For UK manufacturers, innovation is the key way to differentiate and grow their businesses and most businesses are already innovating in some form or another. Previously we’ve examined how innovation within manufacturing can boost innovation exports here. In our latest focus on manufacturing Your Ready Business once again got the perspective of EEF senior economist Felicity Burch on the traits of the most innovative organisations within this Industry and what it takes to be a true innovator and how businesses who adopt these traits can be successful.
At EEF, we’ve been talking to manufacturers for years about what makes the difference between success and failure when it comes to innovation; here we share five habits of successful innovators.
1. They innovate broadly
Developing a new product can be a great way to meet the customers’ needs and increase sales. But just developing a new product by itself isn’t enough. Combining product innovation with other innovative activities – such as process innovation or service innovation – can boost returns further. For example, if a product is too expensive to produce using existing techniques, developing a new process alongside the product can help reduce costs of production, increase margins and boost sales.
Service innovation – developing some form of service, such as maintenance, to be sold alongside a product – can also enable manufacturers to increase margins, by adding value to their products and providing a market differentiator. Services can help customers use products more effectively, or prolong the useful life of a product, enabling manufacturers to sell at a higher price.
2. They invest broadly
Investing in innovation alone isn’t always enough. Manufacturers need complementary investments in expertise and equipment as well to help them achieve their goals.
When attempting to develop a new market leading product, it is vital to do this economically. To meet this challenge one organisation we work with described how they purchased new equipment, hired new employees and worked with a university to help them with developing new production processes. They then retrained existing employees on the new processes, and were able to reduce production times and costs drastically, meeting the challenge.
3. They own their own outcomes
Our research has shown that projects with clear, defined outcomes lead to higher success rates, but what if a customer doesn’t know the outcome they want to achieve? Manufacturers tell us this is something they can turn to their advantage.
When engaging in particularly challenging projects where the outcome is not pre-defined, innovative organisations bringing the customer into the process earlier will help define the outcome. If a customer knows what they want it can be relatively easy to develop a product to their specification but it is also easy for competitors to do this too. What innovative organisations do is look to work with the customer at an earlier stage, to develop the specification as well.
4. They collaborate for success
Innovating broadly, developing new relationships and ideas, investing in training and equipment all takes a lot of skills and resource which no company has unlimited access to. Working with customers, suppliers and universities is a great way for companies to access new resources and ideas, helping them to innovate more successfully. It’s common practice in manufacturing; 98% of innovative companies also collaborate. Partnership and collaboration can only be a positive.
When it comes to large innovative projects, collaborating with the customer has a range of advantages. Since the customer will eventually buy the product, it is helpful to have them involved from an early stage in the process to ensure their demands are being met. Organisations will also find that working with a customer focuses innovative projects and tangible outcomes and makes them more likely to happen on time and on budget.
5. They are well connected and tap into the right support networks
Successful innovators also know what support and networks are out there, and make use of them. Government support can help manufacturers boost their success rates by helping with access to expertise, equipment and finance. It can also help companies find collaborative partners and ease collaborative relationships.
For example, one SME manufacturer – and one of the 62% of EEF members who use the R&D tax credit – said that an annual investment of £2m in equipment was necessary to ensure high levels of accuracy with his products. In addition, to maintain an edge over his competitors, his company works to develop new – more efficient and more accurate – ways of working with their tools, and measuring their effectiveness. He said the R&D tax credit boosted the company’s financial performance and allowed them to sustain their levels of investment which meant they could continue to do this effectively.
For further information see EEF’s Innovation Monitor 2015/16, published in partnership with Vodafone.