INNOVATION is the key to the continued success of any business. No firm lasts forever. Just as all plants, animals and humans go through various stages of life, so do businesses. The business life cycle includes the following stages: the inception, introduction, growth maturity, decline and exit.
The business life cycle starts with the inception of an idea. The entrepreneur goes through the process of defining the business opportunity and testing its feasibility or likelihood of success.
Satisfied that the idea is sound, the entrepreneur then gets the business into the start-up stage, establishing the initial foundation of the business and identifying a niche area of operation.
After the operational structures have been put in place, the business enters the growth stage. This is an important stage as it determines whether the firm survives or dies. To survive, the business needs to build a customer and revenue base to provide cash flow to feed the firm so that it meets operational costs as well as sustain its continued growth.
It is at the growth stage that new challenges start to surface.
Other players, attracted by the profitability of the business idea like bears to a honey pot, will start to enter your business area. They will imitate your business and pull away your clients. Eventually someone will find a way to do what you do faster, cheaper and maybe even better, hastening your businessâ€™ demise.
The whole cycle may range from just a few months to several decades. Businesses that continue to do things the way they have been doing them in the past soon become history. Firms that innovate are the ones that survive and continue to grow. But, what is innovation?
Innovation is regarded as the introduction of something new, or something contrary to established ways of doing things. The term innovation may refer to both radical and incremental changes in thinking, in things, in processes or in services
In economics and business, innovation refers to change that increases value, either to the customer or the producer. The goal of innovation is to make positive change, making something or someone better. Innovation leading to increased productivity is the fundamental source of increasing wealth in an economy. Innovation is related to creativity; it is actually the successful implementation of creative ideas to produce positive change. Innovation is also the ability to overcome obstacles that would stop most people. It turns problems and risks into opportunities.
For innovation to occur, something more than the generation of a creative idea or insight is required: the insight must be put into action to make a genuine difference, resulting for example in new or altered business processes within the organisation, or changes in the products and services provided.
In entrepreneurship, innovation may involve one or more of the following activities, as defined by the well regarded Austrian economist Joseph Schumpeter in The Theory of Economic Development, 1934, Harvard University Press, Boston:
lThe introduction of a new good â€” that is one with which consumers are not yet familiar â€” or of a new quality of a good.
lThe introduction of a new method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially.
lThe opening of a new market, that is, a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
lThe conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created.
lThe carrying out of the new organisation of any industry, like the creation of a monopoly position (for example through trustification) or the breaking up of a monopoly position.
How then, does the Zimbabwean executive, business owner or, farmer apply innovation to their business so that it does not stop growing?
There are, at any given time, things that you can change; you just need to be always on the new lookout for the opportunities to innovate. To increase the chances of spotting such opportunities, your organisation must be continuously creative; every member must be encouraged to be creative. Managers are not the only ones gifted with creative thinking.
Stifling employeesâ€™ creative ideas will kill the innovation spirit. Successful companies, such as 3M, openly encourage employees to experiment with new ideas during their working time.
If you look carefully at your products and services, and the processes involved in producing them, you should be able to find something that you can improve. Keep in mind that innovation should add value to your product or service. Value is measured from customersâ€™ perspective. You should therefore always listen to your customers; you will definitely pick up some good ideas.
Research shows that in developing countries most agricultural produce is sold from farms with a level of processing as low as 2%, compared to above 60% in developed countries. An article in the Economic Times of India reported in July last year that the bulk of the mint grown in India is exported to China which then re-exports it to markets like the US and Europe. The same holds true for many products grown in Zimbabwe.
There are lots of ways that one can innovatively add value to these products. For example, fish can be filleted, frozen and; fruit can be turned into juice and bottled; in fact many products can be processed and their value increased right on farm.
Opportunities for innovation are endless. By continuously exploring the opportunities, you can keep on producing new and improved products, and your business will keep on growing.
lPhillip Chichoni is a business planning consultant who works with small and medium sized entrepreneurs. Your views and comments are welcome. Please email firstname.lastname@example.org