The successful exploitation of new ideas is crucial to a business being able to improve its processes, bring new and improved products and services to market, increase its efficiency and, most importantly, improve its profitability.
Marketplaces – whether local, regional, national or global – are becoming highly competitive. Competition has increased as a result of wider access to new technologies and the increased trading and knowledge-sharing opportunities offered by the Internet.
This guide explains how you can make innovation a key business process and outlines the different approaches you can take. It gives you advice on planning for innovation and creating the right business environment to develop your ideas. It also outlines the help and support available to innovative businesses.
- The business case for innovation
- Approaches to innovation
- Planning innovation
- Encourage innovation in your business
- Funding innovation
The Business Case For Innovation
It is important to be clear about the difference between invention and innovation. Invention is a new idea. Innovation is the commercial application and successful exploitation of the idea.
Fundamentally, innovation means introducing something new into your business. This could be:
- improving or replacing business processes to increase efficiency and productivity, or to enable the business to extend the range or quality of existing products and/or services
- developing entirely new and improved products and services – often to meet rapidly changing customer or consumer demands or needs
- adding value to existing products, services or markets to differentiate the business from its competitors and increase the perceived value to the customers and markets
Innovation can mean a single major breakthrough – e.g. a totally new product or service. However, it can also be a series of small, incremental changes.
Continuing with “The Business Case for Innovation”
Whatever form it takes, innovation is a creative process. The ideas may come from:
- inside the business, e.g. from employees, managers or in-house research and development work
- outside the business, e.g. suppliers, customers, media reports, market research published by another organization, or universities and other sources of new technologies
Success comes from filtering those ideas, identifying those that the business will focus on and applying resources to exploit them.
Introducing innovation can help you to:
- improve productivity
- reduce costs
- be more competitive
- build the value of your brand
- establish new partnerships and relationships
- increase turnover and improve profitability
Businesses that fail to innovate run the risk of:
- losing market share to competitors
- falling productivity and efficiency
- losing key staff
- experiencing steadily reducing margins and profit
- going out of business
Approaches to Innovation
Innovation in your business can mean introducing new or improved products, services or processes.
Analyze the marketplace: There’s no point considering innovation in a vacuum. To move your business forward, study your marketplace and understand how innovation can add value to your customers.
You can identify opportunities for innovation by adapting your product or service to the way your marketplace is changing. For example, if you’re a specialist hamburger manufacturer, you might consider lowering the fat content in your burgers to appeal to the health-conscious consumer.
- You could also develop your business by identifying a completely new product. For example, you could start producing vegetarian as well as meat burgers.
- You could innovate by introducing new technology, techniques or working practices – perhaps using better processes to give a more consistent quality of product.
If research shows people have less time to go to the stores, you could overhaul your distribution processes, offering customers a home-delivery service, possibly tied in with online and telephone ordering.
If your main competitor’s products have a reputation for being cheap and cheerful, rather than trying to undercut them on price you could innovate by revamping your marketing to emphasize the quality of your merchandise – and consider charging a premium for them.