Innovation: the key to mid-market success

Innovation

01 November 2014

There is a well‐worn adage that says “only a dead fish swims with the current.” In a business context, the most literal interpretation of this maxim is “innovate or die.”

It’s widely accepted that mid‐market businesses are the engine room of the economy and employ the majority of Australian workers. In order for these businesses to maintain their competitive edge and continued growth, the mid‐market must constantly innovate. It is no longer enough to consider innovation as the “icing on the cake”; rather, innovation should be seen as a fundamental ingredient in every business mix.

Mid‐size businesses: leading the way in innovation

One of the distinct competitive advantages of the mid‐market is its agility. Mid‐size businesses can bring new products and services to their customer bases faster than their larger competitors. However, it is important to recognise that “innovation” is not always synonymous with “technology”. Of course, the two concepts are often intertwined, but often it is more accurate to view technology as a subset of innovation.

Business leaders need to dissect every part of their business and review them through the lens of innovation. Product development, customer service, recruitment and retention are but a few areas that provide scope for innovation and change. Encouragingly, Bankwest’s recent Future of Business Innovation Report found business leaders are now far more open to incorporating innovation into the business cycle. I would argue that the most successful of these businesses will take the next step and incorporate innovation into their business culture.

Adopting innovative business cultures

I had the good fortune of working on a consulting assignment in Japan in the 1990s where I was struck by the cultural alignment that had developed between the “stated values” of the company and the “lived values” of the employees. Employees came to work with a strong sense of commitment to the brand, looking for ways to improve their personal productivity and add value to the company. A Japanese colleague later explained that in the years following World War II, as Japan rebuilt its industrial economy, workers were encouraged to embody the “spirit of continuous improvement” – what the Japanese referred to as “Kaizen”.

The concept of “Kaizen” offers some key lessons in the important nexus between culture, productivity and innovation. First and foremost, leaders of Australian mid‐size businesses should ask themselves: how can we make this company an “employer of choice”? With the ongoing battle for talent, what innovative practices need to be developed that not only attract and retain the best people, but also ensure optimal outcomes in terms of efficiency and productivity?

A great Australian example of a highly innovative business is Atlassian software. Part of Atlassian’s success can be attributed to its flat, “no nonsense” management structure that enables – and rewards – ideas from all staff to be presented directly (read: unfiltered) to the management team. In just over a decade, Atlassian has grown from a start‐up to a billion dollar business and is regularly recognised as an employer of choice by many business award programs.

Returning to the “old school”

If innovation is the key to success but technology is not always the best approach, what is the best way for a mid‐size business to innovate? For many, what is old is new again and a renewed emphasis on customer service might just be the secret your business is looking for.

Recently, I observed the management team from a local web hosting business make the strategic decision to invest in customer service. Whilst the temptation existed to fully outsource help desk services to less expensive foreign operators, extensive polling demonstrated that customers placed a high value on being able to speak to Australian‐based customer service representatives and the decision was made to deliver on this preference. Over the past eight years, it is simple, customer‐driven decisions like this that has allowed the company to grow from being the fifteenth to the second largest web hosting company in Australia.

Make time for face time

Sometimes we can fall into the trap of working so hard “in” our business that we fail to work “on” our business.

It is important to set aside regular times to meet with customers and staff, to encourage and reward their ideas. You can be confident that this investment will be repaid many times over. Future of Business Innovation Report found a large majority of respondents have adopted or plan to adopt face‐to‐face meetings, phone calls to customers and in‐person customer meetings as part of their innovation agenda. This tells us that mid‐size business leaders are already adopting a broader definition of innovation and are ensuring this approach permeates every facet of the business.

In a world that pre‐dated technology, Charles Darwin proclaimed that “it is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” Business leaders should remain mindful of the fact that the only constant is change, and on that basis critically examine the role innovation plays in their business strategies. Innovation – in all its forms – will continue to play a critical role in the success of mid‐size businesses.

Mark McConnell is a serial entrepreneur, mid‐market expert and Executive Director of recently listed Citadel Group Limited.

The information contained in this publication is of a general nature and is not intended to be nor should it be considered as professional advice. Youshould not act on the basis of anything contained in this publication without first obtaining specific professional advice. To the extent permitted by law,Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945, its related bodies corporate,employees and contractors accepts no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting onor refraining from acting as a result of anything contained in this publication.

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Mark McConnell

Mark McConnell
Serial Entrepreneur and Mid-market Expert

Bankwest SWIFT code: BKWAAU6P | Find your BSB by logging into Online Banking.

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