What Drives Business Reinvention?
Innovation and invention are hot topics amongst business and political leaders alike.
Innovation impacts on not only businesses growth and planning but also the country and society we live in – from the air we breathe (clean energy) to what we eat and how we communicate and travel.
When working with underperforming businesses, the subject of innovation and invention is often at the bottom of their list.
Yet if embraced, innovation can be used as a key to their success – and it doesn’t have to mean great cash outflow.
Innovation can be about the way a business deals with staff, customers and suppliers. It can involve internal process improvement and efficiencies. It is a vast subject that is worth exploring even if a business is experiencing crisis.
Here are three key factors influencing business reinvention and innovation:
1. Customer demand and competition
Today’s customers are sophisticated and keen to try new things. They demand more efficient services and products that will improve their business.
A maturing of the product or service, with it becoming uncompetitive due to external pressures or simply changing times, should not be a viewed as a threat.
Instead, it is an opportunity to discover new products or a niche that will allow the business to evolve in new directions.
The introduction of brick-sized mobile phones signalled the beginning of a new era in telephony. No one could have predicted the usage and ownership of mobile phones would grow to over 5 billion users around the world by 2010.
Maturing products and services simply open the door to new things. They are opportunities not to be missed!
The need for the business to invest in Research and Development (R&D) is often overlooked due to the pressures of delivering on short term profitability and cash flow.
In times of crisis, successful companies are those that keep spending on R&D, as they will come out of the crisis with market leading products.
For example, Hewlett Packard, during the recession of 1969 invented a pocket calculator and Apple came out of the Dot-Com crash of 2001 with the iPod.
Capital shortage is not only a threat to business liquidity; it can also lead to a business becoming stale. This, in turn, will lead to loss of competitiveness.
Investing in innovation and R&D may be a tough decision to make in times of funding shortage, but it is essential to maintain a long term view for the business.
Obtaining capital funding is one way to ensure you stay on the course to innovation. For information about how to do this, see – 3 Steps to Capital Raising.
3. Vision and culture
Innovation doesn’t just apply to products or services. A key success factor for many businesses is the need to reinvent or reinvigorate their vision and culture.
To cite a recent example, we helped a Sydney residential building company in crisis attract capital to turn around their business, and we revamped their management team to drive the business.
It wasn’t enough. Once the immediate crisis was over, it became clear that the focus and vision – key drivers of company performance – were lost by the team.
With our assistance, the new, uplifted spirit of the team has had a positive impact on the sales and performance of the company.
Having helped re-establish the business and return it to profit, it is great to see the team’s renewed enthusiasm for the success and longevity of the business.
What do you believe are the key reasons for business reinvention?
Vantage Performance is one of Australia’s leading turnaround management and profit improvement firms – solving complex problems for businesses experiencing major change.