since World War II because companies focused on the aesthetics – making the prosthesis look like a foot – rather than how to make it act like a foot.

Phillips used his own experience and unique insight as a user of prosthetics to take a new approach for his own business and to challenge the status quo of the prosthetics industry.

Van Phillips drew on ideas from diving boards, pole vaulting and the feet of Cheetahs to revolutionise the world of prosthetics – a good example of exaptation (see Challenge 5).

Phillips created ‘Flex-Foot’; a prosthetic made from carbon graphite that looks nothing like a foot but gives wearers far greater freedom of movement. Today, about 90 percent of Paralympians use a variation of the original Flex-Foot design along with many thousands of people around the world.

Here’s your challenge: put yourself in the shoes of your customers to consider problems and challenges from their perspective. Get inside their minds: What are their needs, worldviews, and desires? This challenge will require empathy and for you to overcome any familiarity bias.

Get over yourself

Innovation is crucial for any business to achieve its growth ambitions.

And yet, while it’s hard to admit, one of the main reasons that innovation doesn’t happen is because we are constrained by our own biases and self-limitations that distort our perceptions and prevent us from seeing new possibilities.

Ultimately, if you want your company to grow and if you want to realise the future profits that you are capable of, then you need to recognise that it is most likely you that is holding things back.

You need to overcome your cognitive biases and instead question, analyse, explore, experiment, hypothesise, and above all, empathise.

In this article we’ve suggested six innovation challenges to help you do this.

Now it’s time for you to think big, to face down the fear of failure, to ignore the status quo and to take a leap towards the valuable opportunities that are just out of view but within your grasp.

Go for it!