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3 ways to innovate on a budget

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Tonight’s Federal Budget cuts are at risk of stifling innovation for many Australian businesses. Cuts include a reduction in R&D Tax credits and the abolition of Commercialisation Australia and the …

Tonight’s Federal Budget cuts are at risk of stifling innovation for many Australian businesses. Cuts include a reduction in R&D Tax credits and the abolition of Commercialisation Australia and the Innovation Research Fund.

In the wake of tonight’s budget announcement, here are three ways to innovate when budgets are tight.

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  • 1. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 2 www.zumbara.com.au Introduction 14th May, 2014 Last night’s Federal Budget cuts will make it even tougher to innovate. Cuts include a reduction in R&D Tax credits and the abolition of Commercialisation Australia and the Innovation Research Fund. Where will this leave Australian businesses? The future impacts are hard to predict. Commercialisation Australia has supported many success stories, including recruitment behemoth SEEK. The CSIRO is also losing 500 jobs. The research institute has been instrumental in many innovations across a range of industries, including the development of Wi-Fi technology. Think for a minute. Where would we be without SEEK.com? Where would we be without Wi-Fi? What future innovations will never see the light of day due to these substantial cuts in the Federal Budget? Now, it would be very un-Australian to complain about something without rolling up our sleeves and doing something about it. So, in the wake of last night’s budget announcement, here are three ways to innovate when your budget is tight.
  • 2. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 3 www.zumbara.com.au Table of Contents THE 80/20 RULE 3 DO ONE THING, DO IT BRILLIANTLY, THEN GROW 4 MASTERING SIMPLICITY 6 Underestimating simplicity 7 New bank, one product 8 New system, one focus 8 The 80/20 rule It’s surprising how often the Pareto Principle shows up in economics and business. The Pareto Principle, popularised by author Richard Koch, states that often 80 percent of effects come from 20 percent of causes. In his second book, Living the 80/20 Way, Koch provides a number of examples of 80/20 in business. How many of these circumstances apply to your business?  80 percent of your profits come from 20 percent of your customers  80 percent of your complaints come from 20 percent of your customers  80 percent of your profits come from 20 percent of the time you spend  80 percent of your sales come from 20 percent of your products
  • 3. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 4 www.zumbara.com.au Working out the 80/20 opportunities in your business could be one of your biggest opportunities to innovate. What would happen if you standardised the 20 percent of processes that are performed most of the time? What would happen if you focused your solution on prioritising the 20 percent of system features that deliver the highest ROI? What would happen if you let go of the customer categories that generate the highest number of complaints? What would happen if you let go of the 80 percent of customers who only contribute 20 percent of your income? These are substantial changes, not to be entered into lightly, but the world’s biggest companies are harnessing the power of 80/20 and simplification, with compelling results. Do one thing, do it brilliantly, then grow When it comes to innovation, bigger is not always better, and this is more the case every year. With the explosion in the App-based approach to software development, global small businesses that do just one thing but do it brilliantly are taking the world by storm. Daniel Priestley explores the Global Small Business phenomenon in his latest book, The Entrepreneur Revolution. Let’s take a look at a few examples. Fitbit has become a leader in pedometers with an incredibly feature- rich solution in a minimalist package. This tiny, elegant pedometer does away with the bulkiness of many of its competitors (I always
  • 4. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 5 www.zumbara.com.au loved the idea of using a pedometer to measure my daily step count but didn’t particularly want to accessorise my work suits with a bulky pedometer). It’s also incredibly accurate (more accurate than many of its competitors, measures how many floors you’ve climbed, as well as your step count, and syncs wirelessly to your smart phone or computer so you don’t have to enter your step count manually. Fitbit also has a feature rich online dashboard, automatically tracking your progress against goals, giving you badges when you hit 10,000 steps for the day or have climbed 1000 lifetime floors. It also allows you to sync up with friends (my sister and I cheer each other’s prog- ress despite living more than 800 kilometres apart). Fitbit does one thing and does it brilliantly, starting simple and adding features,apps, and products along the way. Evernote has become a leader in knowledge management, or as I like to think of it, outsourcing your brain. I no longer use Post It notes stuck to my computer screen to remind myself to do things, I jot it down in Evernote. I can take a photo of a product I want to research on my smart phone when I’m out and about. I can save text, images and URL’s from a web page I’ve visited for articles I’d like to read or reference. The feature set keeps getting better and better. You can share note- books with team members privately and save final versions of key
  • 5. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 6 www.zumbara.com.au documents. Powerful tagging and search means that you can easily find that note you jotted down three weeks ago. The location you took the note is tagged too, so if you went to a conference in Sydney you can search by location and find all your Sydney notes, sorted by date. Evernote does one thing well, does it brilliantly, then grows. Innovative Companies lists such as Fast Company and BRW are dominated by global small businesses that do one thing (or started with one thing) do it brilliantly and are taking on the biggest brands in the world. Evernote is now taking on the likes of Microsoft Sharepoint and Google Docs with its feature rich Evernote Business offering. This trend is making it even more challenging for big businesses to innovate. Those that are succeeding are finding ways to focus start small and do it brilliantly. Starting with one new shoe at Nike. Starting with one new store at Target. Starting with one city at Amazon. Start small, do it brilliantly and grow from there. Mastering simplicity One of the keys to Apple’s success has been that Apple is not focussed on packing in as many features, as many apps, as many pre- bundled applications as they possibly can. Instead, they focus on the features that they see as most important, and execute them brilliantly. Apple became the largest company in the world with only
  • 6. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 7 www.zumbara.com.au seven products. How many products does your company sell? How innovative is your execution? Underestimating simplicity Something to consider in refining your solution, making the final decision on the direction you’ll take, is how complex is your solution - don’t underestimate the power of simplicity. Many people think that if it’s simple, it must be easy. Not true! When you’re an expert in something, you see that subject in a very differ- ent way to the ‘average Joe’. Take colour - the ‘average Joe’ will see an artist’s palette with five blue paints, and see blue, blue, blue, blue, blue, but an artist or graphic designer or fashion designer will see cerise, marine, sky, cornflower, and peacock. When you’re an expert you see variables the layperson can’t distin- guish. You see problems others don’t pick up on. Unfortunately this can also mean that you overcomplicate things unnecessarily because you want to account for all those variables, you want all the bells and whistles you know are possible, and you want the solution to be the solution you’d want to use yourself. Similarly, there is a tendency to think that innovative solutions need to be complex; however, many amazing innovations are incredibly, powerfully simple. We’ve already talked about the emergence of
  • 7. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 8 www.zumbara.com.au global small businesses like Fitbit and Evernote that do one thing and do it brilliantly, but big business is also unlocking the power of simplicity. New bank, one product ING launched into the Australian market with a single product - their high interest online savings account, their only product for several years. They started small, executed brilliantly, and then grew. In 2009, NAB jumped on the bandwagon, launching a separate brand, UBank, with distinct branding, systems and culture from the parent company, and a single product - a high interest online savings account, that quickly became a rival to ING for Market Leader status. Start small, do it brilliantly, then expand. New system, one focus In 2010 ANZ became the first Australian bank to launch a native Smartphone internet banking app. Their approach - keep it simple - the first version gave you access to your own accounts, including the ability to transfer to friends’ accounts even without their account details (all you needed was their mobile phone number). Features like BPAY and versions for Android and other devices were added later.
  • 8. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 9 www.zumbara.com.au One of the largest companies in the world, BHP, is living and breath- ing the power of simplicity, with one global system for HR, Finance, Supply and Work Management with one standard set of processes across 100,000 staff in 22 countries and 20 mining divisions. Now this hardly seems an example of starting small, but if BHP can master simple, why can’t anyone, at least in some parts of the business. Over to you... If the big players can harness the power of simplicity - what can you do in your team? What are your 80/20 opportunities? What one thing could you start with? Do one thing, do it brilliantly, then grow. There are many complex, challenging problems in our communities and in our businesses. Tight budgets, limited resources and changes in direction only make it tougher. If you can harness the power of simplicity, you can still create remarkable results. When you focus on 80/20 opportunities… When you do one thing, do it brilliantly, then grow… A simple, elegant solution can have a remarkable impact.
  • 9. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 10 www.zumbara.com.au About the book This guide to innovating on a budget has been adapted from Jenny’s book, The Innovation Recipe: Key ingredients for world-class results in big business. Details about the book, including where to buy the book, are available on the Zumbara website.
  • 10. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 11 www.zumbara.com.au Mastering your Innovation Recipe Zumbara can help you to translate great ideas into great results. Our principal consultant, Jenny Vandyke, has developed Zumbara’s own six-step Innovation Recipe to help business leaders translate great ideas into great results. Jenny’s approach is based on more than 10 years senior level experience on major projects at Australia’s largest companies. Past projects have included National Australia Bank, BHP Billiton, ANZ Institutional Bank and KPMG. Jenny has managed multiple successful implementations and delivered award winning results. In addition to her practical experience, Jenny has spoken at various conferences and industry events on innovation and change management, and over the years she has delivered hundreds of workshops. Jenny loves her work because for more than ten years she has been getting businesses buzzing. Jenny and her team can help set you up for innovation success through our range of services. Strategy workshops At Zumbara’s strategy workshops we work with leadership teams and boards of directors to build a strategy that is more than empty words – a strategy that the whole team can commit to, with a practical plan to translate strategy into bottom line results. We can tailor an
  • 11. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 12 www.zumbara.com.au agenda to suit your needs, whether you’re setting the strategy for a specific project, your team, or your entire business. Innovation Recipe briefings and keynotes At Zumbara’s briefings and keynote presentations, we uncover the secret ingredients to innovation, using Zumbara’s own six-step Innovation Recipe to translate ideas into results. Zumbara’s Innovation Recipe covers the key ingredients for selecting the right ideas, as well as all the key ingredients for successful implementation, including leadership, planning, risk management and communications, to name a few. Our briefings can be tailored to suit your needs, ranging from a 30 minute keynote presentation through to a multi-day training program. Topics available include:  Five signs your project is a lemon – innovation mistakes to avoid  15 minute innovation - how to innovate without turning your business upside down  Get out of the Kitchen (and Talk to People) - 7 secrets to maximise your stakeholder engagement  The Power of Simplicity - lessons from the world's most innovative companies  Risky business - managing risk in innovation projects
  • 12. 3 TIPS FOR INNOVATING ON A BUDGET PAGE | 13 www.zumbara.com.au Find out more To find out more about our services and how we can tailor a solution to meet your needs, drop us an email to arrange an initial consultation. We’re based in Melbourne but we travel within Australia and internationally for speaking engagements and client projects. Jenny Vandyke | Director and Principal Consultant 0412 602 362 | Jenny.Vandyke@zumbara.com.au www.zumbara.com.au We look forward to working with you and your team to master your own Innovation Recipe.

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