When it comes to creating wealth, no one does it better than an Entrepreneur and Small Business, and in tumultuous economic times Small Business will lead the way to the rebirth of a dynamic and thriving economy, and to be an effective company, Peter Drucker correctly observed the company must always innovate, and if it failed to perform the task of innovation over time it would fail to be successful, and yet most executives are marginally satisfied if at all with their businesses current levels of innovation, and of course many are disappointed with the level of improvements that result from their efforts.
In the course of developing innovative ideas entrepreneurs need to be careful that they are just innovating for the mere sake of innovating, since this never results in very profitable endeavors, or it might seem that actually current levels of innovation aren’t really innovations, just only small incremental improvements on existing ideas, products and services.
Profitable innovation happens most frequently within well defined parameters of problem solving, and without these parameters the innovation would simply be about creating just new ideas, and yet we must realize that innovation, or at least commercially successful innovation is actually more
than that, it is about creating new value, and with the new value the potential for the creation of new wealth.
In taking the innovation one step beyond the creation of new technologies one has to determine why many innovative creations don’t work right away, but sometimes take many years and multiple efforts before success is achieved, and when we focus on what was missing in the process, many times it’s as simple as getting the idea to spread and become viral to a point where the innovation becomes very successful.
This is true many times when entrepreneurs are able to create networks that combine different innovations that together are able to fully exploit results, and therefore become successful as a group called a value network, or a value chain, which is usually taken for granted or purely neglected by many managers and executives, but changes here can result in profitable, innovative solutions for both entrepreneurial organizations and their customers.
A businesses value network is the collection of business functions, systems, and processes that are designed to deliver the greatest value to its customers, and the value network becomes a critical mechanism for the process of innovation, and also becomes a key part of the business strategy because it creates systems that include the creation of a natural barrier to entry for competitors, make the business more competitive in the marketplace, insurer profits and good economies, and most importantly insulates the company from losses in a bad market similar to the current state of the global economy.
Instead of building a value network, many companies look to marketing its traditional 4P’s (Product, Price, Place, Promotion) to navigate the through hard times or to squeak out an extra dollar of profit, and while the 4P’s are useful tool, they frequently do not go far enough, so creating a value network will serve much the same basic function as the 4P’s, but actually takes it several steps beyond, and the good news is the 4P’s can be fairly easy to replicate, however replicating systems and processes are much more complex, as such, the value network becomes intertwined with overall corporate strategies.
Strategy is a combination of the many things entrepreneurs do, for example, for Wal-Mart or Southwest Airlines to compete on price, all of their processes that to work together and all the small details have to exist to support their one driving goal, which is to provide the lowest prices for their many customers, and of the features of these two companies, part of their 4P’s including the warehouse is, and the airplanes, are all fairly easy to replicate. Yet, the way their processes, capabilities, and personnel integrate and execute is
what makes each of these extraordinary companies unique and very successful, even in the worst of economic environments like the current global economy, as execution of the processes redefined for maximum efficiencies even at the smallest detail tasks, by highly trained managers and personnel committed to the one single end result of lowest prices to many loyal customers, and in return the most valuable by-product of the team’s finely tuned efforts is the maximum effect on the bottom line profit, and the creation of wealth.
Finally, a clear understanding of innovations and how when taken in and of themselves they do not function to create new strategies for entrepreneurial success, but when combined with other innovative ideas and processes they create success and wealth beyond anything that could be accomplished with the innovation by itself.
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