Today’s business environment is getting tougher by the day. Customers are demanding more and are becoming savvier, and competitors are always busy seeing who can outperform the other in order to gain the heart of the buying public. Any business that cannot meet up with this rush is definitely left by the wayside without a second thought.
This scenario paints a picture of why innovation is very essential to the success of any business endavour. But what in fact is innovation?
Innovation is the process of translating an idea or invention into a product or service that creates value for the company, and which customers would admire enough to pay for. In business, innovation often results when ideas are applied by the company in order to further satisfy the needs and expectations of the customers.
Innovation is all about a company staying relevant in the industry. Businesses are in a time of unprecedented change, and what may have helped an organization be successful in the past could potentially be the cause of their downfall in the future because tastes change all the time. To avoid this, companies need to adapt and evolve to meet the ever changing needs of their constituents.
To be called an innovation, an idea must be able to be reproduced at an economical cost and it must satisfy a specific need. Innovation can deliver significant benefits, and it is one of the critical skills for achieving success in any business. Innovation can help you solve problems, generate profit, increase your market share and edge out your competitors from the market.
A lot of entrepreneurs are quite reluctant to innovate their businesses because they think it would take a lot of company overhaul to achieve that, but in reality, innovation doesn’t have to be a world-changing breakthrough. It can involve simple, incremental improvements in a particular area of your company or the other.
If you are still wondering why you should go through all the hassles of innovation, here are a few ways innovation benefits an organization.
Table of Content
- BENEFITS OF INNOVATION
- Innovation improves productivity and reduces cost
- 2. Reduce waste and costs
- 3. Helps a company manufacture better quality products
- 4. Helps in building a beneficial product range
- 5. Boosts market position
- 6. Creates competitive advantage
- 7. Become more environmentally friendly
- 8. Improve customer relationships
- 9. Provide more added value
- 10. Improved staff retention
- 11. Improve employee relations
- 12. Economic viability
- 13. Brand Recognition
- 14. It helps an organization to lead its Industry
- 15. It creates employment opportunities
- 16. Improves the economy
- 17. Alleviate Social challenges
- 18. Improved health care
- 19. Achieves product differentiation
- 20. Improves customer loyalty
BENEFITS OF INNOVATION
Innovation improves productivity and reduces cost
When an entrepreneur finds out that it is losing much in running the business, innovation is the next thing that should come to mind. One of the main crux of innovation is to reduce unit costs. This can be achieved by improving the industry’s production capacity and/or flexibility of the business, to enable it to better exploit economies of scale.
2. Reduce waste and costs
Innovation can help a company reduce waste and cost of production. This is because innovative ideas can help fashion out ways a company can save more money or even provide ideas on how a company can make its supposed waste profitable. The goal of innovative ideas to constantly be on the lookout for ways to reduce waste for a company. Waste reduction can bring a host of benefits like lower production costs, better profit margins, improved customer service and increased competitiveness.
3. Helps a company manufacture better quality products
Customers are always looking for improved brands, and with innovation, a company can find out better ways of manufacturing a product or delivering a service. If these products and services are effectively marketed, it would result in higher sales and profits.
4. Helps in building a beneficial product range
One business that can definitely benefit from innovation is a business that has a limited product range. A broader product range provides an opportunity for higher sales and profits and also reduces the risk for shareholders. More products results in more sales and more sales results in more profits. If the innovation was all round, those new products would be manufactured at reduced costs.
5. Boosts market position
Innovation can help a company anticipate market changes more quickly and get ahead of the opportunities, so they are not forced to react to shifts. It can also help them to get differentiated from the competition. Such innovation can come from continuously analyzing market trends, listening to customers, suppliers and advisors, and studying what competitors are doing in order to spot opportunities, and jump on them.
6. Creates competitive advantage
Any company that innovates adds value to their offering by introducing fresh, bespoke and unique concepts that will drive success, and this indeed creates a competitive advantage for them in the industry. Innovation in business can help you to stay ahead of the competition as the market and trend continue to shift.
7. Become more environmentally friendly
Innovation might enable a business to reduce it carbon emissions, produce less waste or perhaps comply with changing product legislation. These legislations would enable businesses think of alternative ways to do things and as such come up with innovative ideas. Changes in laws often force businesses to innovate when they might not otherwise do so.
8. Improve customer relationships
An organization that fails to improve their products and services can put themselves at risk of losing customers to more innovative competitors. If you invest time and money in innovation, customers will notice and appreciate the extra value you’re bringing to them. That should translate into more sales. You can start with simple steps like regularly surveying customers to identify potential product improvements and setting up an innovation team to spearhead your efforts.
9. Provide more added value
Innovation when done well is a great way to establish a unique selling proposition for a product – something which the customer is prepared to pay more for and which helps a business differentiate itself from competitors. This Unique Selling Point would add more value to the company in the eyes of its customers and competitors.
10. Improved staff retention
This benefit may not always be obvious, but it is sure an offshoot of innovation in a business. Potential good quality recruits are often drawn to a business with a reputation for innovation. Innovative businesses have a reputation for being inspiring places to work.
11. Improve employee relations
An innovative workplace is stimulating for employees. Cultivating pride in your products and a desire for your company to be an industry leader has been noted to reduce workplace turnover and boost productivity. That can, in turn, lead to still more innovation success because employees are often a company’s best source of ideas.
12. Economic viability
When business executives and economists think about whether developing an innovation will be worthwhile, they tend to focus on the economic value of the outcome of the innovative process. This is because great innovations sell, and they could be the difference between a company flying high or fading off. Since innovation centrally involves problem solving, and customers would only buy into a product that solves some problems for them, so this then translates to increased income and profitability for the organization.
13. Brand Recognition
Because they have products that set them apart from others, innovative companies generally do not need to do an excess amount of advertising or branding to capture their target market. Instead, their name alone carries considerable weight in their industry and people cannot wait for their products to hit the market. Their name recognition generally sets them apart from other companies in the market, which means that they need to do very little to promote their products. Companies like Google, Apple, Nike, Fed ex etc are currently enjoying this advantage.
14. It helps an organization to lead its Industry
The creativity exhibited by innovative companies often puts them in positions of leadership within their respective industries. Apple, for example, regularly makes the news for its latest innovations which generally sets the bar for other similar products that are later developed by other companies trying to piggyback off of their success. By the time these companies finally manage to catch up, Apple and other companies taking a leadership role have created another innovative product to once again lead the way.
15. It creates employment opportunities
The success of a country is mostly measured by its employment capacity. A country struggling to provide employment opportunities for its citizens is not seen in a good economic light. On a large scale, innovation holds the power to create entire industries. Consider bio-medical and alternative energy and other such related industries. Jobs are being created in response to the growing demand for the innovations from these new and fast growing industries. If it weren’t for the innovations that created these industries, these jobs would not exist today. So, innovation helps a country provide employment for her citizens.
16. Improves the economy
It is a fact that innovation is the hidden force that keeps every country’s economy moving in the right direction. With an uncertain global economy, bringing out innovative products and services to market to others is the only way a country can boost its economic fortunes. Economists have calculated that approximately 50% of U.S. annual GDP growth is attributed to increases in innovation. America’s genius for innovation and entrepreneurial drive is well known to be the primary reason for America’s economic preeminence.
Innovation can help alleviate social challenges that encompass health and demographic challenges, social exclusion and inequalities, among others. As an example, innovation can help elderly individuals remain healthier, live independently and longer, and counteract the diminishing of physical capabilities that become more prevalent with age.
18. Improved health care
Healthy citizens have been equated to a healthy economy, because it is only when people are healthy and strong that they can work. Innovation provides more personal, predictive and preventive health care products that improve the quality of human health.
19. Achieves product differentiation
In economics and marketing, product differentiation is the process of distinguishing a product or service from others, to make it more attractive to a particular target market. This is another glaring benefit of innovation. Differentiation makes an everyday product more attractive to customers by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the product’s seller, as customers view these products as being unique or superior.
20. Improves customer loyalty
Customer loyalty occurs when a customer continues to buy the same products and services for an extended period of time. Customer loyalty can only come when customers appreciate your product or service. This is one of the benefits innovation accords an organisation. When a company is able to build strong customer loyalty, they are able to retain their customers or keep them coming back.