Ian Portsmouth: Welcome to the Business Coach Podcast, an advice-oriented series that tackles the top issues and opportunities facing Canada's small businesses. I'm your host, Ian Portsmouth, the Editor of PROFIT Magazine and we've developed this podcast in cooperation with BMO Bank of Montreal.
It is often said that it's businesses' war. If that's true then good ideas are the weapons of today's business battle field. Come up with better ideas, more often than your competition and you stand a much better chance of long term success. However, it could be argued that most businesses and especially small businesses do not dedicate sufficient thought and effort to staying on the leading edge of the innovation curve. Joining me to discuss the innovation challenges and opportunities within small businesses is Jim Carroll. Jim is an international futurist, trends and innovation specialist who's Business Week named one of four leading sources of insight into innovation and creativity. Based in Mississauga Ontario, Jim is the author of several books, his latest is entitled the "Ready, Set, Done: How to Innovate When Faster is the New Fast". Jim, welcome to the Business Coach Podcast.
Jim Carroll: Thank you.
Ian Portsmouth: So Jim, one of the frustrating things that I find with the term innovation is that people often equate it with only product development. So what's your definition of innovation?
Jim Carroll: It's absolutely true. I Call it the Steve Jobs iphone innovation problem. Everybody hears innovation, they think of the iphone, they think about iPod, they think about Apple and they think that's all that innovation is, you know, coming up with cool products. To me, it's about much more. It starts out with a fundamental presumption, it doesn't matter what your business is or what industry you compete in, you're going to be faced with more competition, more challenging customers, your business model is probably going to be subjected to greater changes. You've got issues in terms of cost input, you probably finding your top line, your revenue line is being subject to the pressure. You've got all kinds of challenges being thrown at you. And from my perspective, innovation is coming up with a lot of unique ideas, whether it's around your business model, whether it is around the manner by which you compete, whether it's around your structure, whether it's around, you know, the methods that you use to compete in your market place, whether, you know, nothing to do with your skills, I mean, it's everything. It's simply, you know, taking the mindset that that my world is going to change on a continuous basis and I am going to make sure that I have a constant stream of ideas as to how I can keep up and how I can deal with those trends.
Ian Portsmouth: Now, there is nothing really wrong with stealing other people's ideas, is there?
Jim Carroll: Oh gosh, not at all. And you know, I put them in three simple categories. You simply have to sit back to think innovation like this. You ask yourself, you challenge yourself on a regular basis with three simple questions. What can I do to run my business better? What can I do to grow my business? And what can I do to transform my business? And to me, that's what innovation is all about.
Ian Portsmouth: So when it comes to new products and services, we see a lot of innovation from big corporations. You mentioned Apple which is famous for coming out with new products, 3M is another great product innovator and of course, start-ups into the market with new innovations. How would you rate the companies in between those companies I just mentioned and that is namely the typical small business?
Jim Carroll: I don't think there is a lot of innovation in terms of new products. You know, I think a lot of small and mid-sized businesses, you know, a good number of them are probably doing the things they were doing a year ago, five years ago, ten years ago, twenty years ago. You know, they are representatives of a particular product or they developed some type of product that they have in the market place for quite some time. And I think, you know, that's the challenge. If you're not constantly reinventing what it is you're brining to your customers, you're putting yourself in a box. You know, I think one of the biggest issues we're faced with out there today, your customer is going to be far more challenging today than they were five years ago. I mean, they are information empowered, they have alternative sources for whatever it is that, you know, you're hoping to provide to them. They're far more sophisticated in terms of their understanding of the product and alternatives to that product. So you know, the customer is changing quite a bit. So you can't keep on selling to them the same old thing that you sold in the past and expect that relationship to go forward based on that. You know, I tend to think that a lot of small and medium-sized organizations aren't real good at innovating.
Ian Portsmouth: Now, given all of the advantages of innovation that you've just articulated and the challenges that lack innovation creates, why don't more SME's do better at innovation? Why aren't entrepreneurs more aware of the need to innovate?
Jim Carroll: I think there are a number of reasons. I mean, number one, there is a difference between an entrepreneur and a start-up. I mean, a start-ups is a risk taker, they are there implicitly to take a risk. An entrepreneur I think has already taken the risk, given they're in a situation in which they're now, you know, actively earning revenue. And so, I think they have lost a bit of their risk taking capability. I think for a lot of folks, complacency sets in. I think for a lot of folks, there is a little bit of denial, you know. Hey, market is not going to change, my business model is not going to change, I am not going to see new competition. It's really that element of risk that I think begins to disappear. And with a lot of my clients, you know, whether they are Fortune 100 organizations in the U.S. or around the world, or small business organizations, I advise people to invest in what I call experiential capital. And that is you take the mindset of there is a lot that is going to impact you out there, there is stuff you don't know about, whether it's new products or whether it's something having to do with social networking and the impact of that on your business or whether it's fooling around with new business models, you go out, you try things out. The more experience you build up, the more experiential capital you have. And the more experiential capital you have, the better position you are in to deal with the future. I don't think a lot of small organizations do that you know. They don't take a lot of risks, they don't try a lot of small scale projects, they don't explore a lot of, you know, the many new things which are going on out there which could impact them. So they need to.
Ian Portsmouth: So trying to take a lot of small steps is one innovation practice that you would recommend. What other ways can small businesses innovate?
Jim Carroll: We see large organizations do an environmental scan. And you know, that is a SWOT analysis, you know, Strength, Weakness, Opportunity, Threat. And you know, I think smaller organizations can do the same thing. Sit back and think about where your new competition might be coming from. Sit back and look at your customers and talk to your customers. You know, try to assess if you are at risk from new competition or displacement products, products which could displace yours. Sit back and look at the business model in new sector and see how much that might be subject to change. Think about the cost structure of your business. I mean, you know, there continues to be all kinds of ways in which you can take cost out of your business whether it's using the information technology or innovative staffing strategies. You know, look at it from a whole variety of different perspectives. And from that, I think you can develop, you know, a bit of an action plan and a whole series of small steps that you can begin to undertake so that you are doing things better in those three areas. You are figuring out how to run the business better. And that's making it more efficient. You know, for example technology, growing the business, you know, how can I do something with my product so that I can earn a little bit more revenue on it. Maybe I can add a service element to the product and then transforming the business, you know. How can I develop better insight into where my business is going into the future if I've got access to knowledge network of similar entrepreneurs. I mean you can go to each of those three areas and think about your business and come up with a whole bunch of ideas.
Ian Portsmouth: Now, Jim, I am sure you have met many CEO's, entrepreneurs who say that their companies are innovating even though they really aren't and we've all met the CEO's and the entrepreneurs who say that they really support innovation in their businesses when really they're not doing what's needed to support innovation. So what is the Chief Executive's role in fostering a culture of innovation in small and mid-sized businesses?
Jim Carroll: Oh, it's absolutely critical. I mean, if they aren't actively supporting innovation, nobody is going to do anything, nobody is going to take any risks. You know, the CEO has to create environment in which people understand it is okay to fail. The CEO has to create an environment in which the word innovation is part of the reward and transformation and bonus structure of the organization. The CEO has to create a mindset that is encouraging everybody, you know, to think about these three things on a regular basis. What can I do to run the business better, grow the business, transform the business. If you don't have a CEO who's doing that, it's simply not going to happen, because people in the absence of a clear direction to take risks which is what innovation is all about simply won't do so.
Ian Portsmouth: Now, a lot of Chief Executives have taken the step of delegating the innovation role to what I guess some of them call a Chief Innovation Officer. Do you think that that is a useful approach?
Jim Carroll: It can be useful because you know, you're putting in place an executive who's basically responsible for managing and directing the whole series of mall or large scale innovation efforts but you still need that message at the top. I mean, you've got to see the CEO who walks the talk. If they simply delegate it and no cause that fundamental cultural shift, then that individual in the CEO role is simply not going to be able to succeed.
Ian Portsmouth: So, finally Jim, where can companies find help with innovation outside their own businesses?
Jim Carroll: What I often recommended to folks, if you want some really good ideas, go to some conferences that have absolutely nothing to do with your industry. You know, I find what people tend to do is they go to the same conference year after year, the same old speakers are there, the same old industry speakers talk about the same old industry trends and you know, you sort of go there and your mind just turns to fluff. Pick up two or three conferences that have nothing to do with what you do and you know what, you can often find, if you are listening to the speakers in other industries, you can often find a whole bunch of very very unique ideas that you can pursue. I think personally, this concept of experiential capital to find ten projects that you think you need to pursue that could involve branding, it could involve advertising, it could involve marketing, it could involve something involving cost reduction. Identify ten projects and simply set out to do those projects for two reasons. Number one, to boost your experience, your experiential capital. But number two, you know, simply to begin the process of doing something and then you can analyze how well you did in those particular projects. You know, I think there is a whole variety of things you can do. Network with your peers, you know, outside industry conferences, I do find there is a lot of good groups, good networks of people you can participate in, you know, to seek ideas. And really take the time to understand what this innovation buzz really is all about. It's not about Steve Job and the development of the iphone, it's about the fact your business is going to be subject to tremendous change from a whole variety of different perspectives and you constantly have to, you know, challenge yourself to do things differently to keep up with that reality.
Ian Portsmouth: Jim, that's all the time we have, but thanks for joining the Business Coach Podcast.
Jim Carroll: Okay, thank you.
Ian Portsmouth: Jim Carol is an international futurist trends and innovation specialist based in Mississauga Ontario.
That's' it for another episode of the Business Coach Podcast. Be sure to check out other episodes which you can download from BMO.com, profitguide.com and iTunes. If you have any comments or suggestions about the podcast, then please send them to me at email@example.com.
Until next time, I am Ian Portsmouth, the Editor of PROFIT Magazine, wishing you continued success.