Business innovation is an organization’s process for introducing new ideas, workflows, methodologies, services or products.
Innovation and creativity are often used synonymously. While similar, they’re not the same. Using creativity in business is important because it fosters unique ideas. This novelty is a key component of innovation. For an idea to be innovative, it must also be useful. Creative ideas don’t always lead to innovations because they don’t necessarily produce viable solutions to problems.
Simply put: Innovation is a product, service, business model, or strategy that’s both novel and useful. Innovations don’t have to be major breakthroughs in technology or new business models; they can be as simple as upgrades to a company’s customer service or features added to an existing product.
Stages of Business Innovation
Innovation’s requirements for novelty and usefulness call for navigating between concrete and abstract thinking. Introducing structure to innovation can guide this process.
- Clarify: The first stage of the process is clarifying a problem. This involves conducting research to empathize with your target audience. The goal is to identify their key pain points and frame the problem in a way that allows you to solve it.
- Ideate: The ideation stage involves generating ideas to solve the problem identified during research. Ideation challenges assumptions and overcomes biases to produce innovative ideas.
- Develop: The development stage involves exploring solutions generated during ideation. It emphasizes rapid prototyping to answer questions about a solution’s practicality and effectiveness.
- Implement: The final stage of the process is implementation. This stage involves communicating your developed idea to stakeholders to encourage its adoption.
1. Types of Business Innovation
Some of the main types of business innovations are:
1.1 Business Model Innovation
Business model innovation is when a company pioneers a new business model or type of business. For example, an e-commerce retailer that is one of the first pioneers of the digital ecosystem may have a business model where the company conducts its business via an e-commerce website. The company builds servers, digital infrastructure and physical warehouses, pioneering the retail and e-commerce industries to become one of the largest e-commerce and retail companies in the world. Innovating business models can help change the way business markets its products, earns its revenue and structures its internal operations.
1.2 Products and performance innovation
Products and performance innovation is when a business pioneers new products or improves the performance of a previous product. Customers often influence this kind of innovation, demanding changes to features or functionality of a product to make it safer, more affordable or reflective of its market price or to meet a specific need. Competition can also influence this kind of innovation, with companies focusing on creating the best possible products to separate themselves from competitors and attract new customers. This kind of innovation is common in business and typically influences much of the competition within an industry.
1.3 Process Innovation
Process innovation is when a company creates or improves processes for producing or delivering products and services or its customer service processes. This kind of innovation typically helps a company save money because it can focus on making certain processes more efficient or quicker. For example, a manufacturer might create a new process for molding plastic, which can save hours of molding time and make some of their products more affordable for customers while saving the company labor hours. Customer demand and company costs are typically the prime influencers of process innovation in a business.
1.4 Network Innovation
Network innovation is when a business changes, improves or creates a completely new method for networking and collaboration. Companies might look for specific partners or customers, creating the need for new or improved networking methods. For example, a company might decide to create a new career website to attract the kind of applicants it requires for certain positions. Changing the way people interact can help a business create more relationships, establish new professional connections in an industry and expand its available list of job candidates and contractors.
1.5 Marketing or sales innovation
Marketing or sales innovation is when a business pioneers how it markets its products and services. Since marketing is crucial to business operations, the marketing sector of a business is typically always innovating. Finding new ways to reach customers, leads and sales can be a great way for a business to earn extra revenue. For example, a company might create a new marketing technique using artificial intelligence that analyzes a customer’s purchase behaviors before showing them ads. This can help the company reach the right customers and limit ads to only relevant ads that might influence a purchase decision.
1.6 Technological innovation
Technological innovation is when a business creates a new kind of technology or improves or expands on an existing technology. Technological innovations can increase company sales, influence brand loyalty among customers and differentiate a business from its competitors. For example, consider technology companies that helped pioneer the use of home computers, eventually creating product lines that evolved through the years and depended on innovation to meet changing customer needs. Technological innovation can also help a company improve its workplace or processes, creating better, more efficient work environments.
2. Importance of Business Innovation
2.1 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.
2.2 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.
2.3 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.
2.4 Attract and retain top talent
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.
2.5 Differentiation
At the core, innovation is about doing something differently from everyone else operating in your space. If your organization is using innovation on its products, for example, then the goal is to develop or update the products until there is nothing else on the market like it. If your organization is using innovation on its processes, it’s because doing so will save you time, money, or other resources, and give you a competitive advantage over other companies stuck in their systems. In either scenario, your organization is taking the time to try something new because sticking to the status quo simply isn’t working.
While delivering value to your customers should always be a company’s main focus, doing so in a way that is memorable and different from everyone else can become a standout element of your brand identity and business strategy, as well.
