Innovation: The Path to Greater Profits, Part 5

By Ted Garrison

In the first four parts of this article, the author explained why innovation is so important to a company's success and the first six of the 12 critical traits were explored. This part will explore the seventh and eight traits of the successful innovative company.

7) Make planning an exercise in creativity rather than simple forecasting:

This suggestion may seem like common sense and it should be. However, too many companies merely sit down and project some percentage of increase in business every year for a certain period. This is a dream, not a plan. If you intend to increase business other than by luck, you need a plan.

Without a plan too many contractors merely react to the business environment. They run around chasing bids and determine their fees based on what other contractors are doing. They aren't running their business - the environment is running their business. Instead they should start their planning by asking the following four questions:

1. What services could be eliminated?
2. What services could be reduced?
3. What services could be raised?
4. What services could be implemented?

The first two questions can reduce your costs. By eliminating or reducing services that your customer places little or no value on, you can increase the value of the services you provide. Also, since you are already providing these services they are easier to identify. This is a good first step to increasing value.

However, questions #3 and #4 offer the greatest potential. These questions provide opportunities for your company to differentiate itself from the competition and at the same time provide added value to your customers while also increasing profit margins. This is the perfect win-win situation.

These increased services don't have to be overly complex. For example, a tenant fit-out contractor met with builder managers throughout his city and asked, "What is your biggest problem in dealing with your current contractors?" They all basically responded with "cleanliness." Their current contractor's workers wore dirty clothes and boots, they made a mess of the elevators and the building's lobby and they parked their beat-up pickup trucks in front of the building. This innovative contractor approached the process differently. He placed his workers in clean uniforms, provided them with vacuum cleaners so they could clean up any mess immediately, and hid his pickup trucks.

This approached worked because it solved the major problem facing the building managers. While other contractors were focusing on schedule, cost and construction quality, this contractor focused on a higher value - namely tenant complaints. In some large office buildings this is a never-ending process, so you can see how powerful this approach can be. This doesn't suggest you can ignore schedule, cost and quality - but they are only the starting points. To help jump-start this process, get out and talk to your customers and prospects to find out what higher value services you can offer or expand.

8) Don't wait for the perfect opportunity. Try things:

No one knows for certain what new ideas will bear fruit - so everyone must learn to try things. The idea is to keep the experiments small and see what happens. If they don't work out, the cost is small. However, if they work out then they can be implemented across the entire company.

The constant improvement with little initiatives that was discussed earlier is a key to this trait. Little initiatives create small risks - so they don't have to be perfect and they can be modified as you go along. Inside your organization it's important to have a little patience as you attempt to work out the innovations. When offering an innovation to a customer, you must make sure the customer's expectations are realistic.

Keep in mind that not all customers will have the same problems. However, when you discover a benefit for one type of customer, you certainly can approach similar types of customers with that innovation. And this certainly doesn't preclude you from mentioning the innovation to other types of clients unless you know that it would have no impact.

But if you never try anything, nothing will change. So establish the goal that everyone must try something new every week. Before long those 1 percent improvements will add up to real dollars.

In Part 6 of this article, the traits that will discussed will the importance of creating realistic expectations and measuring innovation's progress against specific targets.

Ted Garrison, president of Garrison Associates, is a consultant, author and speaker who works with businesses in the construction industry. He can be reached by email at Growing@TedGarrison.com.