You have a great product that is going to sell hand over fist. But, the market is a tough place: there is a lot of competition.

Let’s say that there are two things that you are trying to accomplish:

Capture a portion of monopoly (market) power, and transform your small business into a big business.

In order to capture people’s attention, you need to make a product that is unlike anything else on the market and you need to OWN it. Every company that makes money in the long run has established a system of innovation and product development.

When you are just starting out, it is difficult to make a product from scratch full stop, let alone something that the world has never seen before.

This is okay. Putting a product out there that is just like someone else’s (assuming no intellectual property laws have been broken) can be the first step to great innovation.

As you move forward, you will understand the market and your customers better and better, and find ways to separate yourself from the competition. In order to do this though, there needs to be a formal system and process for innovation in place.

Here are a few ways to think about finding this system for yourself.

(1) Look At Historical Data

If your company has been around for a while, even just a few months, you can look at decisions that were made that produced marginal improvements in some way. Would you consider these changes innovation? There are many types and levels of innovation, and sometimes it can be difficult to discern innovation from development or modification.

If you have collected a few examples of past innovation in your company, look at what ties them all together. Who was the first person to suggest the changes that were made and who did that person reach out to? What was the need that was fulfilled?

Next, look at how these decisions affected the operation or success of the company? Measure as best you can the marginal benefits (or detriments) that these changes made. Is there something that the good changes all had in common.

Not only does identifying historical examples give you an idea of what innovations you have already used, but it also gives you a clue as to HOW these came about. What avenues for communication were opened or utilized? Did it come from an employee or a customer?

Let’s say that a customer had an issue with a product he received in the mail. How did he reach out and how well were you able to deal with his request? Did you change something about the product or the way you communicate with a customer after this happened a few times?

What if your courier was having a difficult time claiming fuel expenses? How did you make it easier for him to do so, and how did you make it easier for him to raise such issues in the first place?

Sifting through and analyzing this data can help you begin to identify a definition for a company. It can reveal just how far you have come since your launch, and what direction you seem to be going.

This self-awareness (see article) allows you to steer the ship in the proper direction and figure out what you, as a company (and a leader), are on course to becoming.

(2) Empower All Employees To Innovate

It is likely the case that employees at all levels have ideas as to how their job could be easier or how the company could save a bit of money, but there often is not enough incentive for them to speak up. That’s why it is important to create an atmosphere where all input is valued and people do not feel embarrassed to present an idea that may seem to be out in left field.

That said, being bombarded with ideas from everyone in the company is a sure way to limit innovation. Without any training and guidance, and without a hierarchical communication system, new ideas and suggestions will generally be underdeveloped and good ideas will slip through the next in the cacophony.

(3) Encourage Communication Between All Departments and Levels

Google (a fairly innovative company) encourages all employees to talk to one another and offer innovative ideas no matter what department they work in or what level they are on. In order to facilitate this, Google created the Google Café which encourages and enables employees to mingle with one another, and build bridges of communication between people with disparate roles.

Opening as many communication avenues as possible is not enough though. Without some kind of system, ideas will never reach the people who can do something with it. Communication does not simply entail standing around the coffee pot chatting freely, but includes structured exercises and practices that clarify channels of communication and strengthen relationships.

The Research & Development department often is assumed to be in charge of innovation, but really they do not have the perspective needed to make the changes needed to maximize the efficiency and output of each department.

(4) Streamline Innovation Between Departments

Everyone in a company needs to be on the same page when an new idea for innovation is being tested or considered. Imagine this:

A new accountability measure is being practiced and certain due diligence is required that takes extra funding. The accounting department is not clued in to how important these tests are and they under prioritize the funding and strangle the project.

When leadership fails to communicate between branches, innovation struggles to get off its feet.

Conclusion

The culture of a company depends first and foremost on the character of its leadership. When leadership is selected, a character driven by attention to detail and organization will ensure a corporate character of the same.

A leader who has goals that are explicitly oriented around innovation and growth, these 4 steps will naturally fall into place.

In a small company with only a few people, or even a business operated by one person, having a system of innovation is just as vital. You may not have some of the challenges of intercommunication, but you should allow yourself to consider innovative ideas that arise and establish a process that maximizes the flow of ideas and improvements to your company.

Often innovation comes from people or places that you would never expect it to. Imagine that the accounting department identifies an issue with cash flow to your company and thinks that it would be easier (and more profitable) to implement a subscription based service instead of a one time payment.

How would this most effectively be communicated to the right people and what would be the best way to get these changed examined and implemented? Would such a thing be consistent with the long term vision of the company?

These are all things that need to be considered and creating a system to more easily facilitate them will make you the most innovative company that you can be.