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Saturday, 26 September 2020

Recession phase 3 - innovation and creativity need to kick in to stimulate growth.

Monday, 28 May 2012 | Posted by: Peter A. Rieck, Marcmoor Ltd.

Innovation is an incredible driver for business. Innovation generates competitive edge, opens up business opportunities, wins orders and motivates the company and it's staff. To virtually all successful companies, innovation is second nature.

There are signs that manufacturing is preparing to move out of recession, a key moment for any company wanting to establish itself as a front runner of the future. The continued discipline of cost containment on its own, in a low growth economy, is not enough to sustain a manufacturer. The quest for growth has to dominate the management agenda which inevitably means cost reduction must take a back seat and cost control becomes the order of the day, while manufacturers seek initiatives which will help differentiate their offerings and drive competitiveness.

While some companies have innovation flowing through their veins, many do not realise until faced with the fall out from recession that they have ignored it. That oversight may well cost them dearly. Their competitors will threaten to take their share of the market. Worse still they will have to cut prices to retain their customers who will become ever more restless when they see that their supplier has been overtaken in products and services; a downward spiral ensues in which cost cutting cannot keep up with loss of margin, cash flow dries up and the staff and resources needed to create the next generation of products to win back market share are no longer there.

Innovation and creativity comes in many forms and both can and should be applied to every aspect of a company. If asked most managers traditionally point to products and services, but they seldom apply their thinking to customer relations, communications, deliveries, production and other vital activities in the business. Being creative with the available resources can pay large dividends, not only do the resulting initiatives rekindle positive staff interest in the company and its future but they also create space and time for the development of longer term core innovation. The approach allows companies experiencing some of the toughest trading conditions to stimulate activity and gain the support of the staff to drive the company forwards while developing products and services that generate fresh competitive edge.

If well planned, the approach of creativity giving birth to innovation has other benefits in that investment is often low at the beginning and can be managed to keep pace with resources as it gathers momentum. In fact at the outset ingenuity is far more valuable than finance.

The most important focal point for all innovation is does it serve a real purpose, does it have features that make it stand out, is it original. All to often the salesman's cry of " how am I expected to sell, we aren't competitive, we don't have the right product" leads to an "and me too", "catch up" philosophy, the development of a copy and price cutting to sell products, often made inferior by cost cutting, in an overcrowded market.

Innovation based on customers needs, ideas and requirements is known to be twenty to thirty percent more successful than "blue sky" concepts. We always hear about ground breaking ideas, but in truth most of them are born out of a shortfall in what already exists. Finding a hole in the market, fulfilling a need, overcoming a shortfall, sets innovative companies apart from the rest, giving them competitive edge and yielding far greater profit and returns on investment.

Think tanks, brainstorming sessions may be the start point, but staff involved and participation beyond the development team is crucial because their contribution adds to the entire project. Innovation in products and services has a powerful byproduct, it triggers a review of the company's core activities, it can lead to a review of communication with customers, a challenge to planning and production methodologies a review of transport and shipping. For example, talking to customers may replace e-mails as the primary means of communication, now there is a revolutionary thought. However, a cautionary footnote, there is a growing shortage of skilled staff with the right attitude and attributes and in this day and age of mobile human resources innovative an exiting companies that are going somewhere become a magnet for the best people.

Manufacturers have begun to realise that cost reduction driven by the recession has gone about as far as it can. Many are now turning investing in product innovation and added value services as a means to compete and drive growth; combining that investment with the pursuit of operational excellence those that choose this approach are accelerating business change and leaving their competitors behind.

In fact innovation revitalises a company.

Peter Rieck,
Marcmoor Limited & Peter Rieck Consulting Blog 9 – 07.05.2012

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