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Created For and Commissioned By: GRANT THORNTON
  • Grant Thornton

The case for thinking small

Forget big ideas. Micro innovations are what can really take your company to the next level

The case for thinking small

A surgeon needs the right tools for the job. But when a highly specialized surgical kit is missing a key tool—say, a pair of corneal scissors or an aortic cross-clamp— the O.R. becomes a much less efficient place. In recent years, however, inventory-management technologies such as RFID chips have helped health care organizations solve these problems. These technologies give hospitals, for instance, a more granular way to make sure each surgical kit is complete when it’s needed. That keeps surgeons at the operating table and reduces the costs to manually manage their tools.

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Is this new way of managing surgical kits a world-beating innovation? No. Does it have the potential to fundamentally change the way health care organizations operate? Absolutely. Indeed, these smaller ideas, or micro innovations, can pay off in big ways, whether you’re running a hospital, a tech firm, or a restaurant. “Smaller ideas are incremental and are relatively easy to put into action,” says Kevin Baril, national managing principal of innovation at Grant Thornton. “But over time, these micro innovations can build on one another and really move a company to a better place.”

Micro-innovations are all around us. Smaller ideas, like Amazon’s Dash Button, Ring security systems, and Apple news feeds are making a big impact right where we work and live. They are on our washing machines, front doors, and, of course, our phones.

Thinking small can be a powerful tool for growth. But as Baril notes, too few companies embrace and support micro innovations. To see the potential in small ideas requires companies not only to understand their benefits, but also to create a corporate culture that supports them. For many companies, that requires an intentional culture shift and a firmwide effort to involve everyone from C-suite executives to entry-level employees.

The payoff can be considerable. Pursuing relatively low-risk, close-to-home innovations—say, ideas that build on the company’s existing knowledge or tap into its existing markets—tend to yield high success rates as well as strong revenue and profit bumps, according to research from the National Center of the Middle Market. Numbers show that even the smallest innovations can boost the bottom line.

MOVE QUICKLY AND PIVOT

For years, the recipe for success was a market-busting innovation that would rocket a company light years ahead of its peers. CEOs hunting for growth strategies often focused only on billion-dollar ideas, says Paul Earle, an adjunct lecturer of innovation and entrepreneurship at Northwestern University’s Kellogg School of Management. “But the real irony of corporate innovation,” he says, “is that the brands and companies you see big firms acquiring at massive multiples all started really small and would never have survived the corporate innovation process.”

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Brian Reynolds, Grant Thornton’s innovation platform and solutions delivery lead, subscribes to the “think small” philosophy. After all, why make big bets early, when there’s the least amount of information to act on? Fostering micro innovations means being willing to experiment with the unknown. It’s about placing small bets, then pivoting as necessary. According to Reynolds, Grant Thornton uses an iterative build-measure-learn process based on lean and agile principles, where good ideas are put into the field quickly and user feedback is taken seriously.

Reynolds points out that “micro innovation isn’t about focusing on unambitious goals. It’s about understanding genuine unmet client needs and addressing them through small, useful accomplishments.” Anchoring micro innovation to client needs gives them legitimacy and helps the organization connect these innovations to deliver platforms for macro innovation.

“Good feedback tells you what feature is most useful or what’s missing, and we use that information to drive the next iteration of the product,” Reynolds says. “The problem at many organizations is that they fall in love with their own ideas or approach the market with hubris. The benefit of the iterative, experiment-based process is that ideas grow through learning, and not through the assumptions you might have.

Sometimes, the iterative process reveals that an idea simply isn’t worth exploring. Early feedback may suggest that the idea isn’t ready for prime time, or that it won’t add much value—directly or indirectly—for users. Baril suggests companies ask three questions when considering pursuing a micro innovation: Can we get to market quickly? Does this product or service match our risk tolerance or address the real threats we’re facing? And are we getting the whole company involved in supporting this micro innovation.

IT TAKES A VILLAGE

The last point is especially important: How can a company make sure all of its creative spigots are open? Are the small ideas from Larry in accounting or Sofia in marketing being heard as clearly as the ones that come from the corner office? “Innovation and creativity doesn’t come from a small group of all-knowing executives,” Reynolds says. “It’s got to percolate organically throughout the business.

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One way to coax ideas from all areas of the business is to incentivize the process. Companies need to go beyond simply collecting ideas and instead motivate employees to get involved by giving them the freedom to help execute the innovations they propose. After all, why offer an idea if it will just be whisked away to incubate elsewhere in the company?

Cultivating a culture of innovation also requires attention from the top: Executives play a crucial role as holders of the corporate purse strings. CEOs, board members, and other leaders need to support and champion micro innovations. “To not support innovation is to implicitly stifle creativity and limit how the community can contribute to the company,” Reynolds says. “It’s absolutely essential to have a vocal leader who not only sponsors but aggressively promotes innovation.”

When employees across the board feel supported at the top, micro innovations can mature and flourish. They can provide the impetus for other micro innovations or build to macro innovations that lead to bottom-line growth.

This article was created for and commissioned by Grant Thornton.

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