Economists, academics and government officials love to talk about it. Entrepreneurs? Not so much. But when it comes to innovation, words don’t matter—getting the job done does.
In my experience, business owners rarely use the word innovation, even if they happen to be champions at doing it in their companies.
They’re more likely to see innovation as a concern for CEOs of Fortune 500 corporations or professors writing in the Harvard Business Review. One more article or speech about it is more likely to cure their insomnia than inspire them to take action.
Instead, they talk simply about improvements in their businesses—improved products, better processes or new approaches to marketing.
What does the research say
In reality, the words don’t matter. What’s important is the idea and it matters very much. Research shows that businesses have to improve continuously—yes, innovate—if they want to be successful.
Twenty‑five years ago, John Baldwin, a leading researcher at Statistics Canada, examined the differences in strategies pursued by the most successful small and medium‑sized businesses.
The study concluded that innovative activities were the most important determinant of success, outpacing management, human resources practices, marketing and financing.
BDC recently conducted a new study on Canadian business success factors. The study identifies what activities separate more successful businesses from less successful businesses. The results are consistent with those found by Baldwin a quarter of a century ago.
What types of innovation matter most?
The most successful businesses innovate more and they do it continuously. Precisely what types of innovation matter most? A number of significant results emerged from our study. First, more‑successful businesses are far more likely to bring new products and services to market.
One‑third of the more‑successful firms we studied reported that over 20% of their products and services didn’t exist five years ago. Only 12% of successful firms offered no new products or services over that period.
Second, 7 out of 10 more‑successful businesses reported they were either first adopters or early adopters of new technology; only half of less‑successful businesses reported the same.
Finally, when asked specifically about the types of innovation they undertook, more‑successful businesses reported making internal processes more efficient, developing new products and services, adapting their business model (e.g., developing new billing systems) and finding new marketing channels.
Innovation—more than just a buzzword
In short, more‑successful businesses are far more likely than less‑successful businesses to offer the latest products and services and to do it with the newest technology. They also spend more time and resources on trying to identify areas in which their business could improve and get ahead of the competition.
Our business environment is changing more rapidly now than ever before and that means innovation really is more than just a buzzword. The most successful Canadian businesses introduce new products, improve their processes and make their businesses more efficient. So, what’s your business doing?