Business leaders predict that half of their revenues within the next five years will come from products, services, or businesses that currently do not exist.

These findings, from a McKinsey Global Survey, highlight where organisations are focusing to drive innovation within their companies. The majority of the survey respondents are looking to build new revenue streams within their existing businesses rather than looking to external collaborations or M&A activity.

However, innovation can often be seen as a distraction to the efficient running of day-to-day business, especially by any existing management. Like any eco system, it can then become the organ transplant that the surrounding body wants nothing to do with.

This uneasy tension between running the business today and imagining how you can do things differently in the future, requires board and c-suite leadership to create the opportunity for innovation to thrive.

So how can business leaders identify and unlock these potential opportunities? The following outlines three ideas can help:

1. Truly understand the core of your business

The key to finding success in unlocking the innovations within your organisation to create these new products and services is often in harnessing the true core of your business.  If we can accept that McDonald’s is not a restaurant but a real estate company and Google is not a search engine but a media owner, what does your business actually do?

If we view a dairy farmer as a grass grower, we unlock a wealth of new opportunities and revenue streams in delivering the greatest possible return on investment – beyond dairy farming. Applying different lenses to your business and your growth ambitions will help to unlock previously hidden opportunities.

When we stop focusing on the obvious things that we do, be it selling burgers or transporting people, and start to explore the potential opportunities for what we could do, we begin to uncover some exciting possibilities. 

2. Technology in isolation isn’t always the answer

It goes without saying that digital and tech investments will form a significant part of this process – unsurprisingly, 91% of executives plan to increase budgets for digital and tech projects this year alone. However, it's important to remember technology alone is not the answer; innovation that connects to a customer need will always triumph.

The pandemic showed us how companies – and in fact, whole industries – could move towards new products and services. Many in the restaurant industry quickly adapted to selling make-at-home meal kits; the health industry adopted telehealth and video calls while the entertainment industry embraced streaming content – including new release blockbusters.

These innovations helped keep many ‘alive’, and also opened the door to new customer audiences while also engaging and potentially rewarding existing customers.

Retail shopping behaviour especially has become much more nuanced.  Retail models will continue to need aggressive reinvention, given blending a physical shop with the digital will only increase opportunities to deliver a better customer experience across the ‘real life’ and digital worlds.

3. Make innovation its own discipline – with the right talent

Innovation is the activity of planning for tomorrow’s business.  As such, it must be a strategic imperative in the business plan and the leadership table, designed and resourced appropriately with a long term and enduring focus. 

However, much like marketing investment, it is an essential expense to remain relevant in the market, but with revenues and profitability under pressure, it’s one that we see ‘trimmed’ for today’s convenience all too often. 

Recruiting for the innovation team can come from asking some of your existing team to ‘double-hat’.  But more importantly it needs people who can think differently to how you currently do business and challenge the leadership conventions. 

To drive innovation, you need to be inquisitive, ask tough questions, examine existing processes through a new lens, challenge accepted norms and potentially make unpopular decisions regarding staff, systems, vendors and suppliers.  Some of the most successful innovation teams can also include external contributors, like suppliers, and even those outside your current industry definition. 

In summary:

The pressure is now on to ensure organisations don’t lose the momentum generated when we emerged from the pandemic, and continue to innovate to keep pace with rapidly changing consumer needs.  

With purposeful design, innovation does not need to impact the business-as-usual model.  There is room for exploration and space to try something, adapt and keep driving today and tomorrow’s business.

This applies to all sectors especially retail as people return to a form of normal living and purchasing. Physical innovation must also be examined in parallel with some of the more strategic considerations as outlined above. 

The need for innovation has never been greater, and the businesses that can redefine, reimagine, and rebuild – both structurally and physically – will be the beacons of success in our post-pandemic future.