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Don’t (Just) Focus on Innovation
While innovation is paramount to the profitability of any business, there are other supporting factors which are essential to make innovation successful.
Similar to the construction of any building, the work first begins with a solid foundation. Viable logistics, solid marketing, and financial health must be considered in order to achieve effective innovation. A solid foundation also ensures that innovation is not simply a one-time occurrence, but rather a sustainable repeatable process.
Financial Health: Beyond the Income Statement
Return on Investment, as well as net profit are of great importance when measuring the overall financial health of a company. They are the fuel and energy to Innovate. However, fiscal fitness cannot be measured by an income statement alone. Dynamic innovation will yield a profitable return on investment (ROI) measured as a favorable direct correlation of innovative ideas and net profits earned. When all is said and done, innovation is about ROI derived from the transformation of ideas into money.
A company’s financial health can be determined by reviewing the balance sheet, income statement and cash flow statement independently and together. Some financial factors of great importance will be the amount budgeted and spent on R&D and marketing.
Logistics: Supplying the Demand
Logistics is defined as “the detailed coordination of a complex operation involving many people, facilities, or supplies.” Wal-Mart, which again tops the 2013 Fortune 500, lives by its logistics process.
From their corporate website, “Ever wonder how the products you see on our shelves get there? It all comes down to logistics, and it’s how Walmart works. Every year, we move millions of products from manufacturers to Walmart distribution centers and from distribution centers to the shelves in our stores.”
Not only is Wal-Mart continually innovative about their logistics process, they also went green while doing it.
“Just last year, Walmart drivers logged 28 million fewer miles while transporting 65 million more cases. Those improvements avoided nearly 41,000 metric tons of carbon emissions – the equivalent of taking 7,900 cars off the road.”
Marketing: The Relationship between Company and Consumer
Lastly, no matter how great your product or service is, none of it matters if your consumers do not know about your company. The old adage, “You have to spend money to make money” holds true even for Wal-Mart, the world’s largest retailer. According to the Business Insider, AT&T spent $1.5 Billion dollars in advertising, followed closely by Verizon.
“Wal-Mart, America’s biggest employer is merely the 10th biggest brand advertiser in the U.S. according to data gathered by Kantar and supplied to Ad Age.”
Businesses cannot be successful with an innovation focus alone. Wal-Mart is a successful and sustainable company that follows all of Robert’s Rules for Innovation. Healthy finances, seamless logistics and effective marketing combined with Robert’s Rules of Innovation can lead to sustainable Innovation and prosperity in your organization.