Entrepreneurs Answer the Question 'Why Is Innovation Important?'
BUSINESS NEWS DAILY
by Chad Brooks
Coming up with new ideas is essential to success. Learn how to tap into several innovation types.
Innovation is the process of modifying existing operations, products, or services to introduce new and improved offerings.
Creativity and brainstorming are key innovation factors, with creativity fueling new ideas during brainstorming sessions.
To encourage any of the five innovation types, empower your team, forge a collaborative work environment, and collect customer insights.
This article is for business owners and managers interested in fueling innovation in their organizations.
Every time your favorite brand rolls out a new product, that's innovation in action. Every time one of your vendors introduces a new billing system that streamlines your payments, that's also innovation.
Innovation doesn't have to be as game-changing as inventing the computer – in fact, you've probably been innovative many times throughout your life. This guide will explore the concept of innovation and show you how to innovate more consistently and conscientiously to improve your business's revenue.
What is innovation – and what is it not? One of the keys to business success is coming up with new ideas to keep operations, products and services fresh. Innovation is the process of bringing those ideas to fruition. Jacob Beckley, senior vice president of innovation at Fusion92, said that while innovation might have slightly different meanings depending on the industry, its core is universal. "[Innovation] embodies the improvement of something that has come before," Beckley said. "It is the evolution of convenience, efficiency, and effectiveness." According to Beckley, those who innovate best will ultimately have sustained entrepreneurial success.
"In the vast sea of innovation, companies that take the largest risk, close the biggest gaps, and identify the newest opportunities are rewarded with the title[s] of true innovators and leaders by their consumers and peers," he said. "These true innovators are setting themselves apart from any and all competition."
How does innovation differ from creativity and brainstorming? Innovation is about tweaking systems that are already faring well or pursuing related new opportunities, while creativity is the potential of your team's brainpower to come up with innovative ideas. Creativity is a learned skill you can harness to bring ideas to the table. Innovation entails all the steps you take to introduce these new directions into your offerings.
Another way to look at the difference between innovation and creativity lies in measurement. You can't quite measure creativity – it's about ideas and mental processes. But you can measure innovation by the number of products, services or operational changes to which creativity leads.
Brainstorming has the same relationship to innovation as it does to creativity. Brainstorming involves gathering many minds to generate a "brain dump" of ideas, many of which your team ultimately won't pursue. If creativity is the skill of coming up with ideas, then brainstorming is the act of generating ideas. Innovation begins when you take steps to turn your ideas into reality.
What are the types of innovation?
When trying to be innovative, businesses can choose from various strategies, each of which has advantages and disadvantages. Some of the different innovation process types businesses can employ include:
As coined by Henry Chesbrough, educational director of the Garwood Center for Corporate Innovation at Berkeley Haas, open innovation uses internal and external ideas to advance a company's operations.
"Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively," Chesbrough wrote in his book Open Innovation: Researching a New Paradigm (Oxford University Press, 2006). "[This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology."
Chesbrough believes open innovation is a more profitable way to innovate because, when done correctly, it can reduce costs, accelerate time to market, increase differentiation in the market and create new revenue streams.
As coined by professor, author, and entrepreneur Clayton Christensen, disruptive innovation is when new products or services start at the bottom of the marketplace but eventually move up and displace their competitors.
According to the Christensen Institute, the "theory explains the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost are the status quo. Initially, a disruptive innovation is formed in a niche market that may appear unattractive or inconsequential to industry incumbents, but eventually, the new product or idea completely redefines the industry."
Some examples of disruptive technology are the refrigerator being introduced to replace the icebox and mobile phones replacing home phones. Both products were not openly welcomed when they first hit the market, but over time, as they improved on their original designs, the products eventually took hold with consumers.
Reverse innovation is when products or services are developed first in developing nations. In an article for the Harvard Business Review, Vijay Govindarajan, co-author of Reverse Innovation, wrote, "At its core, reverse innovation describes solutions adopted first in poorer, emerging nations that subsequently – and disruptively – find a market in richer, developed nations."
Examples of reverse innovation include dried noodles that Nestle developed for use in India, which eventually became popular in Australia and New Zealand, and smaller-format Walmart stores, which initially were developed for use in Mexico but eventually became popular in the United States.
Incremental innovation is when companies make small changes to products and services to ensure their spot in the marketplace. Rather than changing the products or services completely, incremental innovation builds upon existing ones.
Examples of incremental innovation include men's razor blades, which started with one blade and now have three or four, and the automobile, which is consistently being updated with new features and technology.
Breakthrough innovation, also called "radical innovation," is developing entirely new ideas and concepts that don't build off existing products, services or operations. Often developed by research and development teams, breakthrough innovations can use new technology to climb to the top of burgeoning markets quickly. Examples of breakthrough innovations include the internet and transistors.
How to encourage innovation on your team
The problem is that too many businesses are trying to develop new ideas in ways that aren't productive, according to author Maria Ferrante-Schepis, a veteran in the insurance and financial services industry who now consults with Fortune 100 companies. In an interview with Business News Daily, Ferrante-Schepis said it can be hard to see a need and invent a way to fill that need when you've been inside one business or industry for a long time.
"You can't innovate from inside the [proverbial] jar, and if you aren't innovating, you're just waiting for the expiration date on your business," she said.
To innovate successfully, businesses must install the strategies that best fit their needs and goals. Here are four tips to help you and your team strategize for true innovation and turn knowledge into money.
1. Empower your team.
When your team feels empowered to contribute at work, they'll be more likely to share creative business ideas that could benefit your operations, products, or services. Empower your team members using fun employee engagement tactics that help them feel connected to your organization.
You can also give employees more flexibility and the power to solve problems however they please. Transparency from leadership and management – and a lack of bureaucracy that keeps your team overly reliant on you – can also help.
2. Prioritize collaboration over competition.
Though friendly workplace competition can be healthy, competing is almost always unwise when innovation is the goal. Employees competing with each other might not share potentially innovative ideas out of fear that others will steal them. In a collaborative environment with a culture of inclusion, this fear disappears and the ideas start flowing. Your next innovation may lay somewhere within these free-flowing ideas.
3. Don't overwork your team.
You can't have innovation without creativity, and you can't have creativity when you're trying to do everything at once, all the time. It's crucial not to overwork your team. A team member with too many tasks on their plate may become so focused on completing tasks that they lack the mental capacity for brainstorming. This blocked-off creativity does nothing for your innovation.
4. Listen to what people want.
Innovative ideas can also come from your customer base. Try conducting business surveys asking for customer input. Sending a text survey through one of the best text message marketing services is a quick and easy way to get feedback on what customers want.
Ask customers what they like about your products and what they would change. Perhaps their suggestions could inspire your next innovation. Then, you and your team can get right to work on a new opportunity knowing you already have an audience.