‘What is innovation in business?’ This is one of the many things entrepreneurs and business owners try to do to add value to their businesses. While some may know the literal meaning of innovation, some may not.
Luckily, this article will help you better understand the concept of innovation in business.
Here, we will extensively discuss the meaning of innovation in business and everything you should know about this concept.
If you want to learn these, keep reading to the end.
Meaning of Innovation in Business – What is Innovation in Business
Innovation in business refers to how businesses or individuals in a business come up with brand-new ideas and products.
It is also the process of reconceptualising an already existing product or idea and approaching it in a different and new way.
So, if a company were to introduce a new product, then that company can be tagged as being innovative.
The main goal of innovation in any business is to revitalise the business by creating new values.
It also boosts the business’s productivity and growth.
It could be considered a failed innovative move if it fails to achieve all these.
Innovation Vs Creativity
Creativity is one word that pops up whenever the concept of innovation is explained.
It is nearly impossible to discuss innovation without mentioning creativity.
Some people use the word together, like “innovation and creativity”, while others use them interchangeably.
However, while creativity and innovation are somewhat similar, they are different and should be distinct.
Creativity is what births unique and new ideas.
Therefore, it is a major element of innovation; creative thoughts can be shaped into an innovative idea or product.
This is because creative ideas aren’t always functional.
You could come up with a great and unique idea, but this idea may lack certain factors that would make it functional.
However, innovative ideas have to be both new and useful.
So, when a creative idea lacking functionality is birthed, it may not solve the problem.
But then, it can be tweaked to provide a solution, and it then becomes an innovative idea.
Therefore, what often distinguishes creativity from innovation in most cases is usefulness.
Another thing you should know about business innovation is that it must be something other than a major breakthrough.
It can be as simple as upgrading how you do certain things in your business.
And this upgrade can take place in any aspect of your business.
For instance, let’s say you made a slight upgrade in your business’s customer care service; this can pass as innovation.
Types of Innovation -What is Innovation in Business
There are two types of innovation in business: sustaining and disruptive innovation.
Let’s take a closer look at them:
This type of innovation is usually applied by successful businesses looking to retain their positions in the market.
Sustaining innovation often enhances a company’s technologies and processes.
This is done to ensure the business’s product line keeps catering to the needs of the company’s existing clientele.
This innovation is used mainly by smaller businesses to challenge bigger ones and claim the lower segment of the market by making expensive products more affordable.
Disruptive innovation can be further classified into two groups, namely low-end and new market disruption.
These classifications are based on the market area in which the business is competing.
Low-end disruption is when a company enters and then claims a section at the bottom of the market using low-cost.
On the other hand, new-market disruption is when a company creates a new audience from an existing market by offering a cost-effective and more simple product.
You should note that innovation types are not restricted to companies based on their size or success rate.
A very successful business can also pursue disruptive innovation like a small business.
Most successful businesses tend to pursue both disruptive and sustaining innovation because, while they would like to retain their market positions, these businesses also crave growth.
Growth and competition often go arm-in-arm.
Why is Innovation Important in Business – What is Innovation in Business
There are so many reasons businesses pursue innovation.
Let’s look at some of the major advantages that make innovation so important in business.
Innovation Aids Growth
Your business may become stagnant when you continue on your path without thinking outside the box.
When this happens, it will only be a matter of time before the business folds up.
Luckily, there are several ways to grow a business, and innovation is among the best ways to grow rapidly and effectively scale a business.
You can grow your business through innovation by rebranding your business model, product, or service.
Innovation Helps Your Business Stand Out from the Competition
Innovation is sure to ensure your business stands out from the competition.
Most industries are saturated with several businesses offering the same kind of services or products.
But when you pursue innovation, your business can develop an innovative idea that will help distinguish your products and business from the rest.
Innovation is very important because your competitors continuously think of ways to improve their business.
And if you are not doing the same, you may find that your business is slowly but surely fading into the background.
Innovation Fosters Adaptability and Flexibility – What is Innovation in Business
The truth is, to survive in the business world, your business has to be adaptable.
As time goes on, many things would change; your customers’ wants, the economy, technology, politics, etc.
And all of these factors will impact your business in one way or the other.
If your business can’t adapt, it will likely crumble when all these changes come up.
When your business can come up with new and useful ideas, it will have a higher chance of staying relevant despite the changes in the business world.
This makes innovation very important in business because it makes your business more adaptable, which according to Forbes, is a vital key to success in business.
Business Innovation Models – What is Innovation in Business
Like the types of innovation, there are also different models of innovation.
This is because companies often have various reasons for pursuing innovation.
Some companies may pursue innovation to reassess their revenue generation process.
And another company may do the same because they want to venture into a new market or even create a new one.
The reasons often vary, but the reason is a major factor determining the innovation model that will be applied.
So, before starting any innovation process, you need first to understand its reason.
Once you know this, you can figure out which model will be best suitable.
Below, we will discuss three business innovation models to help you know the options available to you and to understand them better.
This way, you can make an informed decision.
This business innovation model involves identifying the areas of the business services, products, and processes that can be improved to increase profitability.
Innovation, in this case, can be getting a new partner, implementing new technologies, changing company culture, and outsourcing some tasks.
Revenue model innovation is typically used to increase the business’s revenue.
Here, innovation can be reevaluating the pricing strategy or reassessing the company’s services or products.
Industry Model – What is Innovation in Business
This is a very radical approach to innovation.
In this model, an entrepreneur might change to a new business entirely or divert to a different industry.
Design Thinking and Innovation – What is Innovation in Business
Design thinking is a phrase used to describe a human-centric mindset that focuses on providing solutions.
This mentality uses insights from research and observations to strategise and develop viable solutions for problems.
Design thinking is important for innovation because, for an idea to be innovative, it must be new and useful, meaning it must solve a problem.
Before a creative thought becomes an innovation, it must go through four stages.
Let’s take a look at these stages below.
Four Stages of Innovation – What is Innovation in Business
This is the research stage.
Here, you would identify and clarify the problem.
To do this, you would have to carry out customer-based research; this will help identify the customer’s pain points.
Knowing the customer’s pain point will make it easier to identify and frame the problem before providing a solution.
Once the problem has been clarified, the next thing would be to come up with ideas to solve the problem.
And this is what the ideate stage is all about.
This is where the business will develop innovative ideas that will likely solve the problem clarified in stage one.
This is the stage where development takes place.
Prototypes are made and used to gauge the idea’s functionality and effectiveness.
Implementing the idea is the final step once it has proven to be viable.
The team that came up with the innovative idea will communicate it to their superiors, who will then pass it on to the stakeholders.
As the business owner, you would then decide whether to implement the idea or not.
How to Create a Workplace that Fosters Innovation – What is Innovation in Business
Now that you have learned about innovation, you most likely want nothing more than to start an innovative process in your company.
To do this, you need to create a workplace that embraces and encourages innovation.
When you encourage your workforce to think innovatively, there won’t be anything holding them back from doing just that.
There are so many ways you can create a workplace environment that fosters innovation; let’s consider some of them below.
Collaboration is a necessary ingredient for innovation in the workplace.
When there is collaboration in the workplace, there will be unity among the workers.
Colleagues will work well together, and they will be more comfortable sharing ideas within themselves.
And when people share ideas, there is a higher chance of them coming up with great ideas.
Sharing good ideas will boost innovation.
Promoting workplace collaboration is a whole lot easier than you think.
The following are some of the best ways to promote workplace collaboration:
Create Opportunities that Will Help Your Employees Work Together
Collaboration is all about working together, so you need to create opportunities that would guarantee this among your employees.
Make them work in teams.
Create an opportunity that will make different teams or departments work together.
Hold sessions where your employees have to brainstorm together.
Promote Open Communication
Collaboration is impossible without proper communication.
This is why you should promote open communication between your employees.
The best way to do this is to lead by example.
Make your employees comfortable with communicating with you and their superiors.
Create a workplace where communication can easily flow from the top to bottom and vice versa.
Encourage your employees to share ideas and opinions and listen to others.
Reward Collaboration – What is Innovation in Business
Encourage workplace collaboration by rewarding those who work well with their colleagues.
When you implement this, other workers will be more inclined to work with their co-workers.
Ensure Your Employees Have Enough Time and Resources to be Innovative
Your employees need the resources and time that will allow them to be innovative.
And as the boss, you have to provide these things.
Time is an invaluable resource when it comes to business and innovation.
With enough time, your employees can think out of the box.
They’d be able to explore and test the ideas they come up with.
If you over-task your employees, they will not have time to think innovatively.
Aside from time, you should also be able to provide other resources to spur innovation within your workforce.
When your employees come up with an innovative idea, you should be able to provide the resources that they would use to test that idea.
If the resources needed are lacking, your workers won’t want to waste their time thinking about an idea that would never see the light of day.
Encourage Your Employees to Develop a Growth Mindset
As humans, we are only as great as our thoughts/mindsets.
If you always think down on yourself, you will indeed have low self-esteem.
The same goes for growth.
If you think that you cannot grow, then you won’t.
This is why the growth mindset is a must-have for everybody.
And this mindset is especially important when it comes to being innovative.
The growth mindset will let people know they can surpass their current capacities.
It will make them believe that anything is achievable as long as they are ready to do the work.
This is why to build an innovative workplace; you need to encourage this mindset among your employees.
When employees believe they can improve their skills and talents, they won’t mind taking risks and exploring new ideas.
Encourage Feedback in the Workplace – What is Innovation in Business
Being innovative can be a scary process for some people.
While some people are natural risk-takers and innovators, some would never go outside their comfort zone enough to be innovative.
People like this need a little push and a pat on the back to see their potential; feedback can be that little push.
Feedback is yet another necessary ingredient for innovation in the workplace.
When people receive feedback, they know what works and what needs improvement.
Also, knowing that the company acknowledges its ideas will make them more inclined to keep thinking.
Sadly, not a lot of workplaces encourage feedback, and this is often because of how challenging giving feedback is.
Some people may feel hurt or undervalued because of the feedback they get, even when there is no malicious intent behind the feedback.
So, be mindful of how you give feedback in the workplace.
When giving feedback, make your employees understand that you acknowledge and appreciate their efforts.
And that feedback does not mean they are not doing well; it’s only a means to make them perform optimally.
While encouraging feedback in the workplace may not be easy, you’d surely enjoy many benefits if you could build a workplace culture that encourages feedback.
Give Your Employees a Sense of Ownership
Many companies now encourage innovation by making their employees feel a sense of ownership.
This feeling will make the employees more interested in the company and its growth.
You can create this feeling in your employees by investing in them and welcoming innovative ideas.
You can even take it a step further and hire or develop intrapreneurs in your company.
Intrapreneurship can be great for your company if handled correctly.
Conclusion on What is Innovation in Business
Business innovation is the process of developing new ideas and products in an organisation.
This process is very important in business and can go a long way in promoting the growth of a business.
Hopefully, this article has helped you learn all you need to know about this process and how to pursue it in your business.