Wednesday 1 June 2016 11:31 am

Why innovation should be top of every business’ agenda

Last week's announcement that the UK government will launch the UK Research and Innovation (UKRI) body, a £6bn funded group to champion research and innovation, should be warmly welcomed by the UK and indeed the global business community. 

In modern business, everyone is trying to innovate, but very few are truly succeeding.

In a world where shareholders demand ever greater annual returns, where companies need to boost sales by four to six per cent per year, innovation is not merely desirable; it is essential.

Executives who deliver innovation and the resultant shareholder returns are well rewarded; those who do not could face losing their jobs.

So, every organisation, from the largest multinational to the newest start-up, are searching for breakthroughs – the experiences, the ideas, the occasions, the devices and the innovations that will get into the hearts and minds of consumers.

Read more: Why AI and robots will never compete with human creativity

Even the most established brands need a constant cadence of news if they are to remain fresh, relevant and chosen.

Commercial innovation, such as new messaging or aesthetic updates are small and can provide incremental growth, but a cadence of disruptive innovation is required over time to keep competition firmly in the dust.

The pressure to innovate is relentless and intense, but that is not all. The vast majority of organisations are attempting to achieve this in the face of corporate cultures and structures that, whether intentional or not, can work against innovative ideas. However, there are tactics that businesses can employ to ensure they can produce genuine innovations that drive shareholder value.

Beyond eureka

Firstly, it’s important not to view innovation as being a series of "eureka" moments. There is a widely held misconception that innovation occurs as a spark of genius.

More often, innovation is the result of a more prosaic process where the right team of people undertake a thoughtful approach over a sustained period of time. Genuine innovation occurs when organisations put together small cross-functional teams of people with narrow and deep expertise, typically incorporating creatives and designers who identify the right spaces and frameworks in which to operate.

Secondly, it’s about encouraging interaction. Innovation tends to result when people who rarely speak to each other start sharing ideas.

Read more: Creativity and innovation: The neglected distinction

Take design as an example: when graphic designers interact with lighting designers, product designers learn from furniture designers, and digital designers share ideas with building designers, it leads to a multi-faceted understanding of shared craft and goals, and can produce outstanding results.

It’s also crucial to embrace failure. Recognising and accepting this is highly challenging for many organisations. Yet the risk of exploring innovation is normally not as high as many expect, especially compared with the extraordinary cost of a failure in market when an early "prototype and learn" methodology could have prevented that failure. The point of early innovation is to keep refining processes and move on quickly to a new idea.

In today’s fast-moving world, complacency is no longer an option. Today’s corporates must build teams that can move with velocity, agility, and momentum. They must adopt methods and cultures that spark ideas and nurture creativity and, ultimately, they must innovate before it’s too late.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.