Tuesday, March 21, 2017

You have to be innovative and creative to become wealthy

This is our next myth. Sometimes people are confused by terms innovation and creativity. The simplest definition of innovation I am comfortable with is ‘Innovation is intended change, which brings improvement.’ Innovation and improvement is very good for business, because it can give you competition advantage over other companies. This is true, if you and your competitors are on the same level in the beginning.

Innovation in business, as it brings desired changes, will lead to better results of that company. Innovation is great and desired but it is not necessary for business operations. There are businesses which operate in traditional activities and because of their monopoly, they don’t have to evolve.

Innovation helps you to get rich more quickly and I strongly advise you to look for possible innovations. Some authors call it a leverage.

To use innovation you don’t have to be innovative yourself. You can copy innovation from your competition. All you have to do is watch your competition and if they change something (e.g. a competing bank starts to offer on-line banking), you can test it yourself and measure if it is innovation for you. If it brings no improvement in performance for you, it is not innovation.

If online banking lowers your profit margin because you receive less money in fees compared to regular bank account, it is not innovation (for you). Using your online banking can still be innovation for your online customer, because he saves time and money. But if it is not profitable for the bank,
the bank can’t call this change innovative. If you can’t measure the benefit, you can’t call it innovation.

Other related myth is that you have to be the first on the market to apply the innovation. There are multiple cases where the first innovator spent much too money on testing what works and what does not before he found the innovation. After he found it, others copied it from him with much smaller costs. I don’t say it is nice, but it is the reality and it is done all the time all over the world.

Copying is easier than finding innovations and that is why it was, it is and it will be done whether we like it or not. It is natural. We can see it even with the penguins. First to jump off the cliff takes highest risk that orca will eat him. If others see that he is alive, they will jump the cliff too. But nobody wants to be the first. The first one can be eaten.

Good example is  Google. There were other search engines before Google, but it is Google which is the market leader now. You don’t have to start first to become the winner.

Creativity is the ability to create something new. Not everything newer is better than what was created earlier. You can be creative and lose money. You can be conservative and earn money. In many cases creativity ‘kills sales’. Good marketing measures how much money is spent on a certain activity and how much sales and profit it brings.

If you use an advertising agency, and I was witness to this many times, you and your agency have different goals most of the time. You want to increase sales profitably and spend as little as possible, while the agency wants to spend as much money as possible and then take a percentage of that advertising budget. For the agency it is good to be well known and their partial goal is to create ‘creative advertisements’ which will win some advertising awards so they can promote their agency through the award.

Many times the agency is satisfied if they make your brand more known or if their ad gets more views. What agencies will not tell you is that there is a big difference between what people like to see (creative advertisement) and what makes them buy (classical boring but tested and measured advertisement).

Creativity can have negative influence as well. Not everything that is new is better. You have to measure and test it to be sure. As you can see, innovation or creative innovation is good for business, but it is not necessary to be innovative or creative yourself.

Lot of authors write that you need just one idea to get rich. Having a great idea is just small step to get rich. The idea itself has no value. Everybody has ideas. My friend has list of 100 ideas on which he will base his businesses. So far he has a job and no business, because he lacks actions to realize those ideas.

There are ideas everywhere and it is not difficult to choose one idea that will make you rich if you implement it successfully. To implement the idea successfully is the important part of the sentence. The successful people are not the one with the ideas, but those who implement those ideas. Those who have strong will, endurance and decide to risk failing when trying to realize the idea. And when they fail, they have courage to start again.

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