Category: News

Why Other Industries Hold the key to Unlocking Business Innovation

Kieron Salter, managing director of KW Special Projects (KWSP), built the entire business around the concept of horizontal innovation, taking the lessons of motorsport into other industries to solve a range of problems for OEMs. Kieron gives his opinion on why other industries hold the key to unlocking business innovation. 

If there’s one thing the CEO community agrees on, it’s that innovation is king. Such a message was welcomed when outlined in the UK Government’s Industrial Strategy white paper last year.

However, a lack of spending on research and development is holding many organisations back from achieving their innovation goals. At a recent CBI conference, Prime Minister Teresa May announced that for every £1 of government support for R&D, British businesses invest around £1.70. Yet, in America, companies invest around £2.70, while the figure is nearly £2.40 in Germany.

It’s easy to see why many organisations are so reluctant to invest in innovation. As businesses grow, innovation brings a perceived risk. Many businesses lack the freedom to operate creatively or take risks on new technology. As a result, employees suffer from idea fatigue and often struggle to understand how new processes could fit into bigger picture growth plans. Once organisations are in this mindset, it can be difficult to break free and the more innovation is put on hold, the greater the perceived risk becomes.

One answer can be seen in the motorsport industry, which is often credited for its approach to horizontal innovation; the process of taking existing technologies and processes from one sector and applying them directly to other applications in different industries. In the main, this approach is frequently adopted within the SME community but it can deliver similar benefits for larger organisations.

As of 2017, there were 5.7 million SMEs registered in the UK, representing 99% of all businesses. SMEs are agile and flexible enough to take a risk on innovation for the benefit of larger organisations, when these new ideas are shared across industries. This enables bigger organisations to integrate small bursts of innovation into their processes. Small steps towards technological change can de-risk innovation for corporate businesses and help to overcome boundaries.

Take the example of a large textiles business that wanted to introduce digital printing into its production process. This would enable customers to choose completely individual designs for textiles, at marginal cost. The company had tried to develop the technology in-house but, due to the technical demands of the new process, had faced ongoing challenges. Within just weeks of being approached, KWSP had introduced the client to a totally new way of manufacturing the digital printer, which reduced its weight significantly and made the project not only viable, but more advanced. The process for this came from an altogether different pocket of industry but added just as much value in the textiles sector as it did in more traditional additive manufacturing processes.

A similar approach to horizontal innovation is commonly used by major supermarkets across the UK. Several stores are teaming up with SMEs involved in the Formula One supply chain to reduce the energy consumed by industrial refrigerators. A new retrofit aerofoil system has been proven to retain more cold air inside the refrigerator than other materials, resulting in significant energy and cost savings.

SME collaboration presents several opportunities for larger corporations. Not only are small businesses a major contributor to the wider economy, but they can also add value to wider organisational eco-systems, enabling larger businesses to adapt and thrive in more open environments. And this is not limited to private sector businesses. In fact, horizontal innovation is also being used within large private institutions.

In the healthcare sector, advanced equipment commonly used in motorsport is being integrated into incubators to record and store important data as newborns are transferred between wards and hospitals. G forces and vibrations experienced by babies are indicating important information pertaining to heart rate and blood pressure. Not only is this freeing up nursing staff to focus on more critical areas of care, but also helping hospitals to utilise accurate data more purposely.

In recent years, SMEs have taken advantage of new technologies and ideas to boost their contribution to corporate innovation. Changing technologies and niche market demands have enabled SMEs to strengthen their proposition, helping larger organisations to reduce some of the structural disadvantages that stem from their limited abilities to reap economies of scale. Today, small businesses have become the driving force behind the innovation that Government is promoting, free to work outside dominant paradigms and exploit commercial technologies that have otherwise been out of reach for larger corporations that struggle to take a risk on something new.

So, how does a CEO start to harness the benefits that horizontal innovation can bring? The first step is to understand where horizontal innovation can add value. Undertake an audit of your existing business to understand where you can add further value through collaboration. At KWSP, we have always had strengths innovating and streamlining processes for the motorsport industry and many larger organisations lack this agility. Our opportunity is to deliver the flexibility and speed of motorsport operations to other industry sectors, and larger corporate organisations.

Once you have identified opportunities to add more value, begin to engage with SMEs from other industries. Never underestimate the value of open dialogue and collaboration when pushing boundaries. By working closely with Innovate UK and putting ourselves forward for Horizon 2020 funding, KWSP has been able to forge many lifelong beneficial partnerships with businesses in completely different industries.

Finally, don’t shy away from a new approach; embrace horizontal innovation today. It’s easy to remain in the mindset that change poses threats to your business. Every business decision a CEO makes carries an element of risk, but if you work closely with smaller businesses to mitigate these, you can turn innovation into a major competitive advantage.

The Industrial Strategy is right to place innovation at its heart, but this cannot be realised within individual businesses alone. Collaboration is critical to driving innovation and, with SMEs leading this charge, big businesses can collaborate effectively to achieve greater agility, creativity and ultimately, productivity.

adi Group’s CEO urges businesses to engage with pre-apprenticeship programme

Alan Lusty, Founder and CEO of £82 million turnover, multi-disciplinary engineering firm, adi Group, has a unique offer for UK businesses. Having established the country’s first Pre-Apprenticeship Programme in 2016 and watched it flourish with each subsequent intake, Alan is convinced of its value not only in inspiring youngsters but in benefiting businesses, the wider community and the UK economy.

Alan is urging companies, both in the engineering sector and beyond, to replicate its success by making use of the proven adi concept – for free.

Students age 14-16 from North Bromsgrove High School, already involved with the scheme, spend half a day a week over two years learning core hands on skills and getting a taste of how rewarding and diverse an engineering career can be.

Alan sees his approach to apprenticeships in terms of completing his own cycle of life. He didn’t take the academic route to engineering, a moment of teenage inspiration, watching a friend doing up their go-kart, led to an electrical apprenticeship that gave him the skills to fulfil his dreams.

 Since founding adi Group in 1990 with the help of a £15,000 loan, he has grown a self-delivering 34 discipline model that now turns over £82 million and employs a team of 630. For Alan, the important thing is to give something back to the apprenticeship ideal that got him started.

Recognising the skills deficit, adi created a bespoke hands on engineering curriculum which is fully accredited by EAL They want other SMEs to follow their example in helping to address a UK skills gap that Semta believes can only be filled by an additional 1.8 million trained engineers before 2025.

Alan said, “People and skills are central to what we do as a company. But they are also central to our whole sector and to the broader UK economy. So, we have a responsibility to society to ensure people are equipped with the skills they need to find quality employment and to deliver widespread prosperity.

That starts with youngsters. Not everyone is cut out for university and not all of those thinking about career choices know how great engineering is. So, we try to inspire young minds and to open up new pathways into the profession.

In our Pre-Apprenticeship Programme, we have proof of a wonderful concept that benefits us all – as individuals, as employers, as a community and as a country. We believe that, if other companies copy what we have created, we can help bring about a sea change, not just in the engineering sphere but in a number of key economic sectors.

The theme for National Apprenticeship Week 2018 is ‘Apprenticeships Work’. I can tell you, from personal experience, that they really do. So, I’d urge any businesses looking to make a difference to get in touch.”

If you’re interested in finding out more about this unique opportunity, please call Martin Smith on 0121 451 2255 or email [email protected].

By Benedikt von Thüngen, CEO of Speechmatics

Whether you’re a software company, retailer or in financial services – substandard delivery just won’t cut it anymore. If you can’t provide an exceptional experience to your customers, then you can bet someone else will.

To stay top of your game, you’ll need to make sure you’re hiring the best talent. I’ve been an entrepreneur my whole career but the truth is you’re only as good as the team around you. Take the time and effort to find and hire the best people, and it will pay dividends. Never be afraid to hire people better than you. As I always say, “if you’re the smartest person in the room, you’re in the wrong room.”

When it comes to recruiting your team, my mantra is: Attitude first, then aptitude! Hire people who will fit in and support the culture of the brand you want to promote. This is especially important in the early stages of a company. My view is you can always teach skills, but you can’t teach culture.

Once you’ve got the talent, you need to nurture it. Cultivating a great employee experience is essential. While it may sound simple, happy employees deliver a better customer experience. This is an important differentiator for eNett and has had a direct impact on engagement as well as the bottom line. In a recent People survey, 92% of our employees said that they would recommend eNett as a great place to work.

There’s lots of evidence of the measurable benefits of a thought out, brand-aligned customer experience. For example, Forrester reported that just a one-point gain in the Customer Experience (CX) Index was worth US$65 million to an upscale hotel chain. Global CX consultants Smith+Co also found that a 5% increase in customer loyalty can produce profit increases between 25–85%, demonstrating the huge returns that a good CX can deliver.

So, you’ve done the hard bit of finding individuals that fit your company culture. But to deliver a great experience to your employees, you must maintain it. Especially as you grow. Some things that have worked for us include inviting our employees to brainstorm on how to improve the business. We also introduced an annual CSR initiative where a group can volunteer to travel to help an impoverished community as a way of giving back.

Even little things can go a long way, such as having beers in the fridge ready for the end of the day and creating a recognition programme that rewards great work. And my big piece of advice would be staying down-to-earth even as your company grows.

It’s also about freeing employees up from repetitive, time consuming and frankly boring tasks. Streamlining back-end processes will allow them to get back to what they love about their job. By making things like payment process quicker and more efficient, you can improve employee experience and drive customer advocacy. There’s a reason why Amazon and Uber have been so successful.

Delivering on-the-job training is also important to developing employees’ skills for their own personal development and to support company expansion. Ensure you’re continuously evaluating your employees’ needs and fulfilling their passion to learn.

I really can’t emphasise enough how important it is to hire for culture and do all that you can to maintain a good vibe across the company – something which can be difficult as your business grows. Employees are responsible for your customers’ experience and therefore the success of your company. Get it wrong and you’re shooting yourself in the foot.

Conventional wisdom suggests businesses that put a commitment to sustainability at the heart of their operating practices are, in some respects, going to be damaging their bottom line, while limiting their opportunities for accelerating growth or expanding in to new markets.

However, businesses also know that a blasé attitude to the environmental concerns of their consumers will impact on their own brand integrity, especially in the ‘always on social media era’ where information and knowledge transfer have been decentralised and democratised.

Therefore, since the 1990’s, we have seen companies all over the world rapidly increase their use of Corporate Social Responsibility (CSR) initiatives, a self-regulatory mechanism designed to take responsibility for the impact that their business activities are having on the environment.

This focus has enabled brands to show off their green credentials to their consumers, while appeasing shareholders by ensuring a limited impact on profit margins.

The limits of Corporate Social Responsibility

We have seen this process in action recently, as brands have sought to align themselves with a range of consumer hot topics, such as the Evening Standard’s important and timely The Last Straw campaign, securing a quick media hit and positive endorsement along the way.

It is my belief, however, that by focussing on their own CSR policies and by reacting to the latest media campaigns as they happen, brands are missing a brilliant opportunity to take stock of their own business activity, and to assess the social, economic and environmental impact they are having.

Indeed, the current media focus on issues such as the use of non-renewable materials, modern day slavery and income equality should act as a springboard for businesses to broaden their policies away from simple CSR measures, to a model that encompasses a wider set of issues.

Therefore, I am calling on businesses to adopt Creating Shared Value (CSV) for sustained and ethical business growth and to make 2018 the year of CSV. 

What is Creating Shared Value?

The concept of CSV was proposed by Michael E. Porter and Mark R. Kramer in the Harvard Business Review as a response to trust in big business collapsing, as they were widely perceived by consumers and National governments alike to be ‘prospering at the expense of their communities'[i].

The argument goes that brands can begin to bridge this divide by bringing business and society back together through the creation of ‘shared value’ – this is a commitment to generating economic value in a way that also produces value for society by addressing its challenges, rather than mitigating or offsetting them through a traditional CSR programme.

As such, a holistic approach to value creation, and not just wealth creation, results in the well-being of suppliers, consumers and communities being placed at the forefront of any business operation.

Unlocking growth through Creating Shared Value

The practice of unlocking growth by focussing on sustainable initiatives that simultaneously improve businesses can seem counter-intuitive. However, there is plenty of evidence emerging that is challenging this narrative.

According to a recent report in the Financial Times, collective renewable energy and energy efficient initiatives by 190 of the Fortune 500 companies together “saved close to $3.7bn” in 2016[ii]. These corporations have realised that cleaner, more efficient energy is not only good for the environment but has also impacted positively on the bottom line.

Furthermore, the potential of CSV as a viable business model has been highlighted in a 2017 report by the Business Commission entitled Better Business, Better World[iii]. The report suggested that “Greater sustainability can help businesses overcome global burdens to growth and deliver trillions in new market value”, while helping to tackle the most pressing social, economic and environmental issues.

How smaller, independent companies can be at the vanguard

While the larger corporations may be generating the headlines, it is increasingly the smaller, independent businesses who are at the vanguard of the movement. This is because they can be nimbler and more responsive to the world around them.

Using smaller food and drink manufactures as an example, we have seen this manifest itself through the development of transparent supply chains, such as ‘direct trade'[iv], which connects suppliers and buyers together without the use of intermediaries, simplifying the route to market for farmers.

In the case of English Tea Shop, we have put CSV in to practice through our Love Care Change philosophy that manifests in a wide variety of environmental, social, financial initiatives that have a huge effect on the environment, farmers and their communities and factory workers.

For example, by pioneering new ways of working together, we can help farmers plan for the future, minimise over-cultivation and grow a better product, which in turn gives us access to better tea for our customers.

Furthermore, these closer relationships mean we are well placed to drive and meet the growing consumer demand for organic produce. This is not only better for the environment but also enables farmers to command higher premiums.

We also encourage our employees to think like business people. One initiative we manage, called The Big Game, sees 400 individuals who work in our Sri Lankan based manufacturing facility engage in a profit sharing scheme every quarter. The programme educates workers on programmes such as open book management and has helped to increase productivity by over 30% per employee.

This is just a small example of how CSV initiatives can be implemented and can be made mutually beneficial for consumers, producers and businesses alike.

Creating Shared Value for the future

There is a commonly held view that sustainability is anathema to growth and that the best way for businesses to ‘do their bit’ in the world is through their own CSR initiatives.

I couldn’t disagree more. I believe we are approaching a new age of business where sustainability-minded companies, who focus on the communities that they work with and sell to, will be the fast growing, high achieving stars of the future.

Suranga Herath is CEO of English Tea Shop, the leading independent speciality and organic tea company.

[i] https://hbr.org/2011/01/the-big-idea-creating-shared-value
[ii] https://www.ft.com/content/b45860b2-917e-11e7-a9e6-11d2f0ebb7f0
[iii] http://report.businesscommission.org/report
[iv] http://direct-trade.org/