Business Innovation
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Business Innovation – How To Do It Like A Pro + Examples

Creativity is a driving force for evolution. It’s the reason you’re currently reading this article on a screen, in what we assume is a relatively comfortable Western life, instead of squatting in a damp cave and pining for a gazelle. Creativity has spawned our glittering cities, our delicious recipes, and some of the most profitable products ever sold. When companies come up with these lucrative products, they do it through good old-fashioned business innovation.

In this article, we explore the concept of creative business innovation, why it’s so important for growth, and how you can encourage it for your own company.

What is innovation in business?

business innovation sticky notes

Business innovation is coming up with creative ways to generate value for a company. This could be improving its product or service lines, revising processes for its departments, charging customers differently, or any other aspect of the business. Employees might introduce a desirable new feature for a product, find new ways to speed up production, or come up with a novel method to attract business partners. It doesn’t matter what it is. It’s just about discovering new ways to be better, which either increases the company’s revenue or reduces its costs. If a staff member believes that something isn’t quite right, they can collaborate and try to come up with an innovative new solution.

Innovation is essentially creativity, and because this comes directly from our brains, it can be found in every nook and cranny of a company, from planned brainstorming sessions to casual chats by the coffee machine. But to really get the most out of it, companies should try to make business innovation an official part of their processes, and in fact, 52% of Australian businesses reported being “innovation-active” in the two-year period leading up to July 2021.1 Your competitors may be included in that number.

People like to break business innovation down into lots of small categories, but for the sake of brevity, there are four broad types you need to know about:

  • Incremental innovation—gradual improvements to products and services, like improving a phone’s battery life. This is also known as evolutionary innovation.
  • Sustaining innovation—a significant improvement to product or services to sustain your market position. This could be releasing a new product model with a variety of new features.
  • Disruptive innovation—disrupt an existing market with a new technology or business model. Uber is a common example here, which disrupted the taxi industry with a technology-based approach.
  • Radical innovation—use technology to transform an existing market or create an entirely new market, such as Tesla’s high-performance electric vehicles. This is also known as revolutionary innovation.

Most business innovation falls under the first two categories, because they are easier and more affordable. Despite this, innovation can be a significant time investment—coming up with new ideas isn’t quick or easy. It takes regular, committed meetings to generate the ideas and evaluate them fairly, and a deft facilitator to embolden people to speak up, especially a good variety of people (introverts included). But the benefits of innovation are extensive. They include:

  • Stay ahead of competitors—business is competitive, and if you stick to the same old track without making any fresh improvements, you may find yourself slowly losing your market share. By investing time into creative business innovation, you can meet changing customer demands, find new ways to differentiate, and ultimately make more revenue for the business, which puts you a step ahead of your competitors.
  • Attract new customers—if your team spends six months coming up with a brand new product idea, and that product eventually attracts thousands of new customers and boosts your revenue, the time investment was clearly worth it. Business innovation can be an efficient way to capture people’s interest with new offerings, and help to offset lost customers.
  • Safeguard against recessions—recessions are an inevitable part of capitalist economies, and companies can prepare by putting innovative business ideas into place that help to stabilise revenue.
  • Stay ahead of disruptors—radio became much less popular after the invention of the television, Netflix effectively replaced cable television, and book encyclopaedias nosedived after Wikipedia. There’s so many examples of disruptive innovation, and you can help to protect your company’s interests by getting there first.
  • Encourage adaptability—adaptability is a driving force of evolution, allowing animals and plants to survive in ever-changing environments. Businesses must also stay adaptable and evolve with the demands of consumers, which is encouraged by continually innovating and coming up with new solutions to problems.
  • Keep staff engaged, and attract skilled staff—it’s dull doing the same thing day in, day out. Business innovation encourages new ideas and new ways of doing things, which can invigorate a stale working environment and help to keep people interested in their jobs. It attracts new talent too, especially younger people with plenty of promise. If a staff member comes up with an innovative idea which is implemented by the company, that can be incredibly rewarding for them.

Innovation can be completed on-the-fly, or as regular planned sessions. It might be influenced by customer demands, a desire to be the very best in your industry, or any number of other factors. The key thing to remember is that business innovation is often necessary for a company to continue competing in their market. If you’re worried about the time cost for innovation, realise that it could be just as costly not innovating and falling behind.

Business innovation examples

Every facet of a business can be improved with innovation, but here are some common examples:

  • Create new products or services—brand new products can become an extra source of revenue for the company, a potentially lucrative one. We wrote about them in detail in our diversification article.
  • Improve existing products or services—pretty much anything in life can be refined, and the same goes for your products or services. Make them better, and you’ll be rewarded with more customers, and more loyal customers.
  • Improve processes—a business has so many different moving parts. Customer service, marketing, sales, distribution—all complex entities with their own processes, which can be more efficient with business innovation.
  • Charge customers differently (revenue model innovation)—just because you’ve charged customers a certain way doesn’t necessarily mean it’s the best way. There may be a more profitable way to request payment from people which doesn’t scare them off.
  • Come up with new ways to partner with other companies—a strategic partnership can be a win-win relationship where two businesses provide clear value to each other. But they can be difficult to create or manage, and so are a good candidate for innovation.
  • Change the company’s business model—the company might benefit from a radical change in how they operate, or their very reason for existence. This could be from necessity, or be inspired from a particularly genius idea that seems too good to ignore.

How to encourage business innovation

Now that we’ve covered what business innovation is, we can talk about some good ways to introduce it for your business. Usually, it requires a combination of the following suggestions, especially the first: creating a safe culture for your employees.

Create a safe and positive culture

business innovation friendly atmosphere

If someone makes a suggestion at an innovation meeting and is spectacularly shot down by the facilitator, that person might never make a suggestion again. For innovation to thrive, the most important thing you can do is create a safe and accepting culture for your employees. That means facilitators (usually managers) need to be welcoming, tactful, and able to put a positive light on things, especially people’s suggestions. They need to put aside their egos and desire to be dominant, and instead be as friendly and receptive as possible. Have you ever been in a meeting run by a person who is combative and domineering (i.e. insecure)? If so, you know there’s fat chance of anyone putting forward creative, risky ideas, especially if the person is further up the company’s hierarchy. That’s why managers, supervisors, executives, and any other meeting facilitators need to be good with people for innovation to happen. Otherwise they are just too ruffled to be creative. They go into “safety” mode until the meeting is over, which is the death knell of creativity.

This attitude extends to other team members too. You don’t have to be a manager to assert control over a meeting, or intimidate people into silence. Creating a safe and accepting culture may require you to reassess your hiring policies, with a focus on people who are kind, friendly, and approachable (and with the right technical skills, of course). The goal is to create an environment where even the staunchest introverts feel safe to put their ideas forward without fear of being criticised or embarrassed, and this takes a combination of good people skills, and being able to create friendly, welcoming environments in meetings.

Create monthly innovation sessions

Carve out some time each month for innovation sessions, where team members have the space to be creative. Groups of between 5 to 10 are usually better because it’s less intimidating for people, and it’s good to invite people from a variety of departments and skill sets, as this encourages more diverse thinking.

The innovation meetings can be open-ended, with the facilitator asking for creative ideas for their particular department, as well as other departments. Or they can focus on specific issues or goals that have been identified by the facilitator prior to the meeting, with a view to solve them in innovative ways. If goals are the subject, it’s good to use a combination of short-term and long-term goals, because achieving the former can motivate people to keep on innovating, and achieving the latter usually helps the business to grow.

As for structure, you can use whichever idea-generating methods you are familiar with: brainstorming, role-playing, storyboarding, or something else. Or you can try a methodology called design thinking, which breaks the process down into the following steps:

  • Clarify—define the issue that you’re trying to solve.
  • Ideate—come up with potential solutions to the issue. Try to encourage “blue sky” innovation where literally anything goes; no idea is too wacky. Some of humanity’s greatest inventions started with harebrained ideas. Remind people that the ideas they come up with should be rough around the edges and nowhere near perfect.
  • Evaluate—as a team, discuss your favourite solutions to the problem, and why. They need to be fairly evaluated based on their viability and feasibility for the business. This is the part of the meeting where the facilitator needs to show tact for people’s ideas, and why they might not be suitable for this particular problem. They need to be positive and encouraging at all times, while also inspiring this attitude in others.

Once a solution has been chosen, the next steps of this process are to develop it, test it, and then implement it into the business. It’s important to remember that failure is part of this process too. Not every idea is going to work, but trying is crucial because eventually you’ll land on an idea that does work. Adopting a growth mindset and experimenting is key—you’ll fail if you’re too safe!

Add a “what if” section to meetings

“What if” can be an enticing proposal that invites people to put forward creative suggestions, and can be incorporated into any meeting where a problem is being solved. It can be as simple as asking people to privately write down the phrase “what if” on a sheet of paper, and then completing the sentence as many times as they like. Once done, they share and discuss their ideas with the group.

Some people may be hesitant with this approach because it can feel like they’re being forced to contribute, which is why the facilitator needs to be clear that you don’t have to come up with a suggestion if they struggle. Again, it’s about creating an environment of open friendliness, not hostile competition.

Make it a core value

Make innovation a core value of your business. Add it to your mission, vision, and values statements. Bring it up in important meetings. And reward people who come up with excellent innovative ideas (especially if they increase the company’s revenue).

Employees may not start to take innovation seriously unless you show that you’re serious about it. When the message is repeated enough, people can be more encouraged to put forward new ideas both in and out of meetings.

Share information across departments

One reason that babies don’t come up with creative ideas is because they don’t have the knowledge to do so. The same logic applies to adults. Creativity comes from a synthesis of knowledge, experience, and wisdom, so in theory, the more your staff members know about each department and their inner workings, the more potential they have for creative ideas. That’s why sharing information across departments is a great lubricant for innovation. Ask each department to send out internal newsletters about what they have been doing, and why. Ask them to run regular meetings to talk about their ongoing projects. Do whatever you can to break down the silos between departments.

Allow pet projects

Let’s be honest: most of your staff probably don’t want to be working on the projects you assign to them. Given the choice, they would almost certainly pick something that they are more passionate about, which is the whole point of pet projects.

When we are passionate about a project, we have a natural enthusiasm that drives us forward. Work feels less like work and more like fun, and this is reflected not only in the quality of the work we produce, but in the innovative ideas we generate. Giving people a day or two each month to work on pet projects can result in inspired ideas that make the business a lot of money. Google is a famous example, with Gmail, Google News, and other of its products coming out of pet projects. And while you obviously don’t have the same resources as the world’s number one search engine, giving pet projects a try might still be within your reach.

Have a diverse hiring policy

business innovation diverse team

When a team works together to come up with innovative ideas, you can expect a greater variety if the group comes from different backgrounds. The cultures and places where we grow up have a great effect on how we perceive and make sense of the world, which leads to unique ideas. A 50-year old white Australian may have very different ideas to a 26-year old Venezuelan, both of them valuable, but distinctly different, which is exactly what you want when you’re trying to innovate.

If you’re serious about innovation, try to make your hiring policy more diverse. Your staff members will probably provide you with a broader and more eclectic range of ideas. Not to mention that the company may become a more interesting place to work.

Try an innovation retreat

Your office or desk can become a stressful place because it’s where you have to perform every day, or risk plummeting into unemployment. And stress is terrible for innovation because it clams us up. Truly creative ideas can only come from someone who feels safe and relaxed, and an innovation retreat might be just the place. It doesn’t have to be anything fancy, just somewhere different where you can gather as a team for a day or two, ideally followed by food and drink to show your gratitude.

Install a suggestion box

Suggestion boxes may be old-fashioned, but they can appeal to shy people who have valuable ideas to offer but would rather do it quietly. You can install a physical box and provide a summary of what you’re looking for, or do it digitally as an “ideas board” or something similar. Either way works.


  1. 2022, Innovation in Australian Business, 2020-21 financial year, Australian Bureau of Statistics