Business Profitability through Agility and Innovation

The world around us is changing and changing fast! Barriers to entry in all but the really niche and upcoming industries are down to nothing! How do businesses drive growth and profitability in such an environment? While everyone recognizes innovation to be a catalyst for growth, not many businesses have been able to drive innovation to maximize their profits. In a survey conducted by the Economic Intelligence Unit, respondents of organizations admitted being at a disadvantage due to lack of innovation and agility in order to anticipate market shifts. Agility and innovation need a mix of science, art and passion, and organizations that provide a melting pot for these to come together will succeed.

Business agility means being nimble and having the ability to respond effectively and in real-time to business opportunities, thereby creating the ‘first mover advantage' for oneself with an innovation, or by addressing a significant market challenge that opens up a transformational business opportunity. It also equates to corporations embracing start-up methodologies, taking risks and creating new ideas through effective collaboration. However, infusing agility in organizations is easier said than done as they are bound by hierarchical constraints of compartmentalization, interdepartmental conflicts, risk aversion, and miscommunication.

Innovation has become the lifeblood of the modern enterprise and driving the global economy. Innovation is not just about new ideas, but also about new ways of applying ideas. Both innovation and agility allow companies to leverage their existing processes, people, technology, and information to quickly create novel ways to compete and introduce new products and services. The last two decades in the IT industry alone have proven that companies that are innovative and agile reduce their time to market, improve their productivity, and enhance their customer service. They also achieve the larger benefits of enhanced business sustainability, superior profits and stock performance.

Examples of the power of innovative ideas that have revolutionized industries and generated wealth are abound: right from Apple changing the way music is accessed with its iPod, the emergence of Skype as an alternative (and more economical) voice telephony solution, or the agile innovation-production efficiency among top semiconductor companies that have enabled them to capture the growth curve of the computing and consumer electronics devices in the last two decades. There are more such examples, and more recently, we have seen that innovative companies have emerged more resilient from the economic downturn that peaked in 2008-09, while companies who had sustained only on a cost efficiency model found it hard to differentiate themselves in the market.

Some of the important areas that can catalyze this ability to think better and be agile are discussed below.

LEADERSHIP AND CULTURE

Innovation should not be limited to products; the scope of innovation is not restricted. Organizations have started recognizing that to be innovative in their products and services, they must also embrace innovation in leadership, management, technology and everything that they do. With a fast changing and highly dynamic market, a culture of innovation will thrive when there is transparency, freedom to creative thinking and accountability given to employees. The role of the leadership team is now more important to build a culture among its employees that encourages collaboration, problem-solving abilities and innovation. It is the leadership team's function to embrace collaboration as a culture and enable the establishment of cross-functional teams to engage and brainstorm.

CROWDSOURCING

Crowdsourcing isn't new. Wired magazine's Jeff Howe coined the term back in 2006 and defines it as ‘the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call'.

Crowdsourcing has tremendous potential to generate new growth and business opportunities. In comparison to traditional market research, input can be obtained faster and cheaper. The principle of crowdsourcing is based on ‘more heads are better than one'. As it involves a large crowd for ideas, skills and participation, quality results are generated. Crowdsourcing allows organizations to select the best result not from a single provider but from a sea of talent.

To stay ahead of the curve, companies need to think about where the next generation of ideas are coming from, and whether they are crowdsourcing innovation. It is becoming critical for organizations to have small ‘innovation' groups and leverage ideas from the thousands of employees, each of whom has a distinct thought. Organizations are realizing that establishing a nerve center of qualified, enabled and empowered people to arrive at an idea and develop it into a full-fledged plan, is fueling thought process, collaboration. More and more ambitious and market challengers are adopting this to identify the best idea, develop it and create a differentiation in the market.

TECHNOLOGY PLATFORMS

The third important element in enabling agility and new thinking is the platform. The old style of decision-making resting with top management moved to participative decision-making in the last few decades, giving leaders the opportunity to look at the best possible ideas no matter where they emerged from. With the advent of technology developments though-whether you take the PC, internet, email, chat, or now mobility and social media platforms-organizations have greater advantages of communication and collaboration.

Social media for example, is not just a fad among youngsters, but it is also a serious way of communication and collaboration. Organizations are beginning to seriously consider integrating social business as part of their normal every day. If effectively used, social media can actually enable learning, thinking and faster decision-making. In fact, McKinsey in 2012 reported that companies that use social media internally can reduce, by as much as 35%, the time employees spend searching for company information. It further added that additional value can be realized through faster, more efficient, more effective collaboration, both within and between enterprises.

USING ANALYTICS

Besides social media, another technology that has significant potential for innovation is analytics. In an era when digital data volumes are increasing tenfold every five years, business analytics guides effective decision-making and strategy formation in organizations. It has existed since years but gaining popularity now due to the convergence of analytics and big data. More data and real-time customer feedback is now available and organizations that can use it accurately to analyze behavior can gain crucial advantage over competitors. Analyzing such data empowers organizations to improve their products, enhance customer relationships and reduce time to market. Big data analytics is increasingly being considered to have the potential to increase profitability, and competing analytics is becoming the new mantra for innovation, leadership and excellence.

CONCLUSION

In summary, at a time when businesses can rise and sink in a matter of a few years, it is becoming far more essential to think in the right direction and act on that thinking quickly. An organizationâ??s culture of leadership that enables crowdsourcing, and empowers its people with the technologies to collaborate better and execute faster, are becoming key ingredients to succeed, with the parameters of competitive success being defined as agility (ie, are we thinking and acting fast enough to respond to market requirements?), and innovation (ie, do we having enough ideas and germinating the right ones that can transform our opportunity?). Such thinking requires organizations to be a visionary and break the shackles of traditional thinking, and in turn enable them to stay relevant, meet challenges, and win in the competitive marketplace.