The meaning of innovation is one that’s not fully understood by many businesses, and as a result its practice has dwindled to say the least. This is an unfortunate scenario however as innovation is actually the most important aspect of a business, it’s what makes it stand out among the market place, prevents it from going stagnant, helps it to grow and drives society, and humanity, forwards.

So that’s a pretty good review of innovation, but it doesn’t shed any light on what it is. So what is the meaning of innovation? Well essentially innovation is simply having a new idea - or taking an idea that already exists and streamlining it to make it work better. Now most companies and entrepreneurs use this kind of innovation when they first get started to concoct their initial business plan or product. You see it all the time on Dragon’s Den when individuals come into the room looking for an investment on their strange device that helps you to clean out ketchup bottles for example. At some point an individual has realized that this is a problem that they would pay to be solved and come up with a solution that they can provide to others - and that’s an innovation.

Innovation does not only apply to products however, but to the business models themselves - to the delivery and the service and here is where the true meaning of innovation lies. One great example of innovation in a swamped market place is the DVD rental company that works by post. Here you choose a DVD then keep it as long as you want with no fees until you decide to send it back in exchange for the next film. This changes the way DVD rental works - streamlining it to make it easier for the customer and for the business which can attract them away from the older systems. This business model was transformative meaning that there was currently nothing like it on the market which straight away got people interested.

Of course without that innovation such a company would be pointless - if you’re already a signed up member of Blockbusters, why would you want to switch to a different company for your loans unless it was somehow different? It just wouldn’t be worth the hassle.

Even if a rental company offered the DVDs cheaper that might be enough incentive, but this again would have to come from an innovation on the part of the company who’d designed their business in such a way that it could provide the DVDs at a competitive price while still earning a profit - this was essentially how Virgin differentiated themselves as CD suppliers in the company’s early days. In the future the whole industry will be replaced by digital media and they will have to adapt - and that’s another aspect of innovation; staying current and adapting to new technology. The real meaning of innovation then is to work out how you can do something better, or do something that hasn’t been done - and without innovation a business stands little chance of attracting a customer base. To stand out you either have to be the very best, or unique.

But innovation must not stop at the conception of the business. Rather it’s important that the company continues to innovate and to streamline every aspect of its process as it grows. The old adage ‘if it ain’t broke don’t fix it’ really doesn’t apply here as there’s always room for improvement - and that’s the part of business that’s creative, fun and worthwhile to the customer and society. If your company simply churns out orders without making any changes to its structure then it will quickly be replaced by younger more innovative companies that perform the same task in a more efficient way, or that adapt to new technologies. Even if there is no threat of competition then streamlining your business through innovations will earn you more profit, generate more publicity and provide a better service for your customers.

This is where few successful companies understand the meaning of innovation however and most continue to work a set structure. The most successful companies however realize this mistake however and encourage innovation in the work place. Google for example allow their staff to spend something like 30% of their time pursuing their own creative interests which has lead to innovations such as Google Maps and Google Adsense which have genuinely changed the way we live and made Google in phenomenon more than a search engine. Future projects include digitizing every book ever published which again will change the industry and benefit consumers - by staying innovative Google have remained at the top of their game and driven us into the future.

Richard Branson, who has a similar outlook for Virgin, might soon be taking the Joe public into space. Again innovation in business is essentially what keeps mankind moving forward and changes the way we live for the better. So make sure that you and your staff do the same and set aside some time to analyze the company’s performance and think about how to improve it, and what other services it could potentially offer - you just might get to play a part in the future.

And innovation shouldn’t just apply to big businesses either. Even if you’re a sole trader you should be thinking of ways to improve your service. On a recent holiday to Rome I noticed people selling tours - coming up to tourists and badgering them for money. The stupid thing was that you could easily just follow one of the tours for free or listen from nearby which was when I realized that a better system might be to give historical talks for free in a charismatic way that drew a crowd and have a collection hat for the end. By drawing the audience in and interacting with the crowd they’d feel compelled to give but at the same time they’d be able to come and go as they choose and not get dragged into a whole tour. This would again improve the experience for the customer. And that really is the true meaning of innovation.

Mack LeMouse

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