Arush Chandna is the co-founder of Quad Education.
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America has been abuzz with unprecedented entrepreneurial activity since the pandemic. According to Babson College's Global Entrepreneurship Monitor (GEM) 2022-2023 USA report, the total entrepreneurial activity rates were at an all-time high, with an increase of 18% for women and 20% for men. In 2020 alone, Americans filed paperwork to start 4.3 million businesses.
This boom poses a key question—how are entrepreneurs identifying so many business ideas? Clearly, not all ideas or models are novel or innovative. But all businesses do need some innovation in the way they operate to propel the business toward success. Why is that? Let’s first understand what innovation is.
According to McKinsey, in business terms,"innovation is the ability to conceive, develop, deliver, and scale new products, services, processes, and business models for customers." Harvard Business Review further explains, “Innovations don't have to be major breakthroughs in technology or new business models; they can be as simple as upgrades to a company's customer service or features added to an existing product."
By prioritizing and investing in innovation, be it for products or processes, companies can expect financial returns. According to the McKinsey article linked above, businesses that excel at innovating can generate 2.4 times higher economic profit than other companies.
So, how can aspiring entrepreneurs or leaders master the essentials of innovation—both in how they think and how they can implement it in business? As the founder of an ed tech business, I believe leaders can learn how to emulate a culture of innovation in business from colleges and universities.
Embrace and encourage interdisciplinary innovation.
Different units of a business might work in silos, but an innovative leader will always know which departments can benefit from collaboration to drive maximum innovation and profitability. Stanford University provides an impressive example of how this can work.
The university has programs and an environment that encourages students from across disciplines and focus areas to collaborate and devise solutions to complex societal issues. Their Bio-X program, for example, "brings together researchers from the fields of biology, engineering, and medicine to tackle pressing issues in healthcare and biotechnology." At the Massachusetts Institute of Technology, "A general prerequisite of most MIT entrepreneurial contests or accelerators, for instance, is that participants form mixed teams of scientists and engineers with management students."
Businesses, too, can significantly benefit from such cross-pollination if their leaders take the initiative to amalgamate parts of the business that might be unrelated but have massive scope for innovation. For example, does your marketing team have a roadblock that perhaps your engineering or technology team could fix? The answer might lie in cross-functional collaboration.
Instill innovation in the company culture.
Your employees, partners or stakeholders will only be committed to the idea of innovation if you show them that you are, too. By definition, innovation requires a new approach to doing things. Employees who might already have been trained in a particular process may resist innovation unless they see that it’s a way of life at the organization. Is the company open to taking risks, accepting failure, implementing experiential learning initiatives and so on?
Innovation might conjure up an image of a fast-moving startup with less focus on rules and a rampant practice of experimentation, but innovation is also synonymous with failed experiments, starting all over again and recognizing the loopholes in the process. Employees will feel tempted to innovate when they feel they can make mistakes without serious repercussions, make amends, try again and be incentivized for processes that yield favorable results for the organization.
Once again, educational institutions provide blueprints that can benefit businesses. Michigan Ross Business School is known for its signature Multidisciplinary Action Projects (MAP) program, which offers Ross Experiences in Action-Based Learning, or REAL, for both its undergraduate and graduate business degrees. Students are at the forefront of real-world situations with high stakes. Within the program, students develop an original business with the intent of achieving economic viability. They also "manage eight focused investment funds, totaling more than $10 million in assets, in all aspects of their operations."
As an entrepreneur or business leader, you must give your employees the opportunity to learn by doing while having a high but realistic threshold for errors, offering feedback and solutions when ideas fail and rewards when they succeed.
Be prepared for future challenges.
Innovation stems from recognizing unmet needs and finding solutions that fulfill them. If business leaders can foresee the needs of their current and prospective customers preemptively, they can kickstart the innovation process—which relies heavily on research and development—sooner than their competitors. This also leaves them more room for trying out multiple solutions, collecting feedback from beta users and fine-tuning the product, service or process.
Wharton Business School offers a notable example. Once it saw a pattern among recruiters hiring for ESG-related skills, Wharton launched a major called Business, Energy, Environment and Sustainability, with nearly 30 courses. Today, ESG is considered one of the top factors impacting business strategy. The University further announced its Environmental, Social and Governance Factors for Business (ESGB) and Diversity, Equity and Inclusion (DEI) programs as a concentration at the undergraduate level and a major at the MBA level last fall.
This ability to recognize trends and challenges proactively can spur innovative thinking, test products and models, and prepare you to launch an avant-garde solution around the time when others might only be beginning to see the same trend.
Consider these final thoughts.
When it comes to learning the essentials of innovation, many rely on examples of current companies that innovate to solve a business problem. While there’s nothing wrong with that approach, I have been able to cull lessons from the exceptional culture of innovation at higher institutions as a result of my proximity to this industry.
Whether it’s through an intersection of disciplines that allows for a productive collision of ideas, exemplifying the innovation culture through actions and environment or acting preemptively on society’s most complex challenges, I believe these institutions provide a powerful model for learning and implementing innovative thinking and practices.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
