After OpenAI launched ChatGPT, Stability AI launched its Stable Diffusion, an AI image generator. Google released its chatbot, Bard, and China’s Baidu announced plans to unveil its chatbot, Ernie.
Competition is swift and stiff in the marketplace. Failing to embrace business innovation leads to falling off a cliff into a river, drowning, and never being heard of again.
If that’s not terror and frightening enough, replay the smartphone battle scenes: Apple versus Blackberry versus Nokia. Now, you have a clear picture of why you should innovate quickly.
Innovation cuts across every sector, including military, technology, world order, and business. However, this article will focus on leveraging the power of innovation in business and reaping the benefits.
What is Business innovation?
When organizations develop new and improved products or services to create value or improve revenue, that’s business innovation.
As little as making simple upgrades on existing products or as big as coming up with an entirely new product and market, the aim is to solve customers’ problems and make the product more efficient.
Business innovation produces growth, efficiency, productivity, profit, and positive change in their business.
To understand this concept better, you must know the three innovation types.
Types Of Innovation in Business
Product and Performance Innovation
Product and Performance Innovation focuses on a business creating a product from its core offering. It either improves its existing product to perform better or introduces a new product to the market.
The emphasis is on products and how they perform in the market.
For example, Apple improved the iPhone’s performance by upgrading it from 13 to 14. Uber has also developed new services like Uber Freight and Uber Eats.
Process Innovation
(A company designs a new way to be more efficient in its core business.) This may include improving the production process by adopting new and faster means to sustain production.
Introducing assembly lines to make production faster and lower costs is an example of industry process innovation. This leads to improved market prices of their products.
For example, Tesla selling its cars online is an innovation that breaks the supply chain, reduces prices, and forms a new way of interacting with customers.
Also, Amazon uses robots in its warehouse to make production faster and cheaper.
Business Model Innovation
Every business has a model of making a profit when it starts. Still, this (business innovation requires organizations to identify which processes, products, or services could be improved to boost the company’s profitability.)
Business models include Forming partnerships, outsourcing tasks, or introducing new technologies. There are many examples of Business model innovation, but Google and Twitter’s revenue growth after innovating their business models is staggering.
Google initially had a business model that negated ads, but it had to improve its business model sooner, and advertising became a major revenue source.
While X, formerly Twitter, shifted its business model from advertising to users to paying for verification. Subscription to this verification entitles the user to ad revenue.
Benefits of Business Innovation
Solves complex business problems
Every customer has a problem or need, and companies try to take advantage of this opportunity by solving their problem.
As the older problems are solved, new ones emerge, and the result is transforming your customers’ lives to near perfection.
There’s no better way to solve customer satisfaction and add value to a product than through innovation.
Adaptability overcomes challenges of change.
No one saw the pandemics coming or the war in Eastern Europe, and even if you’re sure World War III will happen, you can’t tell when unless you have a nuclear football in your hands.
However, you could be Dr. Doom, Peter Schiff, not Victor Von Doom, who can predict the next economic crisis and how much damage it’ll cause. Whichever way, we know that change in the market is constant and comes with challenges.
We must adapt to these changes and navigate through the challenges.
Innovation offers a winning strategy when the wave comes.
Competitive advantage separates your business from competitors.
There’s bound to be market competition in free economies.
As Clay Christensen said, “Every successful and established company will one day be overtaken and threatened by a revolutionary newcomer.” The only way to achieve or survive this prophecy is through business innovation.
Apple products have stood out for decades because of its competitive advantage.
And decades could become centuries if it maintains this advantage.
Over the years, a debate has ensued: Is Apple too big to fail? Will Apple be forgotten when it stops innovating its iPhone?
Somewhere within this article, the answer to those questions is given.
A company that innovates consistently will become ageless. But innovating is not recklessness; your product must appeal to your market audience, and that will give you an upper hand in the market.
Foster Growth and Efficiency
When you create value, you grow.
Productivity and performance are crucial to staying relevant, providing a means to save time and money.
Your business must have a growth strategy.
Brand Perception attracts employees and customers.
Who loves it when favorite brands come up with something new?
Every customer loves it.
Innovation is good for the brand. It proves customers’ loyalty.
This doesn’t just apply to customers but also to employees. Most talents in the automotive industry want to work for Tesla because of its innovative culture. It doesn’t matter how much they earn; they know they’ll have a chance to change the world.
Approaches To Business Innovation
Innovation starts with ideas but must proceed to examination, strategy, and execution.
Leaders or innovative entrepreneurs consider each idea’s viability, feasibility, and desirability. This process is called Design Thinking.
Innovation follows a thorough process because it must appeal to the market audience. You’re either like Apple’s CEO, Tim Cook, (who said, “Our whole role in life is to give you something you didn’t know you wanted. And then once you get it, you can’t imagine your life without it.”)
But we’ve seen companies take this risk, and it backfired either because the product was way ahead of its time or (the customers didn’t know why they needed it.)… NuvoMedia’s Rocket eBook is one good example.
So, except you have a bitten apple on your company’s logo, the best way is to clarify your customer’s problem through research and observation.
After pinpointing their key pain points:
- Frame the problem in a way that allows you to solve it.
- Come up with ideas that solve the problem.
- Explore the solutions generated during ideation until you’ve found the solution that addresses the problem.
- Communicate your developed ideas for adoption and track the performance after execution.
Why Companies Take Innovation Seriously
Al Ries and Jack Trout assert through their positioning paradigm that there’s only room for three products in a consumer’s head, and if your product isn’t one of them, then you must deposition one product to take that slot.
Just in case you’re lonely at the top because your current competitors are so dull that you’ve technically monopolized your industry. Then, it would help if you watched out for the villain paradigm. There’s competitive positioning in every villain paradigm.
A villain can arise from another product category altogether as an indirect competitor and disrupt the industry, displacing your business.
This played out in the smartphone industry when Apple’s iPhone displaced Blackberry and Nokia.
Threats are lurking everywhere; you can’t choose to be complacent but rather take innovation seriously.
Who drives innovation in a company?
Every company must have an innovative culture and environment. Moreover, it should be clearly stated who drives innovation in your company.
Sadly, Digital McKinsey research shows that a third of company executives do not know which leader is responsible for digital and technology functions within their business; there’s always a tussle between customer, technology, chief information, digital, data, digital transformation officers, and marketing.
Jason Dormieux says a successful CTO should take responsibility for driving business innovation. But he added, “Regardless of title, all companies need people whose obsession is around what products and services they can build to help their customers take advantage of the opportunities that this disruption brings.”
Mira Murati, now CTO of OpenAI, led the development of Tesla’s Model X before joining the AI research lab turned company in 2018. Her achievements in that role exemplify why you must fix an innovator in your company.
Establishing an innovation lab will drive business innovations. Data analytics and business intelligence can also drive discovery and innovation. An example is the IT department, which has close working relationships with every part of a business, allowing them to drive innovation and improve collaboration across the organization.
Your business can also opt for other Innovative business services, such as Estonian Business Innovation and Strategy and St Croix Valley Innovation Centre, which teaches small businesses how to innovate.
Bottom Line
Business innovation is doing something new that has not been seen before to solve a problem or reach new customers. It meets changing consumers’ demands and has the chance to change the world through our products by developing business innovation ideas.
But first, Businesses must take it seriously and create a system that encourages innovation, or they risk losing everything they’ve worked for in the long run.