Growth through innovation, not marketing

When a business launches a new product, a good marketing strategy is crucial.  You need to be able to describe what your product does, access an audience who need your product, and engage with advocates who will help guide the growth of your business.  But once your product has been out there a while, what you need is innovation.  And contrary to popular opinion, marketing doesn’t drive long term company performance.  Innovation is key to business growth.

But organisational research and development (R&D) that will help facilitate innovation can be a time-consuming and costly exercise for any firm.  And some smaller firms believe they simply can’t afford to support R&D because they need to focus on sales and service.  But R&D doesn’t have to be monolithic.  While it makes sense for the manufacturing and mining sectors and the computer science and engineering industries to be dominant spenders in Australian R&D, smaller businesses and firms with information-based products and services can still invest in R&D with low risk to revenue.

One of the best means of facilitating R&D in a small to medium enterprise business is to fund problem solving competitions.  These may be based around an identified weakness in a firm, or recommendations for product improvement from existing clients.  Even when organisations feel they know how to fix a specific problem, the act of opening themselves up to alternative solutions can be a revelation.  Improved product development processes, or inventive customer deployment of products and services can be the source of profound business growth.  And because problem solving competitions are (usually) public and competitive, businesses get to review a range of submitted ideas over a finite period of a competition or festival, and to celebrate the success stories thereafter.

On a larger scale, business incubators and accelerators are an economic and inspiring means of facilitating innovation.  The growth in Australia of business incubators and accelerators  has been meteoric in recent years, as large corporate institutions and investment guilds come to terms with the fact that outsourced innovation is more efficient, agile and economically viable than internal expenditure on R&D.  Again, the output of these investments can be based around a specific business problem (incubator) or can be an entirely new business or product category that will help drive growth (accelerator).  While the cost associated with setting up an incubator may be substantial, the returns on investment can be significant.  And for businesses that are not quite up to funding an entire accelerator program of their own, there’s always the possibility of banding together with other firms to breathe life in to a new incubator, or developing relationships with existing incubators to identify and address problems.

The models for business innovation programs are still evolving, too. While most competitions and accelerators tend to be open to any business idea or product, there is a growing acknowledgement that such programs can work for a clearly articulated business need or issue. While such limited programs still attract innovators, those trailblazers tend to be better adaptive thinkers than traditional ‘blue sky’ entrepreneurs.  And for businesses, investing in outsourced problem solving frees a company from any internal process bias, and enables access to emergent talent in the industry.

Pathways to innovation for growth are many and varied. As businesses, we should be investing more with these pathways to innovation rather than focusing all our growth efforts on marketing.   Great marketing can help amplify that innovation process, but it can’t replace better products and processes which will ultimately provide an improved customer experience.