Being innovative in business is becoming increasingly important with each passing year. Companies that don’t keep up with the times (or stay ahead of them) risk losing their competitiveness.
Creating a culture of innovation is part and parcel of successful leadership in modern firms. Businesses need people who can inspire teams to push ahead with their innovative ideas and bring them to fruition. Building such a culture, however, is a challenge. Not all employees come from a background where innovation is central.
In this post, we’re going to look at the things you can do to build a culture of innovation at your company. We’ll investigate both the accounting techniques that you can use as well as the leadership skills. Let’s take a look.
Restructure Your Programme Of R&D Activities By Taking Advantage Of Tax Credits
The UK government wants businesses to innovate, create new products and technologies, and benefit society. It knows that if firms invest in research and development, they stand a better chance of improving citizens’ lives.
Because of this, HMRC – the UK tax authority – offers R&D tax credits: special tax incentives that businesses from any industry can access to save money on their tax bills (or receive in the form of a cash payment).
Taking advantage of this tax facility is vital for creating a culture of innovation in your business. Your claim will hopefully be the first of many where you structure a rolling programme of activities that use the R&D relief to innovate further. Innovation, development, and research provide an opportunity for growth, consolidation, and diversification. You’re able to branch out into different product categories, get a large quantity of product to market faster and potentially create new business models that enhance your profitability in the future.
Mark Zuckerberg and other top innovators from around the world embrace the principle of “failing fast.” The idea here is to try new things, look for ways to confirm their efficacy rapidly before they drain your resources, and then abandon them if they don’t work out.
While some businesses are rife with cultures that fear failure, many managers also fear loss. Both these mindsets lead to a lack of innovation and companies failing to reach their potential. Failing fast is an excellent approach because it allows you both to encourage innovation and weed out bad ideas before they become a significant drain on your resources.
Here again, tax credits can help. With them, you’re able to experiment with avenues of research and development that wouldn’t otherwise meet your risk-reward criteria.
Use Innovation Metrics
Do you want to make your team more innovative? A great approach is to start measuring performance using innovation metrics.
Remember, changing a culture is often about changing incentives. If the key metric that you focus on is “loss” or “shrinkage”, then employees will adopt a risk-averse stance, looking to preserve the business you have, rather than the one you want to create.
If, however, your key metric is R&D ROI, then you’ll encourage the type of activities that push your business and its culture forward.