Innovation is the bedrock of all businesses. As is rightly said, if a business does not innovate, it will evaporate over a period of time. A company focused on innovation just does not launch better products, but also makes operations better, enhances employee productivity, involves employees in the company’s development efforts and increase competitiveness in the marketplace.

A company’s journey to becoming an innovative enterprise is the outcome of many things coming together with a solid leadership driving to make it happen. Before a small business embarks on an innovation journey, it should remember three things. These are:

Just not the product
When you think about Innovation, it need not just happen in the product. Innovation can happen in any part of the value chain. There could be innovation in supply chain, distribution, processes, business-model, distribution channel, sourcing, accounting operations, organizational structure, partners and so on.

Rather, it should be remembered that innovation can happen across the value chain. By confining one’s focus to a product, the organization can miss potential opportunities for differentiation. This is the reason it is recommended to do a detailed value chain analysis to understand how each of the elements contribute towards creating value for the customer.

This process should also help to assess the capabilities of the partners, how they work together, their pains, their competition and the vulnerabilities of your business. For example, Caterpillar differentiated its business by promising customers to deliver parts anywhere on earth within 48 hours or it is for free. How did it achieve this?

This was achieved by creating a network of suppliers – a great example of supply chain innovation. An example of business model innovation is when a company advocates customers to not buy a car, but provides car with a monthly rent with an option to have another model of car every year.

Ideas are treasure troves
Every business owner should remember that ideas are treasures hiding within the organizational crevices which they can mine without investing any money. These ideas hide with stakeholders across the value-chain such as employees, suppliers, customers, partners and so on. This is something which business owners should know how to harvest.

This is, however, easier said than done. It requires the organization having an engine for capturing ideas from employees, partners and customers. Having captured them there has to be a mechanism for evaluating them and giving feedback to each individual who has taken the effort to share the idea. Remember, sometimes the best ideas for innovation come from the people who are close to the process. Never be stingy on getting ideas. More the number of ideas the better it is. A small business keen o ..

This could include ideation workshops, innovation schools, providing financial help to prototype ideas, pitch an idea to an executive team, Ideathons, create spaces for employees to innovate, celebrate smart failures, incentives, process walks, retail store visits and so on. If you want employees to be a continued source for ideas, you need to have a supporting culture and embed creative confidence among them.

Abhijit Sengupta, a leading quality expert based in the US who has helped small and large businesses in automotive and energy sector to become competitive says, “Without a continuous flow of ideas, innovation cannot survive in an enterprise. However, one should remember that a critical success factor for this is an engaged and trained work force which is willing to participate in the organization’s success. Communication is fundamental to the success of any effective organization. Despite having ..

Observe, observe and observe
Some ideas for innovation may emerge with serendipity but if a business owner is serious about innovation, he has to master the art of observation. While observing may appear to be a simple act which he can do with ease, this however is not the case. I am talking here about observation that throws up opportunities to address an unquenched need of customer. This has to be taught and comes only with practice.

So what does it mean to be a small business where the business-owner practices the art of observation? To know product performance, he just does not just talk to customers but spends time to observe the customers as they consume the product. He should be on the look-out for broad macro trends around economy, consumer behaviors, demographics and technology. He should see successful practices and innovations in another industry which he could pick and deploy in his organization. He should keep his ..

He should also question the existing assumptions of his industry and even his business. Remember, these are just not simple gaze but observations to gather insights for possible innovation. Innovation is not always about developing something new but transplanting a successful deployment from one context to another. What is critical to note is that your takeaway from observation should solve a problem. A forward looking business-leader ensures this skill of observing and getting value from it and ..

For example, when I was in ICICI Bank in the early 2000s, the then CEO nudged us to observe and learn. This led us to pick quite a few things from manufacturing shop-floor and use it to innovate our processes.

As Sengupta told me, “The art of observation sharpens through practice. One needs a curious mind that is constantly seeking answers to become better and competitive. The insights that one gathers from these observations can throw up opportunities which otherwise may not have been”.

Remember, innovation need not just be initiated by your Head of Product Development or Chief of Design. It can be triggered by employees who know how to observe and get value out of it.

The writer is an author and managing partner of Proliferator Advisory & Consulting. He is a Fellow of American Society of Quality and recipient of 2014 Phil Crosby Medal. To know more about him, please visit: www.debashissarkar.com