Why Is Innovation Important For Business?

Innovation – it’s a word that echoes through the corridors of corporate boardrooms, permeates the discussions of startups, and is the driving force behind the world’s most successful businesses. 

Even though most companies and startups out there are constantly trying to innovate, only a few are successful at embedding it into their firm’s operations. Which companies come to mind when you think of the word innovation? I would bet that Tesla would be one of the top 3 on everyone’s list for it. The market share that Tesla enjoys is the live proof of it. 

Have you ever stopped and wondered why that’s the case? What makes innovation so vital for businesses? What does it exactly mean to innovate? Let’s explore the term innovation in all its glory in this article. 

What does innovation mean?

Business innovation can be seen as the introduction of a novel way to do something. In every market segment, there will obviously be many players. But what sets them apart? If every company operates and behaves the same way, a natural question brews in the minds of all the founders. How do I gain a tangible advantage over my competitors? 

The answer to such questions lies at the heart of what innovation means and the pace of innovation execution relative to your business competitors. 

Business innovation can be formally defined as the process of implementing a new product, a service, an internal company growth strategy, or even a marketing method. When the world’s attention span is on a constant decline, the simple idea of creating shorts/reels for your company can make a drastic difference in your vs your competitors’ customer acquisition provided they’re still stuck using the old ways of doing things.  

Significance of Innovation

Just because innovation as a term seems to imply disruption, there is generally a notion of excessive pressure on the various teams to execute ‘innovation’ in their respective departments. It can get confusing. The teams might then just study up on their competitors, review and try to copy the new strategies employed by them. 

Regardless of all the effort it takes to make this happen, it still doesn’t come across as being innovative as novelty is a crucial aspect of it. Creative methods and strategies don’t generally mean being innovative. Leaders must create emphasis on studying problems associated with the firm and create tailored solutions. Even finding out a specific problem that is novel to your 

firm and addressing it can be construed as being innovative. 

We can characterize the significance of innovation in business as follows:

• Innovation drives Progress
• Innovation leads to Technology Adoption
• Innovation boosts Productivity
• Innovation fosters Adaptability
• Innovation empowers Leaders

Are there any ‘types’ of Innovation?

Of course, there are. Basically, there are two types of Innovation. 

Innovation that is Sustaining

This is when an existing company tries to better optimize its offerings and internal processes thereby sustaining healthy growth and maintaining a competitive edge with respect to competitors.

Innovation that is Disruptive

This is when smaller scaled startups try to disrupt a market segment where big players and industry leaders already exist. Startups clash with titans to disrupt the entire market segment or create an entirely new parallel category using disruptive innovation techniques. 

So, how can you ‘Innovate’?

Even though the process of innovation itself is subjective as there is a creative component to it, there is a fundamental series of steps that you can follow to incite innovation for your business!

Step(i)   Identify:

You need to first recognize the exact problem or process that you’re trying to form a solution on. What is the fundamental problem associated with it? And how it needs to be mitigated.

Having clarity of thought with respect to what problem your business needs to solve and which processes can be optimized to be more effective is definitely the first phase for executing your innovation plans. Talk to your customers. Understand what they’re struggling with. If your product/service is doing great, then have a chat about what more could you offer them. Document your research. 

Step(ii)   Ideate:

Now that you have identified the problem and are at the crux of the matter that needs optimization, figuring out how to is the next rational step. Sit with your team and brainstorm. Read the research and ensure everybody is on the same page with respect to the problem. Discuss potential solutions. The inherent assumptions that went into the design of the initial product can be challenged and real bias from customers POV can now be embedded into the future iterations. 

Step(iii)   Design:

So you have come up with a list of potential solutions. What now? Well, it’s time to assess how well each one of those solutions is performing with respect to addressing the problem. Rapid prototyping has never been easier. Evaluate how effective each of the solutions is and assess for practicality keeping implementation in mind. 

Step(iv)   Execute:

The hard part is now over. You’re at the light at the end of the tunnel. You have the solution with you. You know it works. All that’s left is to convince you that this is a positive change for the organization. Ensure to present facts and state clear objectives. What compelled you to take up this research and how much of the company resources can be saved or how much more potential revenue is to be made by adopting this change? And that’s it!

Closing Thoughts

Ultimately, innovation isn’t just about making noise; it’s about creating value. It’s about ensuring your business thrives, even in the face of uncertainty. So, if you’re wondering why innovation matters for business, remember this – it’s the compass that points toward a brighter future.