Over the past few decades, innovation has become a major buzzword with different meanings to different organizations, industries, and individuals.
Additionally, the underlying concepts of innovation remain foggy and unclear. Many entities and individuals use the term depending on their mindset, process, product, or business entity.
However, according to the Oslo Manual 2018, an international reference guide, innovation is the introduction of a new or improved product or process into the market. The product or process differs significantly from previous ones and must add value to potential consumers, organizations, or industries.
If you consider the organizations that differentiate themselves within their industries, it is clear that they have one thing in common: they embrace innovation.
These innovative companies include new organizations like Uber and older organizations like Microsoft, which have been around for decades. So, no matter your industry or organization, you have to embrace innovation to maintain a competitive edge.
Objectives of Innovation
Innovation objectives are goals that aim to improve an organization by a large magnitude. In most cases, integrating innovation into your business involves experimentation, creativity, and risk-taking. As such, this involves high levels of uncertainty. However, to tackle the tension, the goals to be attained have to be deemed worthwhile in the long run.
Organizations have several options to increase their competitive edge, but with technological inventions, organizations get more output for a unit input in a much faster way. For example, with intelligent automation in business operations, customers can go through procedures without human interaction.
With innovation, organizations make things easier for their employees and consumers. For example, businesses utilize the internet and e-commerce services to enhance how their customers receive their products worldwide.
Innovation transforms processes that do not end well into efficient ones that achieve a business’s long-term goals. For example, with the generation of energy from renewable sources such as solar and wind, manufacturing industries can be scaled to meet global needs.
Why innovation is Important
I’m sure you’ve probably heard of the phrase “adapt or die.” For a business to achieve success in today’s technological world, this is a profound truth. With the massive expansion in technologies, companies worldwide have to adapt to stay afloat. Simply put, you cannot stay afloat if your organization does not embrace innovation and change.
Below are four critical factors on the importance of innovation:
Help Your Company Grow
According to the Boston Consulting Group, 79% of surveyed executives state that innovation ranks among their top business goals. This is the highest percentage recorded in a decade. As an entrepreneur and business leader, you evolve your businesses by improving your products, processes, and business models. This improvement leads to the rapid expansion and growth of your company. However, with traditional methods, your company will have a slow growth process that may take years.
Organizations that consistently bring in large profits and rank as the top 50 most innovative companies continue to grow while staying one step ahead of the competition. For example, companies like Uber and Amazon have changed their industries operations at their core and disrupted the whole taxi, e-commerce, and cloud computing industries.
Keeps Organizations Relevant
Technological innovation consistently proves to drive change across multiple industries. For your business to remain relevant, you will eventually have to adapt to meet the new market.
According to Techjury, there are more than 7 billion internet-connected devices. With the invention of new gadgets and machinery, this number will explode in the coming years. Eventually, this will change the market and remodel how customers receive products or services. For example, with the introduction of Amazon Prime Air, the delivery system is set to change to fully autonomous non-pilot drones. As such, delivery companies need to change their strategies, or they will go out of business.
Therefore, just as large organizations often innovate, start-ups need to innovate to break into their respective industry and disrupt markets.
Helps Businesses Stand Out
Innovation is all about doing things differently from your competitors. If you are utilizing innovation on your products, your goal is to update your product until there is no better market product.
If you’re using innovation in your business process, you aim to develop a strategy that will save you time, money, and other resources. In both cases, your organization needs to take the time to experiment and improve its model because sticking to the old one will not work in technological evolution.
New ideas and models help your organization differentiate its product, customer experience, and convenience from the competition in a saturated market. Over the past decade, Netflix has proven that embracing change is a powerful tool for business success. Netflix triumphed over Blockbuster by popularizing streaming. This strategy later forced the entire entertainment industry to adapt to the model Netflix had introduced.
Helps Businesses find new Solutions to Problems
With today’s unparalleled pace of technological change, companies are relentlessly under pressure to find new solutions to new problems. According to Gregory Hicks, Director of IT Innovation R&D at Optum, the market is always moving, and organizations should not rest when operations are going well. This claim generally means that new technological innovation is on its way, and with it comes new challenges.
Innovators who can respond in advance to looming challenges and competitive threats can change customer preference and have a competitive advantage.
Importance of Innovation in a Business
In general, it’s challenging to differentiate the industries where innovation would be necessary from those that it would not be. However, it is crucial to understand that although some sectors depend on innovation more than others, it applies to all industries.
Innovation can deliver significant benefits to your organization and is a critical factor for a business to succeed.
A company’s ability to innovate is one of the essential factors for competitive advantage. If you want your company to stay relevant, you have to improve your products, services, and customer experience consistently. Technological innovation makes this possible by providing efficient methods to attain your company goals.
According to Deloitte, only 12% of fortune 500 companies that appeared in 1955 also appeared in the 2017 Fortune 500 list. With the creative destruction that fuels economic growth, most of the other companies have been taken out of the market because they did not respond to disruptive technologies.
Maximize Return on Investment
According to Global Innovation 1000, innovative companies not only grow faster but are more profitable than their competitors in the long-run. These results are due to an increased competitive advantage and consistent innovation, which directly impacts performance and productivity. With more efficient operations and processes, your business can produce products efficiently, which reduces the production cost and meet customer needs. This process, in turn, increases your market share.
Although measuring the ROI of an innovative product or process might be difficult, investing in innovation is always a better way to improve your earnings than not innovating at all.
Helps in Streamlining Decision Making
In any business or entity, decision making is a critical process. Traditionally, decision-making relied on physically keeping track of customers, supply chain, and market data. It was a slow process, and any mistake in the chain meant that businesses could no longer track the products or customer needs, and decisions would be made vaguely.
With technological innovation, businesses now rely on relevant software. The software guarantees accuracy and error-free reporting derived from financial transactions, marketing data, and customer engagement. Through innovative technology, your business captures critical customer and market data that helps you notice weak areas and strategize accordingly.
Importance of Technology and Innovation
Do you ever wonder why technological innovations are so important? The answer is quite simple. In today’s world, technology is no longer a want but a need as it saves time, effort, enhances security, and even connects the world as one digital community. However, numerous factors determine the importance of technology to an individual or organization, depending on the task they want to accomplish. To keep the world operational as a whole, creative entrepreneurs are always developing tools and products.
Online attacks have been on the rise, which has proven to be very risky for business and personal data. Since this is an era of cloud computing and the Internet of Things, Cyber attacks are more persistent than before. Therefore, innovative developers are designing systems and technologies to help protect data stored on the internet.
Technologies like Blockchain enhance security by storing online data in a decentralized and immutable database.
Provides an Unlimited Supply of Knowledge
With the innovation of online schools, libraries, and educational websites, you cannot limit what you can achieve. Conducting research is easy because you can access a website and get any information you need. It provides an endless supply of insights and knowledge.
Additionally, technology helps you keep a close eye on your customers’ needs and competitors, which allows you to stay aware of any market change and any innovations under development.
Explore New Market Growth
With innovations like Artificial Intelligence and machine learning, businesses can explore the potential of new markets. Your business achieves this by creating simulations and conducting complex calculations that forecast the latest market trends or operations’ authentically. These predictions provide a better picture of what steps are required and whether or not the new market is viable. Moreover, technological innovation is advancing with new gadgets and processes like 3D printing, helping businesses become more productive and grow.
Importance of Innovation in Entrepreneurship
In the highly competitive world of today, innovation is the facilitator of entrepreneurship. It is a way of empowering entrepreneurs to create unique brands. At the same time, entrepreneurship is the backbone of innovation both at a business or individual level. Innovation and creativity go hand and in hand, and it is crucial to note that it does not happen overnight. It requires time and experimentation to ensure you develop something innovative that makes a difference.
Here is how to look at innovation to understand it’s importance in entrepreneurship;
Advances in technological innovation are propelling entrepreneurship.
Technological innovations like the Internet of Things has enabled connection and the sharing of data globally between devices. IoT is crafting a new market where start-ups can leverage already existing platforms to create different revenue streams. For example, start-ups have access to unpaid assistance like Amazon Alexa device or Google Assistant, where they can use their smart-phones to control various devices.
Responding to Increasing Customer Expectations
Today, customers have total control over what they do online, the product they purchase, their preferences, and to whom they share this data. This approach has made organizations focus more on consumer-centric innovations that provide customers with what they need.
Utilizing technology like machine learning and Big Data, entrepreneurs now understand how their customers feel. Using customer data, entrepreneurs can now connect with their customers on an emotional level and win their loyalty. Data sources may include; social media surveys, call transcripts, and thorough lists of multiple choices to understand their preferences. The companies then analyze the data using machine learning and AI tools to improve customer experience and enhance their marketing techniques.
Examples of Innovations
In today’s market, organizations work tirelessly to produce new and unique products and processes to gain a larger market share. This very process of always updating their operations depends on innovation. Examples of technological inventions can be found all around the globe.
Innovative Product – Apple Inc
The success of Apple is undeniable. Their success is primarily due to regularly improving their already existing iPhone model rather than developing new independent products. Their products generate excitement with their unique design and style, which increases sales with every new model.
Innovative Process – Salesforce
Salesforce completely changed how business models work with the introduction of their Customer Relationship Management system (CRM). CRM provides a platform where every organizations’ department can have a shared view of every customer. This strongly enhances marketing innovation as all teams work together and have a clear picture of the customer status.
By harnessing new technology, Salesforce in cloud computing also supports today’s modern business model.
The Outcomes of Innovation
The goal of any form of innovation should always be focused on improvement. When you innovate, the outcome benefits you and the consumer of your product. However, it is crucial to note that innovation brings about the disruption of already existing business models. Generally, this results in winners and losers. Some creative innovators create billion-dollar companies, while others are also put out of business due to the change in the market dynamics.
From an entrepreneur’s perspective, the actual positive outcomes of innovations are; economic growth, production of better products and services, and building a wide range of products.
1. Economic Growth
The essence of innovation is to develop new ideas and technologies to get more output from the same number of inputs. Simply put, innovation leads to higher productivity. As productivity rises, more goods and services are produced in the market-leading to economic growth.
2. Better Quality and Services
By definition, efficient business operations and equipment are more likely to produce high-quality products and convenient services. With this efficiency, the degree to which a customer’s need is fulfilled is exceeded. With innovative marketing techniques, your business will gain more sales and profits.
3. Building a product range
Innovation has provided a new platform where businesses can produce or offer more than one product or service, respectively. A broader range of services and products offers an opportunity for more sales and profits. For example, with the introduction of cloud computing, Google acts as a search engine and provides cloud storage services for consumers and businesses.
1. Loss of jobs
Technological advancement has streamlined processes in businesses and our everyday lives. As a result, most of the outdated systems, equipment, and jobs are being abandoned. This is happening mostly in the manufacturing sector, where Intelligent Automated Machines take up manual and low skill jobs.
2. Wealth Inequality
In general, innovation and economic growth lead to an increase in living standards. However, this is not always the case. With almost all disruptive innovation, the wealth generated is concentrated only on a few individuals who are the technology leaders or those who have the resources to utilize the technology. As a result, a more massive socioeconomic gap with negative consequences is created in the long run.
3. Uncertainty in commercial returns
With any innovation, much of the research is often speculative. There is no guarantee of future profits. Additionally, if the experimentation and development time is extended, then the risk is more significant. Hence if a company does not meet its innovation goals, then it may be left bankrupt.
How to Establish an Innovative Culture
To stay relevant in changing times, drive business growth, and stand out from your competition, you need to think creatively and have the right mindset for innovation. As an entrepreneur, you have to understand how to bring the invention into life and integrate it into your business.
Some of the ways to have an innovative culture in your business include;
Break the rules
In the technological space, traditional and conventional methods will often not get you anywhere. It would help if you were willing to challenge your current business norms and explore new innovative paths. However, it is crucial to keep in mind the risks involved with innovation.
Always Collect Ideas Everywhere
Innovation is a continuous process that requires regular updates. These projects frequently require new ideas, which are often found through experimentation. So to optimize innovation strategies, you have to be vigilant about where the next innovation will be.
Ensure That You Have an Open Mind
Innovation is always changing market dynamics and how businesses operate. As an entrepreneur, to take part in the invention of something new, you need to have an open mind and be willing to experiment with new ideas and products in the market.
Innovation is undoubtedly a challenging process, and it has a significant risk of failure. It’s not a linear or sequential process, but a continuous process that involves experimentation and feedback. Before you think of inventing or improving your product or business model, you have to consider the following; the type of innovation, the resources you have, the feasibility of the invention, your current market dynamics, and how your customers will respond to your invention. You have to take an invention from just an idea and make it available for use by individuals, firms, and other organizations.
The successful implementation of technological innovation brings new and improved products and business models to the market, increase efficiency, and most importantly, improve your business profitability. As an entrepreneur, if you keep the things mentioned above in mind and focus on finding innovative ways to improve your business and customer experience, you’ll be able to meet your innovation goals.