Innovation redefined: the ultimate guide to become an innovative company

We all talk about innovation; every company wants to be innovative. But, do we actually know how to? Time has changed, so did the definition of innovation. It’s crucial for any company to adopt the new ways to be innovative in order to survive in today’s competition. Here’s my view towards the ultimate guide for becoming an innovative company.

Co-creation
It’s one of the most used words lately. Well, you must be wondering, that is this “Co-creation”. Let’s start with a formal definition, “Co-creation is a form of marketing strategy or business strategy that emphasizes the generation and ongoing realization of mutual firm-customer value.” The words to focus on here is “mutual Firm-customer value”. In today’s world it’s crucial for companies to break out of the box and work together with the customer or suppliers to generate innovation and provide better solutions to problems.
A perfect example would be, Nedschroef, a leading manufacturer of fasteners working with its customers like VW, Audi, BMW etc to create innovative fastener solutions.

Crowd Funding
It’s 2013 and we are still experiencing the aftermath of global financial crisis. The Euro crisis is taking a high toll on countries like Netherlands, Germany, once known as one of the strongest economy in the world. Getting funding for starting a business is really difficult these days. Even when it comes to produce innovative products it requires good amount of investment before theory turns to reality. Especially for SME’s and individual entrepreneurs, crowd funding has become the ultimate source for turning a great idea into a reality. Yes, crowd funding is the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations.
The Pebble Watch has been the most famous example of crowd funding. The original team scored more than $10 million with a target of less than $1 million via crowd funding platform named “Kickstarter

5C's of Innovation

Collective Knowledge
“Coming together is a beginning, Keeping together is progress, and working together is success” that’s definitely one of my favorite quotes anymore. When it comes to innovation, people from different background, different part of the world, even from different work experience can contribute to provide innovative solutions to any problem. Thanks to the rapid growth of the internet, people from different part of the world can share their knowledge and create innovative solution and products.
Recently, Facebook friends helped a scientist to identify nearly 5,000 fish specimens collected in Guyana in less than 24 hrs, YES less than 24 hrs. The majority of people commenting held a Ph.D in ichthyology or a related field, and hailed from a great diversity of countries including the United States, Canada, France, Switzerland, Colombia, Peru, Venezuela, Guyana and Brazil. By quickly tapping the collective expertise of their social network to help with the preliminary identification process, the expedition members were able to sort, pack and export the specimens to Washington, D.C in a timely manner.

Collaborative Consumption
Zipcar is a US membership-based carsharing company providing automobile reservations for its members, billable by the hour or day. Members can reserve Zipcars online or by phone at any time, immediately or up to a year in advance. Zipcar members have automated access to Zipcars using an access card which works with the car’s technology to unlock the door, where the keys are already located inside. Zipcar also offers an iPhone or Android application that allows members to honk the horn to locate a Zipcar and unlock the doors.
I was amazed by the overall idea behind such innovative car rental service when I first came to know about it in Marketing and Service Management Class during my MBA at Maastricht School of Management. And this is one of the best examples of innovation via collaborative consumption. In more formal terms, collaborative consumption is an economic model based on classical market behaviors of sharing, swapping, bartering, trading or renting access to products as opposed to ownership which both creates and adds value to existing products and services

Creativity
California State University defined Creativity as the tendency to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems, communicating with others, and entertaining ourselves and others.
It’s no doubt creativity paves the way towards ultimate innovation. But, in order to be creative, you need to be able to view things in new ways or from a different perspective. Among other things, you need to be able to generate new possibilities or new alternatives. You can be from a totally different industry yet you can always add value and create innovative products to other industry just by able to see things in new ways. In fact, a research named “Innovation through diversity” by Forbes insight has proven that formula for success is in the diversity of people in the organization. People from different background when put together in a perfect environment produce creative and innovative solutions.

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The poisonous root of Euro crisis

I still remember the day Euro coins and banknotes entered circulation on, it was 1st January 2002. Famous international News channels such as CNN, BBC to even Bangladesh’s local news channels BTV, ETV were telecasting this historic day live. All this started in Maastricht, Netherlands itself, as it is the fruit of Maastricht Treaty itself. Today, it’s 18th January, 2013. It’s been 11 years since that Historic day and here I am in the Netherlands, writing about “The poisonous root of Euro crisis”. Sounds like a script from a Hollywood movie, but frankly, I never thought this currency would go through such disastrous phase and I will be actually writing a blog about it.

Obviously the first thing that clicked my mind even before starting to research about it was “Why did it all go wrong? There has to be a rotten apple in the basket or poison in the root of the European Union tree to actually go through this Euro crisis. In order understand the overall situation; I will go through step by step with the help of my Euro Crisis Mind Map, and rationalize most probable global financial crisis scenario.

Why did it all go wrong?

It has to be the bad luck of the European Union, because the Euro crisis took place when European identity had begun to emerge and take their place. But, it actually started with the U.S. financial crisis of 2008-2009, when the global economy started to experience slow growth and this had lead to exposure of the unsustainable fiscal policies of European countries and around the globe. It’s the basic structural loophole that exists in the Euro zone system.

  • Firstly, the Euro zone system has monetary union without a fiscal union, i.e. Since the birth of the Euro zone, there was contradiction as it had inherited contradiction of having a monetary union but not a fiscal union. Each country had to follow a common fiscal path, but there is the existence of a common treasury to enforce, i.e. Authority to spend was driven by political force. As a result the European central bank had no control over monetary deficit.
  • Secondly, Euro zone countries differ in terms of productivity & structure. Most of the Euro zone countries have a lower productivity level in comparison to Germany. Even when it comes to unemployment rate there exists vast difference. Also Global Competitiveness index for the Euro zone countries differs in terms of ranking and secure.
Unemployment Rate in EU (Decemeber, 2012)

Unemployment Rate in EU (Decemeber, 2012)

  • Thirdly, Rising government debt due to cross broader lending to be blamed for such disaster. For example, Greece’s debts became so large that it exceeded the GDP, i.e. The total size of the Greek economy.  As a result the investors demanded higher yields on bonds, which worsen Greece’s depth condition by raising the cost of the country’s debt burden. Due to inevitable chain reaction  the market began to drive up the yields of the bond yields in the other heavily indebted countries in the region. Even non- European countries like USA, Britain, Japan have substantial exposure to bank debt to GDP. It’s the not Euro zone but also the overall world economy is part of the current global economical crisis.
An Overview of the Gross Govt. Debt /GDP

An Overview of the Gross Govt. Debt /GDP

  • Lastly, the overall decision making on financial assistance process within the Euro zone is problematic as it requires harmony among all the member representatives of states. Political decisions are taken by respective countries which affect the economy but monetary decisions are taken by European Central Bank (ECB). But ECB being central bank has limited focus on the overall economy of the respective member countries. In brief, economic policies were formulated and controlled by respective national governments, but monetary policies were controlled by the ECB.

EURO CRISIS MY MIND 

Euro Crisis - Mind Map

Euro Crisis – Mind Map

Cure to this disease: Europeanization of the banking sector

The way, I see it, the only way to cure this poisonous root lies in the basic structural loophole that exists in the Euro zone system. As the Euro zone system has monetary union without a fiscal union. But having both monetary and fiscal unions won’t solve the problem as parliaments would have to give up the right to set taxes and determine public expenditure. Thus, most practical approach would be Europeanization of the banking sector, i.e. Banks would no longer be allowed to hold as many domestic government bonds as countries will have to give up sovereignty. Also, this approach will be more acceptable politically as this will be carried out by the independent European Central Bank. In this way, banks will be less exposed to their national politics thus financial sector stability will be ensured even if a national government has financial problems. Moreover, national governments will not have to worry about national banks’ problems as banks would be recapitalized at the European level. In addition to that, providing funds will be possible as control and supervision of the banking system will be taken place at European level.

Dynamic Team Composition – Recipe for success

It’s 2013. We have come a long way. The world definitely didn’t come to an end but for the last few years, we are still experiencing the aftermath of  global financial crisis. Especially in Europe, Euro crisis has led the companies to close down units, plants and lay off employees. The pressure is more than ever, and the managers, entrepreneurs are faced with more challenges and responsibilities. By choosing the right team members, every manager or entrepreneur can outperform and success will be inevitable in any project. To do so, all you need five types of people in a team to make it dynamic and successful:

Executor

This is a go getter. This person is the factor of momentum, making sure deadlines are met and goals are reached. This is a positive catalyst who pushes the team to get the desired out. This is the voice of progress.

Mentor

This is your mentor, your hero, your north star. You want to be like this person. This person is a constant reminder that you can also do amazing things. You don’t only look up to him/her but you want to make this person proud. This is the voice of true authority.

Dynamic Team composition

Dynamic Team Composition

Joker

This person is full of positive energy. This person works passionately and at the same time keeps the team together. Known for cracking jokes, carrying smile and as a result the team gets benefitted from his/her positive vibes. This is the voice of motivation.

Innovator

This is a person full of new ideas. Someone who pushes you, who is always pushing him/herself and most importantly who makes you think. You want to keep this person energized, and enthusiastic. This is the voice of inspiration.

Doubter

This is the devil’s advocate, who asks the smart questions and sees problems before they arise. His/her perspective is very important. This kind of person wants you to be as safe as you are successful. This is the voice of reason.

If you are a manager, entrepreneur or even a student working in a team, try to identify the right people around you. The right types of people are the key factor for formulating the successful dynamic team that works.

P.S.: The post was inspired by Jessica Hagy, article published in Forbes magazine.