As business owners and leaders we know that the business landscape is ever-evolving and we need to be ahead of these changes. The goal is never simply survival, the goal is to flourish. Without an effective business strategy and constant innovation this is not possible in today's world. McKinsey recently did an analysis of 650 leading companies looking for traits that lead to the most success. After doing this research, it was discovered that the leading companies, deemed ‘innovative growers’, were using the perfect combination of an innovative mindset and developmental pathways. These ‘innovative grower’ companies boasted above-average Total Shareholder Returns (TSR) and economic profit power.
These frontrunner companies harnessed success by becoming masters of Mckinsey’s eight essentials of innovation. Aspiring for success, making the right choices, constant effort toward discovery, embracing evolution, accelerating past competition, scaling to meet demands, extending to external networks, and creating a mobile workforce that is always ready for the next step. As you can see, innovation is more than just a word, it is a top to bottom plan that will take your company to the next level just as it has for these ‘innovative growers’.
Additionally, there is the concept of the “Value Stick” that was presented on an HBR podcast episode by Felix Oberholzer-Ghee. This concept is based on the comparison between a customer's willingness to pay and employees willingness to sell. In order to create value, we must find a way to raise our customers' willingness to pay while simultaneously decreasing our employees' willingness to sell, creating a delicate balance between the two. There are many different ways in which this can be achieved. On one hand, willingness to pay can be increased by increasing the quality of products, offering a complimentary product or offering a popular product. On the other hand, willingness to sell is a bit more complicated. Initially, offering a higher salary to an employee seems like a way to attract the most talent, however, crafting a workplace that is appealing in terms of roles and environments is where true value is created.
Both of these pieces collectively enforce the importance of strategy in business growth and success. Innovation is an intricate concept that has many different layers and functions. Every company should be considering the steps they can take to become an ‘innovative grower’ and strike balance on the ‘Value Stick’ to ensure they are ready for the future.