We know what can happen 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 them into relics. To stand out in a crowded market, successful business leaders can leverage innovation to keep up with evolving demand and stay relevant.
What Is Innovation in Business?
Innovation can be simply creating something new, usually a method, idea, or product. When companies employ business innovation, they're typically looking to:
- Implement new ideas
- Launch new products
- Update current products
- Streamline processes to make them more efficient or less costly
- Solve an existing business pain point
- Improve the customer experience
- Enact new workplace policies
Generally, 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. Rather, innovation can bring change that helps sustain business growth and revenue.
The Role of Innovation in Business
Cash flow is key to a company’s growth, but innovation is what allows new revenue streams to flow across a constantly evolving business landscape. For example, business innovation can help companies:
Stay 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 can allow business leaders to respond to trends by using the “buy, build, or partner” model, for instance. If a disruptive startup enters the market, a company may choose to either buy the startup, build a competitor themselves, or partner with the startup. This proactive approach to innovation not only can prepare companies to navigate disruptions but also can equip them with the strategic agility to turn potential threats into growth opportunities or even market leadership.
Improve their brand
These days, consumers often do their research before buying a product, so having a positive brand reputation is often vital. Innovative businesses utilize the right digital marketing strategies to authentically and seamlessly boost their online presence, such as through targeted social media campaigns, search engine optimization (SEO), and personalized content marketing. This way, if consumers are looking for key players in your industry, they can easily find you. Innovative businesses also may want to establish a reputation for being the best in the market, which means offering state-of-the-art products and services, demonstrating environmental stewardship, and showcasing commitment to social responsibility. By embodying these values, businesses can cultivate a positive brand reputation that resonates with consumers, driving loyalty and increasing sales.
Increase efficiency
Having an efficient business model can be more achievable with tech innovations. When business processes are streamlined with technology, for instance, companies can usually reduce expenses and time while increasing operational sustainability. These savings can then be reinvested into company growth, potentially spurring additional innovation, or passed on to the customer to offer not only a reliable product, but an affordable one.
Attract and retain top talent
Establishing your brand as innovative can encourage the best job applicants and then keep them committed to your business, giving you a strong competitive edge. But innovation isn’t just about cutting edge technology; it can also be about offering something new. According to the U.S. Chamber of Commerce, innovative benefits that surpass traditional offerings like paid time off, health insurance, and 401(k)s can attract and retain top talent. Innovative benefits, such as the flexibility to work any eight hours within a 6am to 7pm window, can give employees the ability to prioritize their personal life without being forced to take time off.
Types of Business Innovation
Innovation can be found in various aspects of a business, including products, business models, processes, methodologies, and even workplace culture. Here’s a look at several types of innovation in business:
Product innovation
For some businesses, product innovation is creating an entirely new product or service. That also can include new products or services that are 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 to keep consumers buying that product. But innovation can also be about improving existing products to solve problems or address unmet customer needs. For instance, a company might choose to make a certain product differently to increase durability.
Business model innovation
Innovative business models can include modern marketing, pricing, supply chain, and value creation strategies that meet consumer needs. For example, subscription clothing box companies allow consumers to order clothes online, try them on, return what they don’t want, and pay for what they keep. This innovative business model 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 in the banking industry. In the past, consumers had to go into a branch to access banking services. Now, they can do all of that from their phone. Depositing a paycheck or paying the dog walker can be done in a few clicks.
Delivery innovation
Delivery innovation can mean improving customer experience with faster product delivery, better response times, and increased communication options such as text updates at each stage of an order. It can also apply to intangible goods, like digital products and services. For example, innovation can affect how content, software updates, or services are delivered to the customer.
Organizational innovation
This form of business 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 to try new leadership styles, open lines of communication, and hear new ideas from overlooked voices in their workforce. They also may leverage tools or platforms that facilitate communication and collaboration across different departments and even geographical locations.
Social innovation
Social innovation can work to improve healthcare and benefits, offer financial wellness education, and evaluate fair wages to improve employee's overall quality of life. This also can include upholding social justice causes – such as diversity, equity, and inclusion campaigns – as both employees and consumers look to companies to take a stand on those issues.
The Takeaway
Today’s consumer shops smarter and has more choices than ever before. A brand needs to stand out among the competition. Innovation not only can boost a company’s bottom line, but it also can make your brand hard to ignore. When planning your business strategy, you can take the time to evaluate how your company can be innovative and stay ahead of the curve. Your customers – and industry competitors – are likely watching.
A version of this article was originally published on September 10, 2020.
Photo: Getty Images
