Last month, the EU announced fresh innovation funding for hundreds of businesses across the continent, as part of their Horizon 2020 agenda. Successful applicants will receive free business coaching and acceleration services. While this fantastic initiative will positively drive innovation in the EU, I believe that businesses of the future should look to foster innovation from within. This is about more than independence and self-reliance: it is about cultivating a dynamic and flexible business culture – from which innovation can fully flourish.
Innovation is key to thriving in today’s fast-changing world. This is something I learned in my earliest business experiences in Kazakhstan. Following the collapse of the Soviet Union, many once-successful industries were rendered inoperable, due to years of under-investment, neglect and unresponsiveness to a changing marketplace. Hardest hit were single-resource communities, whose prosperity was tied to a closed-loop ecosystem of interdependent mines, factories and manufacturing units.
Nowhere was this truer than in Zhitigara, a region in north-western Kazakhstan, that for decades relied on the output of local mining and manufacturing. When the post-Soviet era began, local industry was plagued by outdated practices and equipment, a lack of customer focus, and a series of non market-based obstacles that stifled innovation. Only by implementing far-reaching management changes; focusing on the quality of our refining and enrichment processes; and reinvesting heavily in health and safety were, we able to transform and grow a failing local enterprise. You might say it was innovation by necessity but the lessons were learned.
The experience of overhauling old practices and urgently modernising operations cemented my belief in the value of innovation. In my later career, it was this same belief that drove the transformation of the Kusto Group from a single-resource, local company into a diversified multinational with headquarters in Singapore and operations across the globe.
As Kusto has expanded, our desire to innovate has grown. Today we realise that innovation comes in many shapes and sizes, often in the most unlikely of places. Even, for example, in petrol stations. In Kazakhstan, petrol stations used to be small outfits, devoted solely to their core function. Over time they would begin to develop into micro commercial hubs, hosting stores, cafes and restaurants. Kusto Group recognized this trend and in 2014 launched Kazakhstan’s first stations incorporating retail and banking facilities. In addition, the group’s start-up company raised the bar by introducing high quality fuel supply and a new standard for ease of retail purchases. By focusing on the customer – and adding the services and technologies to match – we were able to bring innovation to a sector long thought to be standardised. Looking ahead, we hope to launch 70 integrated service-stations throughout the country by 2020.
Key to this early approach was a commitment to see beyond the horizon and implement new, sometimes radical and uncomfortable ideas. Kazakhs are a nomadic people, with exploration rooted in our DNA. We are open to change, an ethos which defines the Kusto Group. However, innovation itself is often misunderstood. The single greatest challenge in fostering innovation is not discovering new ideas or technologies, but creating a working environment that is open to change and able to adapt to it. This means being open to risk and to potential failure. Essential to this is a company’s corporate culture: an ethos that ensures an open, collaborative environment, in which different parts of the organisation are always seeking to learn from the other.
At Kusto Group, we understand that innovation is the lifeblood of successful companies. Our ethos – the ‘Kusto Way’ – has at its core an understanding of the need to create an environment that encourages proactive knowledge sharing, is tolerant of new ideas, rewards entrepreneurship and does not demonize failure. It is an understanding that to rely unquestioningly on ‘the way things are’ halts progress and leaves companies behind.
Defining a company’s corporate culture is the first step to creating an innovative environment. Yet the modern, globalized corporation is soon faced with a challenging question – how to implement a unified sense of corporate culture across the board, in different countries, communities and sectors? Our solution to this problem is twofold: first, we ensure that the Kusto Way is instilled in each key manager across our decentralized, flat management structure; then, each manager implements that ethos locally.
The learning exchange, however, must also take place between companies. In Ukraine we partnered with the company Cropio, whose cutting-edge sensors and satellite imaging systems helped us develop precise farming methods, reducing crop wastage and improving yields. Such an approach has improved our success in this field and without it we would have fallen behind competitors. Instead, we lead the field in partnering with enterprises who place innovation at the heart of all they do and now look for other markets where this technology could be applied.
Having learned from our partners, and with our innovative culture in place, now it is Kusto’s turn to share our knowledge. An example of this is our Vietnamese operation, which exemplifies the company’s desire to explore, expand and educate. In our work there, we have collaborated with previously state-owned enterprises, bringing with us fresh ideas and new approaches. We implemented the use of Building Information Modelling (BIM), applying highly detailed, digital modelling to reduce costs, improve quality and enhance efficiency. Although established practice in some parts of the world, this constituted an important, innovative development in Vietnamese construction.
Private businesses have considerable resources to invest in, trial and rollout innovative ideas. Every new venture will experience challenges and risk failure. However, successful business react to failure by continuing to innovate, rather than avoiding change. Big or small, no business can afford to take comfort in the familiar. It is crucial to innovate and encourage innovation throughout the workforce, but this requires investment, or it will remain little more than words on a page.
What’s more, the approach to innovation must be holistic, and it must be the bedrock of any corporate culture, as it is at the Kusto Group. This means embracing new technologies, adapting to new practices and – above all – fostering a mindset that always looks to the future. It is as much about thinking creatively as it is about doing innovative things in and of themselves. Ultimately, it is a matter of survival.