It's an exciting time to be an Aussie business! The government has announced a bold and comprehensive innovation plan to secure Australia's future. There are plenty of initiatives that will, given time, deliver benefits to small business. But what does innovation mean to an SME today? It’s the best way to drive future profits and revenues and is also essential for keeping staff engaged and focused. We know this because at Banjo, our whole purpose is to deliver innovative funding solutions for our clients.
According to business.gov.au, innovation, “…generally refers to changing or creating more effective processes, products and ideas, and can increase the likelihood of a business succeeding. Businesses that innovate create more efficient work processes and have better productivity and performance.”
So what’s the best way to instil a culture of ongoing innovation into your enterprise?
According to Mick Liubinskas, entrepreneur in residence at Muru-D Accelerator, the first thing to understand when it comes to innovation is that the word is a verb not a noun.
“It’s not something that is magical or mythical. It’s actually a commitment culturally to developing new ideas in the business,” he says.
Liubinskas explains both senior and junior people must embrace innovation to embed it in the organisation’s DNA.
“Both the top and the bottom have to want it. Most importantly, they must be prepared to embrace the potential for failure.”
All about ‘flearning
He says this is a deciding factor of truly innovative companies. He uses the word ‘flearn’ to describe this approach – which means learning from failure.
“Innovative companies see failure as a positive. So even if an initiative does not work the business still values the work done, the goodwill created through the process and the team’s learnings along the journey.
“Often companies try innovation once, it doesn’t work and they step away from it. But that’s never going to embed innovation in the business. You have to be prepared to fail multiple times,” Liubinskas adds.
He says the underlying principle should be impatience for action, patience for results. “Businesses need to celebrate the process rather than the outcome. They need to support flearning and collaboration. If there’s pressure to achieve results there’s no real appreciation for the value of the process.”
Reward structures matter
Importantly, Liubinskas says it’s essential to build intrinsic and extrinsic reward structures to incentivise staff to behave in innovative ways.
“Work out how you can reward the process of innovating through financial and other rewards to make sure innovation is in the team’s blood.”
So try to move away from the idea that if something is not broken it doesn’t need fixing. “You need to break things that are working at their full potential to be truly innovative. Innovation is all about having the confidence to take risks,” he says.
The rewards are enormous if you get this right. This is because innovation leads to the development of a larger pool of assets for the business and a greater sense of purpose among team members.
Says Liubinskas: “It’s one of the best ways to keep people motivated. The idea is to instil the notion that people need to come to the business every day looking for a better way to do things.”
Banjo’s top three tips for encouraging innovation.
- Don’t be afraid of failure in business. Take the lessons from the failure into future ventures.
- It’s an idea to incentivise staff for being innovative, by including it in KPIs and making sure it’s part of the discussion during employee reviews.
- Invest in innovation but don’t bet the house on it. Make sure you’re protecting existing revenue streams and at the same time, use innovation to develop new ones.