Secrets to successful innovation
It’s a longstanding fact that, regardless of industry, innovation is crucial to business growth and success. But how does a business successfully innovate?
-
-
In the past 12 months, a heart-attack victim in Sweden was saved by a defibrillator-carrying drone, an Israeli start-up developed a 3D-printed salmon fillet, and a fully autonomous ride-hailing operation launched in San Francisco.
Innovative businesses can impact our lives in many ways, and by solving customer problems, tap into a wellspring of growth and profits.
But how to innovate is the million-dollar question with no one-size-fits-all answer.
“Intellectually, companies understand innovation, but they find it very hard to put it into practice,” says Sarah Vega, National Managing Partner for KPMG Futures. “There is no such thing as textbook innovation.”
“All industries are innovating,” she says. “You have to if you want to stay in business. The potential for start-ups to disrupt industries and for corporate giants to seemingly go extinct overnight has never been greater.”
What’s important is being deliberate in how you innovate, she says. Each business needs to start with why they want to innovate and what they want to achieve, and understand these key questions: Is it to create cultural change? Are you a leader trying to stay ahead? What risk are you willing to take? What does a Return on Innovation (ROI) look like for your organisation?
Beyond these questions, innovation must not be seen as a separate “innovation lab” activity, she says, as it will have no real commercial value if done that way. It must be seen as part of the core strategy of a business with a clear plan for how to leverage corporate strategic assets such as access to customers, funding, intellectual property, and brand.
Also key is to “get started” and “accept that early innovation efforts are likely to fail”.
“In an innovative company, people should be incentivised to take risks.”
Working within an ecosystem will help. “Don’t fall into the trap of thinking you have all the answers; collaborate with universities, start-up partnerships, alliance partners, and others,” says Vega.
Western Australian cleantech start-up ULUU, which is pioneering a plastics replacement from seaweed, has achieved early success due, in part, to working within such an ecosystem.
“There are many organisations that believe in our mission,” says co-founder and marine scientist Dr. Julia Reisser. “KPMG has supported on key strategies, but there is Main Sequence, which is a CSIRO innovation fund, the University of Western Australia, where the pilot plant is based, and the Department of Fisheries, among other stakeholders that have made our work possible.”
Reisser’s co-founder, Michael Kingsbury, says the key for him has been “being okay with uncertainty” and being decisive.
“In an innovative company, people should be incentivised to take risks,” he says. “We’re an ambitious company with an ambitious objective to replace plastic with a product that’s good for the world — people need to take risks to achieve that.
“You’re spending money and doing things when you don’t know what the right decision is. It’s about making a decision and backing yourself and moving forward quickly.”
James Mabbot, Partner in Charge for KPMG Futures, believes “innovation is a contact sport, which can only be achieved through the act of doing”.
The advantage for start-ups is their ability to take on risk, says Mabbott. “Everyone holds start-ups as a benchmark for innovation, and in some ways, they can take on risk with no or little consequence. There’s a high degree of freedom to try a lot of things.”
Large businesses don’t have that same agility, he says, and often lose sight of their strengths.
“If you have capital and profits to build with and you have a customer base, access to potential markets is much greater than what a start-up has. Part of the challenge is the mindset — the perception of loss in a large organisation is much greater, which creates an artificial barrier to undertaking innovative activities.”
Mabbott’s advice for large companies being disrupted is to try to establish a deep connection and intimacy with their customer base. “That’s fundamentally important — they pay you for goods and services and provide the capital.
“Being prepared to take risks and experiment with different ways of achieving the outcome needs to be evidence-driven — do it with an eye on the customer,” he says.
Creating a corporate culture in which there is complete alignment between what the leadership team says and does is crucial for innovation, says Mabbott.
To encourage ideas from within the organisation, leaders need to create space for innovation with mechanisms to support funding, recognition, and incentives, and ways of capturing ideas, Mabbott says. Diverse inputs are required to solve big problems, so a sense of inclusion and open participation is essential when building innovation into a company culture.
What does the future hold? According to KPMG’s Sarah Vega, the next decade will see the maturity of a group of “other technologies” such as blockchain, robotics, energy storage, AI and genomic sequencing, all of which on their own have the power to disrupt industries but when converged together will open up hard-to-imagine opportunities.
-
This content was produced in association with KPMG. Read our policy on commercial content here.