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What can entrepreneurs learn about innovation from a global shipping company? That it’s more vital, more practical and more attainable than the average small-business owner realizes.
Mark Hamm, vice president of Innovation at FedEx, says all companies share a chronic need for new business-building ideas. “In a world where change is coming faster and faster, a company’s business advantage doesn’t last as long as it used to. As customers’ needs change, they demand more value from you. If you don’t invest in innovation, your business will slowly sink.”
But don’t think that an annual brainstorming session will catapult your business into the Inc. 500. Ideas alone are just dreams. Innovation, says Hamm, is all about results, including return on investment. He defines it with an equation:
Innovation = Invention + Realization + Commercialization
“It’s one thing to invent something, to come up with the idea. It’s another thing to realize it, to make it possible. And unless you commercialize it by introducing into the marketplace, it’s largely an internal exercise. Innovation is a function of realization and commercialization because that’s what it takes to create a competitive advantage.”
FedEx has a rich history of innovation, and it remains an integral part of the FedEx culture and business strategy. Elevating innovation to a companywide discipline, FedEx taps into the creativity of team members worldwide to improve the way things are done in every area of the FedEx global network.
“Innovation is a part of the DNA at FedEx,” says Hamm. “We see innovation as a strategic business practice that is continuously enhanced, developed and encouraged.”
So, how can you develop a culture of innovation in your small business? Hamm offers these suggestions:
Make an executive decision
“It starts at the top,” says Hamm. “Are you ready to make the necessary investment? You have to make an explicit decision to commit to innovation.”
Atlassian, an Australian software company, gives its developers one day per quarter to work on a project of their choice. They start on a Thursday afternoon and present the results the following afternoon to the rest of the company. Dubbed “FedEx day” because developers deliver a working software prototype overnight, this investment of staff time has produced fixes and new features for existing software and a head start on new products.
Stake out your turf
“FedEx has always been at the leading edge of movement and technology,” says Hamm. "That’s our undisputed turf. It’s at that intersection where we can create game-changing competitive advantages."
FedEx introduced overnight express delivery in 1973. Since then, the company’s market leadership has been reinforced with innovative tools and processes—barcode scanning, online tracking, automated package-handling systems, wireless technology, self-service software, and more.
In what area does your business excel? If you don’t know, ask your customers. “Try to dominate the segment that you can serve best, and make it a core value of the company,” says Hamm. Reinforce your specialized strength by communicating it; refining it with supporting products, services, processes and activities; and gathering customer feedback.
“You need to get everyone on board. If your own employees don’t understand what you do best, they’ll be pulling in other directions. You need every employee’s decisions to align with that core value.”
Focus on the customer
FedEx has grown by giving customers what they want: fast, dependable delivery plus continual upgrades in what’s possible. Today, FedEx provides time-definite delivery and access to nearly real-time information, enabling customers to adopt just-in-time inventory and other new supply chain models and efficiencies.
Meanwhile, Hamm’s Innovation team strives to create new business models and new experiences that benefit customers. “Our commitment to innovation propels the development of ideas, products and services that empower our customers to grow their businesses around the world.”
Ditto for your business. Customers see value in your product or service and reward you with their business. What other customer needs can you satisfy?
Hamm encourages entrepreneurs to learn and use what motivates individual employees, whether it’s opportunity to help others, learn, join a team, have meaningful work or pocket some cash.
“All of those things are motivators,” he says. “People have to get something for their effort.” The more incentives you have in place, the more imaginations you can fire up.
Learn from failure
The FedEx Innovation team uses quick prototyping to get multiple options in front of customers.
“Failure is a critical part of the process of innovation because the nature of learning is trial and error,” says Hamm. “We test prototypes quickly as a way to accelerate success. The faster we fail, the faster we learn.”
You can do the same. Resist the temptation to perfect one concept. Instead, develop and test multiple prototypes to learn what works and what doesn’t.
Prepare for resistance
It turns out there’s a dark side to progress. “Innovation naturally creates change,” says Hamm. “And any time you create change, you meet resistance because you’re leaving behind the way things have been done.”
When preparing to bring an innovation to market, Hamm recommends, be alert to the expectations of employees, customers, partners and investors. Addressing their concerns and explaining the benefits will help manage resistance.
According to Hamm, nurturing innovation is a natural for small business and more than pays for itself with a flow of better products, services and processes that differentiate your company, delight your customers and boost margins.
“Innovation definitely is challenging. It’s fun and inspiring and takes a lot of hard work. In my mind, that defines small-business ownership.”
Jon Holten is a writer and content consultant based in Bloomington, Minn.
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