We know what happens when companies aren't innovative. They may have been industry leaders decades ago, but their refusal to adapt to shifts in consumer behavior and technological advances may turn companies into relics. To stand out in a crowded market, successful business leaders require innovation to keep up with evolving demand and stay relevant.
Innovation is simply creating something new — usually a method, idea or product. When companies employ business innovation, they are looking to:
- Implement new ideas
- Launch new products
- Update current products, making them more efficient
- Streamline processes so they’re also more efficient
- Solve an existing business pain point
- Improve the customer experience
The ultimate goal of business innovation is to increase revenue, no matter what's happening in the market. Innovation is not about making small changes or simply using new technology just because it’s available; it's a change in a company’s core business that sustains its growth and revenue.
The role of innovation in business
Cash flow is obviously key to a company’s growth, but innovation is what allows new revenue streams to flow across a constantly evolving business landscape.
Staying ahead of disruption
Business innovation means keeping track of the market’s direction in response to potential disruptions or a change in consumer demand. Staying on top of consumer information allows business leaders to respond to trends by using the buy, build and partner model. If a startup is disrupting the market, a company can buy the startup, build it themselves or partner with the startup.
Improving your brand
These days, consumers do their research before buying a product, so having a positive brand reputation is vital. You need to utilize the right digital marketing strategies to boost your online presence; that way, if consumers are looking for key players in your industry, they can find you easily. You also need to establish a reputation for being the best in the market, which means striving for innovation — as well as being environmentally and socially conscious — which may help increase your brand visibility, resulting in more sales.
Increasing efficiency
Having an efficient business model is achievable with tech innovations. When business processes are streamlined with technology, they are less expensive, save time, and more sustainable. These savings can be reinvested into your company's growth or passed on to the customer, offering both an affordable and reliable product.
Companies that have a reputation for being innovative also get their pick in recruiting top international talent. Establishing your brand as innovative can encourage top talent to apply and remain committed to your business, giving you a strong competitive edge.
Types of Business Innovation
Companies have several options when it comes to innovation.
Product innovation
Product innovation is creating an entirely new product or service. It can also mean creating a new product or service that is adjacent to existing products — particularly competitor products. For example, a tech company may launch a new product line, perhaps a phone. Over the years, they may adapt or update the technology and improve the phone's software and hardware and keep consumers buying that product.
Business model innovation
Innovative business models include modern marketing, pricing, supply chain and value creation strategies that meet consumer needs. For example, subscription box companies allow consumers to order clothes online and try them on, then returning what doesn't look good and paying for what does. This meets a consumer need by offering the convenience of online shopping and the organic experience of a dressing room. Food subscription services are similar. Consumers can order online, follow instructions with a given set of ingredients, and cook a meal that brings the restaurant experience to their home.
Process innovation
Process innovation takes an existing process and makes it more efficient. A prime example of this is the banking industry. In the past, consumers had to go into a branch to access banking services; now, they have online banking, which can be accessed right from their phone. Depositing a paycheck or paying the dog walker only takes a few clicks.
Delivery innovation
Delivery innovation means improving customer experience with faster delivery and response times.
Organizational innovation
Organizational innovation leverages new ways to improve a company's organizational structure, making it more efficient and open to new ideas. A company may make changes to the traditional work hierarchy as a way to try new leadership methods, open lines of communication, and hear new ideas from overlooked voices in their workforce.
Environmental innovation
Environmental innovation is a hot topic for companies, as more companies cut down on business practices that are harsh for the planet. This includes reducing emissions, decreasing textile dye pollutants, improving recycling and reclaiming materials.
Social innovation
This is also a big area for companies right now. Social innovation works to improve healthcare and benefits, offer financial wellness education, and evaluate fair wages to improve employees' overall quality of life. This also includes upholding social justice causes — like equality campaigns — as both employees and consumers look to companies to take a stand on those issues.
Environmental and social innovations go hand-in-hand and aren’t always implemented to increase revenue. They’re often used to make important societal impacts; however, companies can benefit from increased brand awareness, which may also lead to more revenue.
Innovation is a Differentiator
Consumers shop smart and have a lot of choices, so a brand needs to stand out among the competition. Innovation not only boosts a company’s bottom line, but it also makes your brand hard to ignore. So when planning your business strategy, take the time to evaluate how your company can be innovative and stay ahead of the trend. Your customers — and the industry — are watching.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.