4/18/2017 | Jane Frankel

 

Small, growth-oriented companies can experience bittersweet success. They succeed in building new business but don’t always have the backup to deliver on new demand. As aspiring middle market companies, they can ensure the ability to meet demand and innovate for sustainability when every company member acts like an owner. Innovative thinking emerges when every member considers the best, most resourceful way to meet demand, satisfy customers, and see growth opportunities. This entrepreneurial mindset allows multi-faceted problem solving and resource planning to satisfy newly identified demand, as well as find new opportunities. Leaders of small businesses can support entrepreneurial paradigms that help focus company members on value-creating pursuits. An environment with leaders who do this will also attract the most qualified and motivated candidate employees, which is a major challenge to today’s growing businesses.

As noted by Joseph Schumpeter in The Theory of Economic Development, production and productivity can be thought of as a system including all elements that (or who) contribute toward a result. These elements need to be engaged and enabled through management structures that meet contributors’ needs in pursuing new value. These structures essentially create the mindset within a company that sparks innovative thinking. Leaders need to build an environment that supports company members as contributors and innovators. Establishing the notion of contribution and sustainability throughout the organization can be accomplished through three distinct areas: building readiness, providing relevance, and ensuring reinforcement for continuous innovative thinking.

Readiness for Innovating

The readiness factor builds the expectation that all company members will think innovatively, providing the information necessary to spark this thinking. Peter Drucker in Innovation and Entrepreneurship prescribes an innovation platform of readiness to spark that thinking by considering seven areas for finding new opportunities or problem solutions:

 

Brainstorming discussions in Drucker’s dynamic areas of interest set the stage for company members to envision new efficiencies, resources, and opportunities, as well as innovative solutions to current problems. A technology company had a 5% customer satisfaction rating. Customer service representatives’ responses and outreach to customers were not satisfying customers’ needs. The company had changed its delivery model to work jointly with several other technology companies’ products. The new partnerships with these companies integrated the individual partners’ two solutions to automate product installation, a noted challenge for customers. The representatives had very little understanding of evolving industry structures or the feasibility of partnerships, as well as the customer need for improving software installations. It was important to provide representatives with industry background, the reasons for customer installation frustrations, and the details of the partnering solutions.

Relevant Context for Innovating

Once company members are looking for innovation opportunities or solutions to problems, they need to filter their creative ideas through the context of company vision and mission, as well as company-defined metrics for success. Building metrics for each task, project, and overarching company initiative provides tangible goals for achievement. This translates into a relevant frame and goal for all activity.

Making sure that all company members understand the vision, mission, values, target market, customers, and metrics for success provides the relevance factor.  When thinking about a specific opportunity or solution in Drucker’s areas of focus, company members can quality and quantify their ideas in the context of their company’s direction.

Customer context is also especially useful. As described by MacMillan and McGrath in The Entrepreneurial Mindset, close relationships with customers and their issues provide company members invaluable insights into a company’s current customers. Analyzing the context within which customers use products and services, their consumer chain of actions around their use of products and services, and their specific company attributes paves the path for seeing opportunities. Customer experiences can be improved or enhanced with new products, services, and partnerships, all in the context of Drucker’s opportunities to innovate. When company members can conclude what possibilities are relevant to explore, they are much more focused and effective in identifying opportunities for growth or problem solving than if they function without such vision.

When considering the technology company’s dilemma of customer service ratings, the customer service representatives had little concept of the company’s direction, goals, or the impact of low customer satisfaction ratings. The context of the company problem and goal for customer satisfaction would have helped the representatives see the gap between current ratings and the goal for ratings. Tracking customer attributes, context for product use, and consumer chains of activity would have provided insights into how the representatives could be most impactful in their service to them.

Reinforcement to Spark Innovative Thinking

Reinforcement incentivizes company members to explore value-creating opportunities and solve problems. Company leaders need to consider how they will reinforce these behaviors with rewards and recognition, as rewarded behaviors are likely to continue. These reinforcements can take various forms, such as verbal praise, monetary reward, gaming techniques that note progress toward a goal, or earning new responsibilities within the organization for value-creating members. Several non-profit companies in Philadelphia are rewarding donors with personal recognition on a ceramic wall sculpture, which is updated monthly. Donations tripled in the year following the display of the sculpture. When reinforcements are consistent and continuous, people become accustomed to them and continue to strive for excellence.

Technology company leaders noted that rewards were not consistent with performance, as evidenced by such low customer satisfaction levels and the current mode of praise for a job well done. Representatives were being verbally rewarded for great customer service, intending to make the representatives “feel good” while sending a totally incorrect message on the effectiveness of their performance. Also, thinking that they were doing a great job provided little incentive for representatives to build knowledge-sharing relationships with company technologists, who were responsible for product strategy and updates. The two groups had little time for each other.

How Technology Company Leaders Built a New Environment for Innovation

Company leaders offered an environment for innovation by:
  • Creating an open physical space that prompted collaboration on challenging customer inquiries

  • Scheduling regular open discussions on the technology industry, its components, and its trends

  • Providing extensive information sessions on company direction and goals, such as the gap between current customer service performance ratings and the goal for these ratings and the rationale and nature of the new partnerships

  • Instituting an industry-standard certification program to reinforce work toward performance standards in eleven benchmarked areas of customer service

The company’s customer satisfaction ratings improved from 5% to 95% in one year. This approach identified key participants in the productivity cycle, then identified and met the needs of these participants to think innovatively. They became excellent contributors in delivering customer service. Schumpeter would have been delighted.

In Summary

Middle market companies on a growth trajectory need their members to adopt and maximize an innovative mindset. Company leaders can facilitate this mindset by providing the environment to engage and empower the thinking that will systematize growth initiatives for ensuring company sustainability. This formula for building an innovative mindset has virtually no tangible cost and builds a significant advantage for any growth-oriented company. When everyone thinks like an owner, a business and all of its members thrive.