10 Nov Koulopoulos: Innovation can make recessions a big time for small and mid-sized companies
Madison, Wis. – In this economic climate, Tom Koulopoulos knows there is a natural temptation to pare back on investments in time and money for innovation, but it’s always worth resisting.
In fact, it’s potentially very beneficial to fight the belief that it’s too late for innovation to help weather the recession, so why not keep putting it off?
To Koulopous, who has spoken frequently on the importance of a sustained approach to innovation, that mentality is short-sighted.
“A lot of companies are definitely looking to cut any expenditures that are not directly contributing to operational excellence and the bottom line in the next quarter, if not sooner,” Koulopoulos said. “There is no doubt that we’re becoming more short-sighted. It’s natural, and this is what happens when you hit an economic downturn.”
Koulopoulos appeared before the Nov. 10 gathering of Accelerate Madison, where he talked about how to recession-proof business organizations, and he is conducting an Innovation Master Class at the Fluno Center on the University of Wisconsin-Madison campus. The Master Class is designed to focus on the process of innovation and how to make it a core competency within business organizations.
In Koulopoulos’ view, there is no better time to start than the present. He invited business organizations to think about successful, innovative companies that they really admire and imagine when that company might have started. He cited the example of 3M, which put an innovative process in place very early in its life cycle.
“What you will find, I will bet, is that the company you chose probably started during an economic downturn,” he said. “The reason for that is that a lot of very large companies tend to cut back so much on innovation during an economic downturn that they sort of open the floodgates to smaller companies and mid-sized enterprises to enter the market with really radical, sometimes really great stuff, with the absence of competition from the big guys.”
As a result, whenever the economy hits the skids, a lot of very resourceful entrepreneurial types will start to create things that are extremely innovative. These innovations would rarely be dismissed by major players, yet fly under the economic radar because the larger companies are so interested in cutting costs and creating near-term efficiencies that they neglect innovation, Koulopoulos said.
That’s why for small and mid-sized companies, economic downturns are the best time to innovate. Koulopoulos has recommended hiring people to drive innovation, or devoting part of an employees’ time to managing the innovative process.
Realistic expectations
What can realistically be accomplished in what hopefully will be a short recession? For small and mid-sized companies, Koulopoulos believes there is a real opportunity because we’re at the tail end of an incredibly rich period of investment in technology and tools that enable small organizations to do much more than their resources would typically allow. Just about all the administrative pieces of a small business can today be done by someone else for a very small premium.
“Much more of what you do can be outsourced, can be pawned off on a service provider or a third party,” he noted. “As a result, you can really focus on that core competency of innovation.”
However, when he looks where small companies consistently fall short in terms of innovation, Koulopoulos links it back to the tools they use to increase creativity. These tools have to go beyond brainstorming and make innovation more of a process and more ingrained in the business culture.
“You can’t just expect it to happen,” he explained. “I think you need to look at the ways in which you can make it as much of a system as anything else. That means you capture ideas and you don’t let them evaporate, and you give your people tools by which they can talk through those ideas, as opposed to just sitting around a table and chatting about it.”
Innovation management
When it comes to capturing ideas, one of the most popular things companies do is some sort of electronic in-box, which is probably one of the most abused approaches and an example of a tool that Koulopoulos said can be used effectively or go desperately wrong.
“If you just put in place an electronic in-box, people will submit all these great ideas but you don’t necessarily have any process through which to filter the ideas and decide which ones are good and which ones are not good,” Koulopoulos said.
One of the best tools a small organization can have, he added, is a means by which people can submit whatever they think needs to be changed, be it a service or an internal process or a way that customers are engaged, and then a formal process by which the ideas are evaluated and ranked. By formal process, Koulopoulos means a team (not necessarily a bureaucracy) that will examine the idea, provide metrics with which to evaluate it, and then get back to the idea’s creator in the event more needs to be done to warrant further evaluation.
“I call it an innovation management system, but managed in a loose sense of the word,” he explained. “It’s just a means by which you can capture the ideas, filter them, and then make some decisions about which ones to move forward with.”
Turning around a big ship
For a larger company, innovation it’s not going to very ambitious during a recession, Koulopoulos said. Even corporations that don’t completely abandon innovation are likely have a much more patient approach that is more focused more on putting in place the necessary processes and cultures.
Creating an innovation process or culture does not happen overnight, so recessions are a good time to start doing that because you have some latitude in terms of viewing it in “drips and drabs,” Koulopoulos indicated.
“It’s a good time to do it if you haven’t already started it, but don’t expect to see immediate results because it’s just not going to happen that way,” Koulopoulos said. “It takes time to put these sorts of things into place, but it’s as good a time as any to begin so that when the economic cycle comes back again, you’re well prepared to innovate rapidly and do the kinds of things you need to do to take advantage of the opportunity that will hopefully escalate.”