Bright Sparks

All businesses need fresh ideas to stay competitive. Gareth Chadwick seeks out some rich veins of inspiration

It was Thomas Edison, inventor of the electric light bulb and the doyen of US inventors, who said that genius is "1 per cent inspiration and 99 per cent perspiration". Edison clearly had an abundance of both. He patented more than 1,000 inventions during his lifetime and would spend up to 20 hours a day working on his ideas. But for most would-be innovators, it is the 1 per cent, the elusive inspiration, that causes the headaches.

Ideas and innovation are fundamental to a successful economy. They provide the growth and the dynamism to keep the commercial engine racing onwards and upwards. They are regarded as the cornerstone of economic development, and encouraging and supporting them is a key tenet of much government policy.

The importance of ideas is a message that is preached at the highest levels. In the foreword to the Department of Trade and Industry's Innovation Report in December 2003, the Prime Minister, Tony Blair, said that "innovation, the exploitation of new ideas, is absolutely essential to safeguard and deliver high-quality jobs, successful businesses, better products and services for our consumers and new, more environmentally friendly processes." The Chancellor, Gordon Brown, has even proposed a Royal day of recognition for entrepreneurs on 14 July.

It isn't just political spin. The crucial role of ideas in the economy is not new. What has changed over the last decade in particular, however, is the speed at which businesses need to come up with new ideas to remain competitive. They have to innovate more quickly, generate ideas more regularly and, crucially, commercialise them more effectively.

Stuart Watson, a partner in the entrepreneurial services team at Ernst & Young, says: "Good business ideas are more important now than they ever have been, because the pace of change has accelerated. Technology has made so much more possible and the commercial world so much faster that businesses which don't innovate quickly get left behind." The stereotype innovator is the wacky inventor coming up with a new money-spinning gadget hunched over his kitchen table and making a fortune from it. James Dyson, for example, came up with the idea for his best-selling vacuum cleaner while cleaning his house in the Cotswolds.

At the other end of the scale is the funnel approach, of pouring in as many new ideas as you can and hoping that one or two of them come out of the other end as successful businesses. Richard Branson at Virgin rolls out new businesses on an almost annual basis, some of which work and others which aren't so successful. And they are only the ones that make it through the feasibility assessment.

But while both scenarios contain positive elements, neither offers much of a model for sustainable, long-term development for the smaller business.

Teaching people how to use their brains in order to generate more ideas is a question for philosophers and psychologists, not business people. But just because the mental process of creating an idea can't be taught, it doesn't mean that the whole process of innovation has to be left in the lap of gods.

Alan South, European head at innovation consultants IDEO in London, highlights three stages in the process of generating ideas and turning them into viable projects. By managing the different stages, he suggests that enterprises can better stimulate and encourage new ideas and create a commercial climate in which innovation can flourish.

"In order to innovate, you first of all need insights," South says. "Insights are the fuel for innovation as they spark off the creative process and form the context out of which ideas are generated.

"The second stage is using that insight to actually generate ideas; of thinking creatively about what you want to achieve and coming up with all sorts of different ways of trying to achieve it, most of which will be discarded at a later stage, but some of which will work. Finally, there's the delicate process of getting an idea through an organisation, through various investment gateways and successfully out into the market," he says.

Insights into a product, process or service tends to mean observing and empathising with the customers and end-users. It is a matter of finding out where the problems are that need solving and where the creative energy is best applied. It is not necessarily coming up with the solutions, but working out what needs to be addressed.

It is one area where smaller business have an advantage. They are closer to their customers, have fewer of them and tend to be less complex in terms of internal organisation. But on the other hand, they have less room for risk.

"Smaller businesses can generally move more quickly. They can be more reactive to opportunities and ideas, whereas a larger business has more bureaucracy to wade through. That is balanced by the increased risk, though. A small business has more to lose, maybe everything to lose, if it goes wrong. A larger business will have more capacity to soak up failure," says Angus Macleod, founder of ideas consultancy the Lightbulb Factor, which generates and promotes new business ideas.

Creating the right environment for innovation is a means of stimulating the flow of ideas. It could literally be changing the physical office environment in order to stimulate more innovative thinking, or it could be changing the cultural environment in which people work to encourage them to be more creative.

Alan South suggests dedicated project rooms as one method of stimulating creativity. Rather than having project material in binders and boxes, filed away by people's desks, he says that by creating an environment where people can come and work on the project with all the information and pictures and ideas relating to it all around them, they will be more easily inspired to come up with new thinking.

Project rooms may not be appropriate for all organisations. Macleod, who spent 15 years in management before setting up his own company, recalls organising directors' away days to encourage creativity.

"We would remove ourselves completely from the day-to-day issues of the business two or three times a year to step back and generate ideas and think more innovatively about opportunities, problems and business development. It gave us space to think differently rather than being limited by the ends of our desks," he says.

As Edison pointed out, however, the idea is only a small part of the innovation process. Equally crucial is the ability to commercialise the idea: an area where the UK has historically struggled.

"Most business failures are not due to a lack of ideas, but due to a failure in the commercialisation and implementation of those ideas," says Watson.

Knowing how to commercialise an idea means researching the market, the right pricing strategy, the right team and thorough testing and prototyping of the idea before it ever gets to market.

It is the testing phase that holds the answer to whether an idea is feasible or not. South says that organisations often don't focus as much on this process as they should, but that it is crucial if ideas are to be successfully commercialised. It is one of the main focuses of all IDEO projects.

"It is an incredibly important part of the process of getting ideas out of the door. By visualising and prototyping a project, it comes to life and helps people buy into it. A second issue is that the final quality of a product or service is directly proportional to the quality of the approach to prototyping. None of us would dream of boarding an aeroplane if it hadn't been exhaustively prototyped and tested from every possible angle," he says.

Getting the right team involved can also make or break the commercialisation of an idea. In small companies, particularly owner-managed businesses, the idea generator is often the boss, but someone who is good at coming up with new business ideas doesn't necessarily make the best managing director. There needs to be a level of awareness that once it has been developed to a certain stage, a project may be best commercialised by a different team to the one which initiated it.

Above all, it is about being prepared to fail. Encouraging creativity means accepting that not all the ideas will work, but criticising them if they don't is a sure way of discouraging future innovation.

Research pointed the way for the kitchen gurus

The story of Kitchen Guru is a lesson in how to turn a good idea into a successful business.

Company founders Chandra and Rekha Parmar (pictured right) first had the idea of selling single-recipe portions of fresh Indian herbs and spices 10 years ago. But it took another eight years of research, testing and negotiations before they finally got their "spice cards" on the market.

A former product development engineer, Parmar says that the idea gradually dawned on his wife and co-founder Rekha, a biomedical scientist, after constant requests from friends for the recipes and spices she used when entertaining at home. Rekha would package up small packets of fresh herbs and spices with a hand-written recipe. She realised that the idea had commercial potential.

Early research involved little more than looking at what was currently in the shops, but as the idea developed, the Parmars realised there was nothing similar on the market.

"We did not know much about the food market when we started. It was mainly a case of walking to the supermarket and seeing what was available. Later we made more in-depth investigations, using Mintel and other reports.

"It suggested that consumers were increasingly looking for more authenticity in their ethnic cooking. It tied in perfectly with our idea about selling "spice cards", comprising all the fresh herbs and spices and cooking instructions for a single meal for four," Parmar says.

He sought packaging, branding and legal advice, initially through local agencies such as the Business Link, which enabled him to protect and progress the idea securely.

Prototypes were prepared at home and trialled on friends and family over several months, perfecting recipes and packaging. Finally, in 2002, Chandra gave up his job to focus full-time on bringing the product to market.

Since Chandra and Rekha went into production from home two years ago, Kitchen Guru now employs five people.

It has recently invested £250,000 in its first factory in Hull, East Yorkshire, and the range, which includes chicken tikka massala, chicken madras, goan pork, spicy daal with coriander and pilau rice, is stocked in upmarket delicatessens and food halls nationwide, including Harvey Nichols, Harrods, House of Fraser and Ireland's Superquinn.

It has also broken into the culinary heart of the European food market, France, supplying two of the country's leading supermarkets, Monoprix and Bon Marche. A US launch is planned for later this year.