Innovation through Iteration

When it comes to innovation, the mind immediately jumps to huge leaps forward – the iPhone, ChatGPT, etc.

It’s true that all of those are definitely innovative, but they’re also not indicative of the level of innovation that can happen in the vast majority of businesses.

Anyone that has read Atomic Habits by James Clear will be familiar with the “1% rule” – the belief being that a 1% improvement each day for a year, written as 1.01^365, equates to a ~37% overall increase. When you compound that over a number of years, the improvements are staggering.

Now, there are two initial caveats here:

1. Most small businesses don’t operate 365 days a year,
2. To make changes every day would be unsustainable and create a feeling of instability.

Rather than strictly focusing on constant change, what I particularly like about this theory as a whole is the concept of marginal gains: small changes made often that collectively make a significant positive difference. I like to think of this as iteration.

When we reframe innovation into iteration, we turn those aforementioned huge leaps into a number of smaller, meaningful steps forward that can be spread across your company or contained within a single service, department or branch. Iteration is a common practice in software and applies to systems and features, too.

I like to think that iteration and an iterative change approach can be summarised by the following:

Change doesn’t need to be monumental, it needs to be meaningful.

But what does iteration look like and where do we start?

Investigate

Investigation can be anything from jotting down your current business frustrations that new technology could support through to a structured audit of the current systems in your business – consider things like the time anything takes, the associated costs or how it impacts your staff and customer experience. With any form of investigation for iteration, the key aspects are:

1. Range: don’t review and fault-find solo if possible, a single person is not a good indicator of how a businesses uses or could use technology. Enlist multiple people in different disciplines where possible to get true feedback of your systems, tech or processes.
2. Depth: for every issue you find, try to identify the root cause of the pain and describe both the cause and effect in a basic form, again focusing on costs, time and experience.

The importance of having a measurable against each pain point is that it will help you to prioritise the order in which you address and iterate on any issues.

Iterate

We’ve reframed innovation into iteration – small steps and 1% changes. With that in mind, we don’t necessarily immediately jump to enterprise-level solutions and £X,000 packages, but we also don’t resign to ‘this is a problem we’ll live with until we can justify something much bigger’.

Each pain point can be iterated upon multiple times as your business continues to grow. In fact, with the rise of Software-as-a-Service (SaaS) and tiered products, businesses have been iterating through tools without even realising.

• Owners of small business where many hats, including the financial controller hat. Managing invoice, payments and reconciliation, which tends to start as an entirely manual process – it’s low financial cost, high time cost and takes that valuable time away from other areas of the business. In fact, Starling’s report suggests micro-business spend 15hrs a week on managing finances. Iteration of the process can be as simple as utilising off-the-shelf tech like Xero and GoCardless – a centralised system for create and managing invoices, with automatic reminders and, when utilising the latter, automatic payment collection on a scheduled date. As the business grows, moving through the Xero tiers serves as it’s own micro iteration.
• Marketing teams love HubSpot, a prime example of the enterprise-level, £X,000/month solution, but that starts with a free tier. Gone are the days of prospect emails in spreadsheets when they can be added and managed in HubSpot, where the marketing and sales hubs have free tiers to manage contacts, companies and your sales pipeline – for small businesses, introducing this as an iteration to your sales and marketing process is often the first time that the two ‘departments’ truly connect (even when they’re actually ran by the same person!) and gives the benefit of a single source of truth.

Of course, iteration goes far beyond off-the-shelf.

A good example of an increasingly common iteration in technology teams is a focus on working asynchronously. As an example for agile development teams, retros following the end of a sprint are a commonplace process and initially they might take place at a scheduled time with everyone on a call – synchronously. An iteration as teams scale is to move towards asynchronous communication with team members contributing to a retro review document when their time allows (within reason, always the same day). This iteration gives a team more control to run autonomously and is less dependent on everyone’s coordinated availability.

The pros and cons for sync versus async working would warrant a post on its own, with the right format depending on the wider businesses approach to internal communication.

Implement

Whilst an ideal solution or implementation should be scalable, realistically most tools and processes implemented into a business cannot scale indefinitely and thus have a finite lifespan: this is okay.

Huge emphasis, both in and outside of tech, is on ‘scalability’, so much so that we often discredit solutions that add value now because they will not add the same level of value at a hypothetical future point. The iteration process aims to remove that barrier by encouraging small changes frequently, rather than waiting to take those giant strides that have a higher implementation barrier.

With that said, implementation can still be difficult. Ultimately, changes can upend processes, affect people’s ways of working and alter (but hopefully improve) your client experience. To that end, communication is crucial, but with frequent change, you can’t send an ‘Important update’ email everyday.

This is where involving other people in the investigation phase is beneficial as they’ve supported in identifying issues and are actively invested in seeing a solution put into place – you have ambassadors to support you in bringing in even minor changes and field questions from colleagues and clients. It also encourages a level of transparency and the knowledge amongst your company that change is likely, within reason.

Measure

The most important aspect of iteration is measurement. An ideal iteration yields measurable success as quickly as possible, which comes back to why it’s important to have the initial measure when identifying any pain point. It’s impossible to see the true value of iteration (or any change) without having a base value to compare against.

Typical measures for identifying pain points are cost, time and experience. As such, we can use the same metrics to measure the success of any iteration.

1. Operating efficiency, or the quantifying of time saved. This can be measured through the amount of time previously spent on a task versus the time spent following iteration.
2. Operating cost can be measured through the reduction of expenses incurred by the business. Whilst our examples have oriented around iterating through new tools, many businesses iterate through reducing external dependencies and costs by employing new in-house strategies.
3. Experience applies internally and externally. Internal measures come from staff surveys and feedback (which is often overlooked in businesses). External experience can be measured in various ways – from NPS scores through to website engagement and conversion rates, dependent on the iteration that has taken place.

So there you have it. Innovation in a business does not need to be groundbreaking, just grounded. Following an iterative approach and prioritising incremental changes in your business encourages you to not only identify problems, but resolve and measure them, with your wider team as advocates.