Innovation is the process of staying relevant in a business or any endeavor by always continually creating and implementing new ideas. It is simply the introduction of new things or methods. It is the process of generating creative incremental enhancements to something that is already existing to meet new requirements, unarticulated needs, or existing market needs. Those that innovate win. Those that fail not to lose. Innovation is the motivation that propels individuals and organizations to succeed.
“Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.” — Peter Drucker.
Stefan Lindegaard of Hypeinnovation.com highlighted some definition quotes that I will also love to call out here. They are:
Stephen Shapiro defines, “Very simply put, Innovation is about staying relevant. We are in a time of unprecedented change. As a result, what may have helped an organization succeed in the past could be the cause of their failure in the future. Companies need to adapt and evolve to meet the ever-changing needs of their constituents.” The keywords that highlight Innovation from this definition are: relevant, change, adapt, and needs. Hence, Innovation introduces what is relevant to address change as organizations adapt to their customers’ needs.
Kevin McFarthing defines Innovations as “The introduction of new products and services that add value to the organization.” The keywords that highlight the import of Innovation are—introduction, new, and value. Hence, Innovation introduces the new to add value. The value the organization adds will attract profit to the organization in the long run.
Paul Sloane defines Innovation as “Creativity is thinking of something new. Innovation is the implementation of something new.” The keywords in this definition are as follows: creativity, thinking, new, implementation. Hence, to innovate, you must think out something unique. To innovate, you must implement what you have thought out.
Types of Innovations
The pathway to Innovation and new ideas is not a one-way path. Various roads can lead to discoveries. The savvy innovator or entrepreneur in the business world can go through these different Innovation portals on their quest to deliver value in their respective fields. Whatever portal any organization or individual chooses is irrelevant. It all leads to every success of greater achievements, ceteris paribus. Innovation can take place in any of the three ways listed below.
#1. Incremental Innovation
Incremental Innovation consists of small but significant advances in products and services. Such small and significant improvements could be, for instance, new flavors, packaging improvements, supply chain augmentations, new sizing (e.g., larger/smaller), cost reductions, variation in weight (e.g., heavier/lighter), etc. We see such innovations daily in various business circles, and they help extend the product, service, and business life cycles and enhance profits for companies. They can be easily noticed and quickly communicated and with something new to grab consumer attention (e.g., change in the size of product packs, further improvements on certain food products, etc.). It is a step-by-step innovation process.
#2. Breakthrough Innovation
Breakthrough or disruptive Innovation is an immense change from the traditional way business is always done, giving consumers something demonstrably new. Disruptive Innovation stirs up the marketplace and brings a wow-factor to the consumers of such a product or even service. Breakthrough or disruptive Innovation produces a noticeable competitive edge for a while in the marketplace (e.g., manufacturing new car models, adding new features to mobile phones, etc.).
#3. Transformational Innovation
Transformational Innovation refers to but is not limited to the introduction of new technology or service that formulates a new industry that transforms the way we live and work. This kind of Innovation often eliminates existing industries or, at a minimum, exclusively modifies them (e.g., Artificial Intelligence (AI), Robots, etc.).
Benefits of Innovation
Innovation brings various benefits to the consumers and the organizations that are championing the shift. Innovation does not come empty-handed. Those that court it receive the sundry benefits that come with it. If harnessed correctly, companies shift into the gear of greater achievements and purpose. The various benefits of Innovation are what motivates organizations to invest in it. Some of the benefits of the discoveries that organizations make are as follows:
(a). Increase in Profit/Margins:
Organizations that make the right decision in releasing the right product at the right time stand the chance of making a lot of profit. It all hinges on making the right business decisions in satisfying a particular pain point at the right time. That makes all the difference that causes profits to scale up. Innovation keeps you profitable as a business.
(b). Product Differentiation:
Innovation gives organizations a chance to differentiate or multiply their growth opportunities via the introduction of various ranges of products and services. Product differentiation gives consumers options in their choice range of products and services.
(c). Satisfying Consumer Needs:
Companies innovate as a measure to satisfy the needs of the consumers. The demands of consumers shift all the time. Hence, in other to remain relevant in the marketplace, companies and organizations are bound to continue changing or innovating their products and services.
(d). Keeping or Increasing Market Quota:
The key to staying relevant in the marketplace hinges on maintaining or increasing your market quota or market share as an organization or business. For instance, Apple remains on the top of the list as a bestselling computer brand because they stay innovating regularly.
“Trust the young people; trust this generation’s Innovation. They’re making things, changing Innovation every day. And all the consumers are the same: they want new things, they want cheap things, they want good things, they want unique things. If we can create these kinds of things for consumers, they will come.” — Jack Ma.
(e). Securing a Strategic Market Position:
In conjunction with increased market share, new discoveries also help organizations achieve strategic market positioning. For instance, Amazon has a strategic market positioning as it leads in the E-Commerce world as the world’s most innovative and most profitable E-Commerce and Tech giant. Innovation is a fundamental factor that helps them stay on top.
(f). Use of New Business Opportunities:
Innovation provides more channels for business growth for organizations. For instance, businesses and organizations innovate to create new business outlets or opportunities to increase their profitability. It is particularly dicey for businesses and organizations to put their eggs in one basket in our day and time. For this reason, most companies always aim to diversify.
(g). Market Research and Development:
Innovation helps organizations expand the research and development of specific products and services that they offer. At times, these developments lead to further development initiatives in that particular niche. It establishes a chain reaction in the process of discovery. If they hit the jackpot in developing a killer product, it boosts the organization’s profitability.
(h). Increased Competitive Advantage:
Staying innovative gives organizations a competitive edge in the markets. Every organization or business wants to stay ahead of the competition. Innovation is the catalyst that proffers organizations this sort of advantage. It keeps organizations ahead, screaming to their competition, “Catch me if you can!”
Problems of Innovation
We have seen in the preceding paragraphs the pros or benefits of Innovation. In the same light, there are also some considerations or problems. However, the concept of Innovation in organizations is to stay optimistic and hope that the odds are always in your favor. However, it would be foolish to address the positives without taking some time to establish what could go wrong in Innovation. Hence, let us move forward and consider some of the cons of Innovation.
First, businesses risk ruining reputation if the new product is of poor quality. Hence, they must do their due diligence to ensure that the quality is topnotch. No organization ever wants to join the chronicles of flopped company products. Trust me, many of them listing them will form an article of its own. However, USA Today’s Op-Ed titled, “When product launches go awry: 50 worst product flops of all time,” does a great job with this listicle highlighting different company flops that never took flight.
Second, risk of transfer of intellectual property, trade secrets, or know-how. When Innovation is done in partnership with other organizations, there is a risk of transfer of intellectual property, trade secrets, or know-how. This can create a vulnerability to these trade secrets should they not be guarded well due to the merger. If leaked, competing companies could access valuable knowledge and transcendent advantage to compete fiercely in the marketplace.
Third, a company running out of money. A company can run out of money if they invest too much and don’t get products to market quickly. Startups can also run out of money if they don’t have enough money to infuse into their operation to keep their business afloat. Also, sitting on excess inventory is always a bad deal for any corporation. Less haste, less waste. Some companies that ran out of money are Panda TV, Arrivo, ReVision Optics, Beepi, Aquion Energy, to mention but a few. The CBI Insights’ “208 of the Biggest, Costliest Startup Failures of all Time” highlighted more companies that went defunct because of running out of money.
Fourth, unforeseen limitations can prevent organizations from innovating. It also becomes a problem when organizations can innovate; however, due to unexpected limitations, it bars them from the ability to innovate and scale-up. Such limitations could be a lack of adequate financial resources to achieve the scale they desire. For instance, there are times that entrepreneurs have great ideas that can take flight. However, due to inadequate funding, a health situation, or arising challenges, that stalls the idea from moving forward.
Fifth, spreading too thin too fast. Companies that spread too thin too fast can shipwreck their Innovation efforts. For instance, spreading too thin too fast can lead to an excessive focus on developing new products at the expense of quality. Marketing of existing products can negatively affect its image and profitability.
Why Companies Must Stay Innovative
A Ginni Rometty once quipped, “The only way you survive is to continuously transform into something else. It’s this idea of continuous transformation that makes you an innovation company.” In 2013 during the press conference to announce the mobile phone branch of NOKIA to be sold to Microsoft, Nokia CEO Stephen Elop ended his speech saying, “We didn’t do anything wrong, but somehow, we lost.” Well, the truth is hardwired into the fact of failing to innovate. If you fail to change, morph, to stay in pace with consumers’ changing needs, you will lose. To win in the marketplace, you must continue to be innovative, or else you will slowly drift back to the stone ages of competitiveness.
Consider the words of the late co-founder of Apple, Steve Jobs, during an interview. He said, “If we had done what the people wanted, we would have given them computers, but we didn’t, so we waited few years and gave them the next generation of computers.” How profound. Steve Jobs’ statement says all we need to know about Innovation, with the keyword there being “NEXT.” While Nokia kept doing more of the same thing, Apple studied the mobile phone markets and only made improvements on it; they didn’t invent or re-invent the phone. They just made extensive improvements to it. And today, Apple is one of the highest-selling phone brands globally—thanks to the sole power of Innovation. Nokia didn’t change, they didn’t transform, and they soon felt the ugly effect of not being innovative enough to survive the gruesome claws of the markets.
Innovation is the transcendent key to survive today’s highly demanding and competitive markets. Planning not to innovate is deliberately planning to fail. Please don’t become a Nokia that loses its groove and becomes a bought-over pet project of a giant (i.e., Microsoft). Embrace Innovation and change, and you will be on the upward trajectory of becoming a disruptive force in your operation market. Never forget this statement by Winston Churchill that “Without tradition, art is a flock of sheep without a shepherd. Without Innovation, it is a corpse.” Hence, if you fail to innovate, your idea is on its way to becoming a corpse and a failure of distinguished proportions. Innovate yesterday! Innovate today! Innovate tomorrow! By all means, continue to innovate.
How to Be Innovative
So far, we have seen what Innovation is from different angles. We have also seen the various types of Innovation—it can be incremental, disruptive, and transformational. We have seen the multiple benefits of Innovation—which primarily hinges on a continuous improvement and profitability platform. We have also seen some of the cons of Innovation. We have seen why companies should stay innovative—the consumer wants and demands are not static, so companies must innovate to stay abreast with the trends.
Okay, it’s time to innovate. It’s time to disrupt the marketplace with your new idea. But how? Where do you begin? What steps must you take to start the revolutionary trend that can transform the market? The rhetoric sage would rightly ask. To be innovative, you must be ready to embrace a new way of thinking. You must be prepared to adopt a new way of doing things. Here are some steps to becoming innovative.
First, analyze the market environment trends. For instance, you must first gain an overview of your industry of focus. For example, what are your customers’ wants and needs? Next, narrow and needle down on your target market. Then, know the competition—what are your competitor’s advancements and products? Finally, drill-down and establish your Innovation market entry price.
Second, consult with customers and employees for ideas. Where best to gain new ideas to launch you and your organization into a world of transformation than the customers? Take the time to sample your customers’ opinions via surveys research, experimental research, cohort studies, panel studies, etc. Learn from your customers how to improve the products and services you currently offer.
Third, be open to new ideas and be ready to adapt to change. Innovativeness requires that organizations be open to new ideas and be prepared to adapt to change to influence technological innovations. Organizations stuck in their old ways of doing things may end up like the Nokias of this world. To be innovative, you must be ready to adopt a new way of doing things! Old ways will never open new doors.
Fourth, become innovative by association. The law of association is beneficial in becoming innovative. For instance, if you are an entrepreneur, it would benefit you to move with great thinking people who are innovative, creative, and risk-takers. Ensure that you forge a value-added team or crew that is creative and innovative. It will also rub off on you.
“I believe you have to be willing to be misunderstood if you’re going to innovate. “— Jeff Bezos.
To ground your organization in Innovation, you must also endeavor to employ and build your team to solve problems using creative thinking. These steps on innovating are not exhaustive but a perfect place to start the process. There could be more ways on how to be innovative. Let us move forward to looking at more facts about the role of Innovation in business growth.
10 Facts About the Role of Innovation in Business Growth
Being innovative can be a success marker and a core determiner of business growth. An Adena Friedman once said that “New products, new markets, new investors, and new ways of doing things are the lifeblood of growth. And while each Innovation carries potential risk, businesses that don’t innovate will eventually diminish.” Innovation is the lifeblood of growth. Businesses that want to see change and profitability choose Innovation. Let us now consider ten facts about the role of Innovation in business growth.
#1. Innovation Creates a Domino Effect
One Innovation here inspires another there—it creates a domino effect. Have you ever noticed how every top-selling car and smartphone maker comes out with new models every time? The process of Innovation inspires other companies to think one step ahead by asking the burning question, “How can we be better?” With each Innovation by one company, another company somewhere is looking for how to better what that company has done—it sets off some change chain reaction—a domino effect of some sort. This process of coming up with new ideas every time affects the entire market, and in turn, one Innovation somewhere inspires another innovation elsewhere.
#2. Global Competition
Your competition isn’t always localized in today’s businesses, even if it is a million miles away. Thanks to globalization. Today, clients leverage the power of the Internet of Things (IoT) to search for better customer service, lower prices, and faster production, to mention but a few. Not embracing Innovation could make your business suffer immensely. The reason is that it is now accessible for people to know and reach out to competitors around the globe. Hence, Innovation boosts businesses’ growth globally and does not show any sign of tapering off soon.
#3. Attract the Best Workers
The human element is a fundamental factor in business growth. Versatile and well-versed people want to work for companies that are at the forefront of Innovation. You have no chance of attracting someone who will invent the next big thing or invention unless your company has a history of creating big things. Innovative companies attract innovative talent. This helps to foster the upward growth trajectory of the business. Innovation does not happen in a vacuum. People make Innovation happen!
#4. More for More
If a company can become more innovative, it will experience more growth. It gives them the edge and ability to stand out from the competition even more. It is a differentiation factor that gives them a competitive advantage and a chance to become a market leader in their niche. In so doing, they can meet customers’ needs in ways never imagined. It is a more for more scenario, a benefit of robust and golden proportions.
#5. Stand Out from Competitors
Innovation makes you stand out from the competition—Innovation gives you wings. The right kind of Innovation allows you to offer something unique to your customers. Top innovators take popular products in the market and make them even better suited for their consumers. Making such moves allows brands to stand out in the marketplace. This gives companies the chance to stand out from their competitors and makes it easy for companies to increase their revenue and profitability.
#6. All Businesses are Born Out of Innovation
There is nothing new to be invented because all that needs to be developed has already been made. What is going on today is re-invention—finding out new ways to make things better. It’s akin to the interlocking of similar gears that keeps the machinery of Innovation moving forward. As King Solomon of Israel once said that “There is nothing new under the sun. History merely repeats itself. Nothing is truly new; it has all been done or said before. What can you point to that is new? How do you know it didn’t exist long ages ago? We don’t remember what happened in those former times, and in the future generations, no one will remember what we have done back here.” Since this is the case, then every organization exists to make better already-existing inventions. One can say that all businesses are born out of Innovation.
#7. Meet Customer Needs
Innovation plays a core role in helping organizations meet customer needs. The needs of customers are changing daily, to say the very least. Innovators use algorithms to prognosticate changes in the marketplace and provide solutions before people even realize that they need them. You cannot meet the prolonged needs of your customer base unless you are willing to embrace Innovation. Choosing to remain dormant will lead to your business struggling and eventually folding-up if nothing is done to re-invent the status quo. You have to engineer new ideas that excite your customers.
#8. Immense Growth
Innovation makes the concept of business growth effortless, notwithstanding the size of the company. You can technically say that any corporation’s growth rate is directly proportional to its ability to innovate. The failure of a business entity to innovate is tantamount to failure. Failure to innovate is signing a Deathwish to become defunct eventually. Organizations that failed to innovate with the competition are soon run out of business or bought over by those that are innovating and changing with the trends in the marketplace. You might be a small startup now, but if you innovate, you can grow your business tremendously, even in a short time. Innovation will give you a boost; Innovation will provide you with wings to soar higher and higher.
#9. The “It” Company
Should it amaze you that heads are necessitated to turn when corporations innovate? Umm, no. I don’t think so. Everyone is definitely drawn to the success that spawns with Innovation. Because of this, job seekers looking at sundry opportunities to improve their careers look to the organic organizations that embrace Innovation. They are drawn to the change and the receptive ambiance of budding ideas that these organizations effuse. These organizations attract the crème de la crème of talents in the job market—they are talent magnets, to say the very least. Startup organizations show a heightened appeal because they are vanguards turning the traditional work model on its head. This new model to become leaders can come from distributed companies and the elimination of hierarchies. It becomes a win-win for the employer and employees as organizational morale and brand adoption balloons. Innovation delivers far-reaching benefits to your team, workplace, and brand. You quickly become the “It” Company—a company with je ne sais quoi, or the indefinable something that makes the extra organization special. And, in this highly connected world, it will keep you relevant, adaptive, and ahead of the game.
#10. The Key of Survival
To avoid going obsolete and moribund, Innovation is the most critical component for business survival in today’s highly demanding and competitive markets. Because of how volatile consumers’ needs are constantly changing, Innovation becomes the prime key to any business’s survival. The fact is that companies need to frequently adapt to the changing needs of consumers in other to stay alive and relevant. Failure to adapt is business cyanide that will cause certain death of the business. Businesses must adapt or die; that is the only way to stay relevant; that is the only way to stay alive and ahead in the business marketplace.
It’s time to Innovate—Birth an idea.
We have looked at the many facets of Innovation via this comprehensive listicle. Concerning types of Innovation, we have incremental, breakthrough or disruptive, and transformational Innovation. Innovation can be beneficial in various ways. It increases profit margins, creates an ability to differentiate products, satisfies consumer needs, maintains or increases the market quota, secures a strategic market position, has more channels for business growth, improves market research and development, and increases competitive advantage in the marketplace. With all these benefits, why would any organization not want to innovate? The benefits sure outweigh the considerations. Yes, there are some considerations.
What are some considerations of Innovation? First, your reputation is at risk if all goes wrong with the innovative process. Second, if not appropriately managed, trade secrets and organizations’ intellectual property may be at risk. Third, overspending on Innovation could also hurt the organization. Fourth, not having enough funds could also damage the organization that can innovate on the flip side. Finally, focusing on too much Innovation at the expense of quality products can hurt its image and profitability. Despite these considerations, it is still beneficial for companies to stay innovative to stay relevant and survive the ever-changing market landscape. Companies, to remain creative, must analyze market trends, harvest new ideas by consulting with consumers and employees, be adaptive to change, and don’t be too risk-averse.
Innovation plays a paramount role in business growth. First, it can lead to a chain reaction of sorts in the cycle of change—one Innovation inspires the next. Second, global competition balloons through Innovation. Third, organizations can grow their talent base through the magnetic pull it creates. Fourth, a win-win ambiance funnels-up through the creative spark—more Innovation, more growth. Fifth, organizations can separate themselves from the pack via Innovation. Sixth, it is the matrix of businesses. Seventh, it plays a core role in meeting customer needs. Eighth, it fosters growth in organizations. Ninth, it creates the company with an “it” factor. Finally, tenth, it is the key to survival.
“Without change, there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.” — William Pollard.
As we have stipulated above, we could espouse that there are technically no new inventions—everything that can be invented has been invented in a way. However, that doesn’t stop us from cudgeling our encephalic bundles in attempting to introduce something new—if it is genuinely unique. However, from an encouraging angle, we still have INNOVATION—the ability to make changes to things already established—finding new ways to do something—the ability to alter, the potential to disrupt. Consider that product or that service—study it deeply, ask questions if you must, and make it better than it already is. By all means, INNOVATE—it is the only way forward!