The Merriam Webster dictionary defines innovation as "the introduction of something new; a new idea, method, or device." This is a fine definition for linguists, but we at E-Myth scoff at this definition, as it applies to business! Just because something is "new" doesn't mean that it's good for the company. Painting the walls of retail baby supply store black is innovative (per this definition), but that doesn't necessarily make it a good idea! (Unless your target demographic is goth parents in your local trading area. But that’s the point.)
We define innovation more narrowly. We define it as “the act of conceiving and implementing a new way of achieving a result and/or performing work; a way of making things better.” Innovation doesn't have to be expensive or complicated. It is the mechanism by which a business positions and positively differentiates itself in the mind of the consumer.
So, under this definition, the black wall idea for the retail baby outfit would not survive the higher level of scrutiny used in EMyth's definition of innovation. Yes, it's a new idea, but it doesn't serve the result of helping that business differentiate itself positively from other retail baby stores. It doesn't make an improvement on the store's current pastel sensory package; it doesn't make things better!
Innovation is the skill developed within your business and your people of constantly asking, ‘What is the best way to do this?' Knowing, even as the question is asked, that we will never discover the best way, but by asking we will assuredly discover a way that’s better than the one we know now.
- Michael Gerber
When was the last time your business tried to make things better? And, when was the last time your business succeeded at making things better? If you're having a hard time remembering, chances are it has been awhile. Not to worry, though. It's never too late to bring the spirit of innovation to your business.
Innovation criteria
Here are six things you should consider that will ensure that you don't innovate recklessly, and will begin to give you the confidence you need to start innovating in your business, today:
- Is your proposed innovation results-oriented? Do you have a specific result in mind, and why is that result important to your business?
- Will the innovation positively impact business systems? At EMyth, we use the Seven Essential Systems to help understand and organize the various parts of your business and how the relate to one another. A change to one of the Seven Centers will impact all the other Centers in some way. Can you identify the impact this innovation will have throughout your business system?
- Does the innovation optimize resources? Will the innovation create more efficiency in your business?
- Is there a balanced input and output associated with the innovation? Will the innovation yield a reasonable outcome/result for the amount of work/energy/resources that it will require?
- Is the innovation user friendly? Will the innovation be easily understood and used by your staff; will it make things easier for you and your staff?
- Is the innovation simple and trackable? Will you be able to easily monitor and quantify the impact of the innovation?
Innovation in practice
I recently went through an innovation process with a doctor client of mine that illustrates how this plays out in real life. He was intent on increasing referrals from other doctors and was unhappy with the way their current system produced inconsistent results.
Our first order of business was to get specific with our intended results. “More referrals” is too vague. We needed to know exactly how many referrals made sense when we considered the whole picture. Too many referrals could mean too much business for an office with space and staffing constraints. Too few referrals wouldn’t pay for the amount of employee time involved in making it happen. So we dove into the Money Center and evaluated the financial implications. Ultimately, we discovered that two referrals a month was the optimum number for now.
With that as a baseline we tackled the resources aspect. How could we make this system as efficient as possible? By evaluating the current system, we identified some quick fixes that would greatly enhance efficiency. Specifically, we changed the way referrals were documented from hand-written forms to an electronic form; we scheduled optimum times for outbound calls and introduced a filing and evaluation system that streamlined the call duration and tracking. These may seem like small innovations, but when you combine them and put them in the context of the Seven Centers; these small things have a serious impact. Scheduling call times for instance. Previously, referral calls ended up as overtime work, which cost the business a lot of money because not only did the employee making the call remain at work after normal business hours, but a manager had to be there as well to supervise the office. By scheduling more realistic call times during the normal working day, they were able to solve a management issue.
We also built in tracking and evaluation metrics for the management team to track on a monthly basis. After all, what good is an innovation if it doesn’t work? With quantifiable reporting done regularly, they’ll be able to determine if the original goal of two referrals is firstly, feasible with the new system innovations, and secondly if it’s the right number to aim for.
The system for smart innovation
I bet you can think of a system in your business that should be innovated. In other words, something that's producing a "less than stellar" result. But sometimes just thinking about where to begin and how to go about it can be overwhelming. Also, for those married to the way they've always done things, trying something new can be scary.
Hopefully the innovation criteria listed above will give you a way to thoughtfully consider your approach and allow you to feel much more confident about innovating in your business.
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