Business owners need to constantly innovate and develop new ideas in order to stay competitive and maintain their firms. Innovation can happen in many different areas of the business including technology, marketing, or management. It’s important for firms to ensure innovation isn’t just isolated to one area; after all, innovation should be an umbrella term for everything the company does. The most successful companies have these four key qualities: creativity, risk-taking, entrepreneurial spirit, and never settling for “good enough”.
What is a business innovation?
A business innovation is any new or revolutionary product or idea that changes an industry and makes it better. All companies are constantly trying to innovate, whether they are in the technology sector, or not. Business innovations expertly applied by Fintalent’s Business innovation Consultants, can be used to improve what your company offers its customers as well as expand into new areas of the market. It can help keep your company relevant and profitable.
Three Approaches to Business Innovation
The value-based approach
In this view, value can either be captured by the firm itself or be passed on to those who will positively benefit from the innovation, such as the consumers or clients of the firm. Firms seek to innovate in order to create new product and service offerings with higher perceived value rather than simply lower price points. This approach was labeled as “value-based” or quantitative and assumed firms must focus on increasing innovativeness in order to create superiority over others. Value-based innovation is often described by Fagerberg as a combination of “recipe driven and radical innovation”. According to this definition, recipe driven innovation represents a minor modification to an existing product or process, such as the development of an additional flavor for the same type of soft drink. Radical innovation represents an overhaul or overhauls that change the fundamental identity of the company, such as when Ford introduced its first line of automobiles powered by an internal combustion engine.
The customer-based approach
This approach was first developed by Edward Deming and is named after his work in Japan. It is described as “value-driven” or qualitative and assumes firms must focus on creating superior products, services, processes and/or value to their customers. In contrast to the “value-based” view of innovation, the customer-based view focuses on how the firm can serve its clients or customers better. The customer-based view focuses on what clients want, not what a firm can charge for a product or service. The main reason some companies choose this approach is because they believe that using this perspective will lead to more profitable markets. However, this approach is only one of three in the customer-based model. This is because some innovations may be value-driven or cost-driven and do not account for the actual desires of customers.
The structure-based approach
This approaches focuses on how companies can effectively structure their businesses in order to be most competitive. It argues that it is important to have a competitive organization that can compete and win against rivals. This approach is also known as market-based or process-based. The focus of this approach is on the way firms organize their businesses, what core competencies they must have and how they must exhibit those competencies to produce competitive advantage. Most firms choose one of these approaches, however there are some firms that will consider all three.
Types of Business Innovation
There are many ways to innovate a business, and some companies choose to focus on a specific area. Here is an overview of the main types of innovation.
Business Model Innovation – A new way to run your company. Often referred to as disruptive innovation. It can include putting forth a new business model or revising an existing one. That is why some people also refer to this type of business innovation as a “disruptive” innovation. Disruptive vs Transformative – Which Is Better?
Product Innovation – This refers to any change in the actual product, such as adding new features or improving overall functionality. Generally this type of innovation could also be called product enhancement. Conversely, it could be referred to as redesigning a product.
Business Process Innovation – This refers to any change to the way you do business. It can extend beyond simply a process or system which needs to be improved – it can include an entire new way of doing business that was previously not done before. This type of innovation is often called re-engineering processes or operations within an organization. It could also refer to re-designing processes or systems within an organization.
Brand-New Product Creation – This involves the creation of a brand new product from scratch, rather then improving an already existing product that already exists in the market place (for example: adding new features). This type of innovation is often referred to as a new product, new service or brand-new service.
Merging – This type of business innovation occurs when two existing companies come together to create a new company.
While it isn’t always easy to clearly distinguish between the different types of innovation described above, disruptive innovation is often used interchangeably with all of them. Both words are used often in the same context (for example, when giving a presentation). So it may be a good idea to really think through what these two words mean and how they are being used.
Contrary to common belief, disruptive innovation isn’t necessarily something that is new or revolutionary. Instead, it is any innovation that creates a new market and turns an old industry upside down. It refers to any innovation that changes the paradigm of an industry and improves things for everyone. Examples include creating a better mousetrap, inventing or improving the light bulb, developing a self-sustaining engine or discovering the cure for cancer.
How to Innovate
Executives from all over the world are aiming to create innovate businesses. Some companies may focus on one particular type of innovation – whereas others go for all of them at once. Regardless of what you decide to do, here are some useful tips on how to tackle business innovations.
- Understand the Incumbent Business Model
If you want to create a notable business innovation, spend time analyzing the market to figure out how things are done currently and why they are done this way. Spend time thinking about what is working in the market place, and why. Think about which parts of your industry have hard barriers of entry for new competitors, and which products have no barriers of entry (for example: information technology or internet businesses). Seek out innovation opportunities by spending time researching your industry.
- Research and Analyze the Competition
In order to create a new business innovation, you must first know exactly how your competition is doing it. This type of research will help you to figure out what else needs to be done to innovate your industry better. Finding out about their new products, or their marketing strategies can be very useful sources of information that may help you create something new and improve upon existing business practice!
- Make Sure You Can Change the Culture of Your Company
Sometimes it is difficult to know if the company is committed to making the change or not. In order to be successful, make sure that you can show that your company is willing and able to make radical changes in its culture. This is essential to any business innovation since it shows that you are committed to making the changes necessary.
- Test Your Ideas with your Customers
Before launching a new product or service, test out your idea with potential customers. Test it out in different ways – don’t just assume that what you want will work in this market, instead realize that its success will be subject to the tests and implementation of new ideas. Remember also, these are people who have a stake in your company’s success too – so be sure to address their concerns and feelings (both positive and negative). Listening to what people say about your company is often the best way to understand their needs and make improvements on their behalf!
- Create a Market for Your Product – then Create Another
Choose your market carefully and then create the demand for your product. Do as much as you can to increase demand if necessary, but don’t get too far ahead of yourself. Make sure that no matter what, you have something to sell at the end of the process. Then, once there is an established demand for your product or service, think about how to improve upon it and make something better. Remember that the new and improved version of your product will be even more valuable if you can create a market out of nothing!
- Test out Different Approaches to Innovation
Before you start trying out new ideas, find out as many variables as you can. This will help you to test and discover the best approach to creating a new product or service. Find out what works, and think carefully about how to stay with it or expand upon that initial idea in order to create something even better! Most importantly: remember that trying new things is always part of innovation and experimentation – so never be afraid of trying something new!
- Make Sure You Have Time for Creation
No matter what business you are in, having time for creation will be essential. Take time to think over your idea, try it out and watch how it performs in the market place. Then, make any necessary changes as you progress through the process. In this way you will create something that will work to your advantage.
- Make Sure You have a Plan for Getting Things Done
In order to be successful in the creation process, you must have a plan or strategy for implementing your new ideas into reality. If a company can’t create and innovate quickly enough, then there is little chance of its success – because innovation takes time! Think about how you are going to take on the challenges before you and use all of your resources in order to make that happen!
- Keep Moving Forward
Innovation is a never-ending process and you must remember that you are moving forward with it! There are many factors that can affect your progress and your ability to get things done, including the economy, marketing strategies and competition – but regardless of your current situation, you can use these opportunities for growth and improvement. Because of this, it is best to not get too stressed out – because a little stress won’t stop you from innovating!
- Go Back to the Beginning If Necessary
If something goes wrong with an idea or a product, then go back to the beginning again! Remember: innovation is not perfection. Even if something gets dumped on consumers there is always room for improvement. If a product is not working out, adjust it in such a way that it will work better. If an idea falls through, then start from scratch. Think about what went wrong and what worked – because these elements can help you move forward in order to create something new!
As you can see, business innovation takes time and patience. It is an important part of the ever-changing business culture. However, even though business innovations are constantly on the move — people must be able to adapt to those changes in order to succeed with them!