How to generate new ideas: 5 steps that lead to innovation
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Generating ideas is vital for businesses to survive and thrive. As change accelerates in markets and technology, entrepreneurs need to continually innovate to compete, grow and remain relevant for their customers.
But many companies struggle with innovation. Idea generation requires a business culture open to employee participation and learning, listening to customers and a willingness to adapt, says Anna Walkowiak, a Senior Business Advisor at BDC who specializes in advising entrepreneurs on innovation.
“Ideas are a powerhouse for your business,” Walkowiak says. “Winning business owners have figured out how to generate ideas and integrate adaptability throughout their organization. Creativity is a game-changer for them.”
5 steps to improve how you generate new ideas
1. Foster a culture of innovation
This means a culture promoting employee participation and trust, as well as trying new things, adapting and learning. “If you have a closed-door organization, it’s hard to make idea flow happen,” Walkowiak says.
Your team needs to see that your leadership values, encourages and rewards ideas. It can’t just be lip service. Employees can easily see if their input is really wanted—or if all the talk about innovation is just talk.
Employees have to feel their ideas are welcome and needed for the organization to thrive.
“Employees have to feel their ideas are welcome and needed for the organization to thrive,” Walkowiak says. “This is the responsibility of leadership. They have to provide tangible and visible support for new ideas and demonstrate their openness with their leadership style.”
It’s vital to appoint somebody to be responsible for idea generation and to create processes for collecting, tracking and prioritizing ideas.
2. Identify challenges and collect ideas
Now you’re ready to start gathering ideas. It’s common to begin with a challenge—for example, a new technology, unanswered customer need, production bottleneck, product issue or pricing—then find ideas to solve it.
It’s important to come up with various ways of generating ideas inside and outside your organization. For example, to get input from your team, you can:
- Put up a white board in the cafeteria or by the coffee machine on which a weekly challenge could be posted for employees to propose ideas.
- Set up an idea box where employees can drop off thoughts.
- Hold regular employee town halls or “ideation sessions” (meetings devoted to discussing specific challenges and collecting ideas).
“Your team often sees the blind spots of the owner and leadership,” Walkowiak says. “They see what’s around the corner and what’s shaping the marketplace. The trick is to tap into this organizational knowledge.”
External sources of ideas may include:
- customer feedback on social media
- learning activities and industry conferences
- an advisory board and mentors
- an innovation coach or consultant
Once you’ve collected ideas, the next step is to choose a few of the most compelling or high-potential ones for more in-depth exploration. For this important step of prioritization, it’s helpful to use simple frameworks (for example, a business model canvas, which is a visual chart often used to develop or document a business model) and selection criteria (e.g. feasibility, competencies, profitability). Then, teams can vote for the most promising ideas during a town hall or ideation session.
Now it’s time to explore your best ideas further to research if they’re worth pursuing and even implementing. For example, if the idea is a new digital service, you can discover who the target customers are, validate the value proposition with them on social media or directly, examine the market potential and talk to your team about design and production possibilities.
“Have a mechanism to validate very early in the game if the product or service is desired by your target customers and if they are willing to pay for it,” Walkowiak says.
“Innovation must be based on evidence, not wishful thinking. You don’t want to spend too much time on it if it doesn’t have the potential to solve customers’ problems or answer an unsatisfied need. You need to be creative in how you test the idea without actually building it. The challenge is the difference between what customers say and what they will actually do.”
4. Implement and scale
Once you’re comfortable that an idea has potential, it’s time to proceed to implementation. You can start small—for example, with a pilot or prototype—seek feedback as you work out any kinks, and scale.
Constantly review the implementation to make sure it remains aligned with customer needs, pivot when necessary, and listen to employees and stakeholders to obtain feedback and adapt as needed. “Implementation has to be agile and iterative,” Walkowiak says.
It’s also important to recognize that many ideas won’t achieve expected results. Be sure to have a process for deciding when to abandon the idea. You should also be ready to learn from experiments to improve your chances next time. Employees shouldn’t be rewarded only when an idea has a successful result. Also reward creativity and learning.
5. Measure your efforts
Think of a few key performance indicators you can track, such as:
- number of ideas that come from employees, customers and others
- portion of employees who propose ideas
- portion of ideas that proceed to validation and implementation
- revenue generated or costs saved from new ideas
- learning and training accumulated along the way
At the same time, don’t fall into the common mistake of overanalyzing ideas and not implementing any of them.
“It’s very common to see analysis paralysis,” Walkowiak says. “A lot of companies overanalyze and do endless searches for the perfect product or solution idea without implementing any of them. You have to get out of the boardroom and look to your customers for answers.”