Importance of innovation in business: Innovation is the main and one of the most important factors behind the consistent success of the business. Learn in this essay in most important points, why innovation is important in business as an entrepreneur. Why it’s important in research, product development, marketing, customer support and to make a business successful.
Innovation is a solution to current and future business problems. Innovation brings excitement, new talent, a new experiment, economic benefit, and attracts new and existing customers to buy and exchange products/services features.
Innovation is the execution of a unique idea in the business model, business processes such as manufacturing, distribution, sales, planning, training, management, customer support, and profit. Innovation is the reason behind the growth of the business, startups, entrepreneurship, and anything that we do creatively in business.
Investors are ready to invest in new and old businesses. But they will invest in innovative products, solutions, and companies more than traditional businesses. It’s because innovation leads everyone to the future.
With the use of hybrid computers, robots, computers, the internet, digital marketing, machine learning, artificial intelligence innovation is much easier than before.
Businesses are changing currently. Customers’ behaviors and expectations are changing. Economic and political changes are happening. In this change, only innovation is the most important factor to remain successful, competitive, and profitable in business.
Customers are getting bored from using a product or service after a certain period of time. Their needs and priorities are changing. And it’s also the reason why after a certain period of time demand curve get slopes negatively. In this case, only innovation turns it again in a positive direction or growth.
1. Innovation is important to get new customers, grow the business and revenue:
When there are already many similar or the same products and services in the market then how you will get new customers. And why customers will start buying from you instead of buying from the current shop or businesses.
Even if they will, you will not get a big market share. You will get what left. That’s why innovation is important. Innovation in price, product, services, product packing, delivery, customer support, marketing and branding is important to attract, excited and to surprise the customers with the values.
And Elon Musk and his company (Tesla, SpaceX, and many others have an innovative vision. He is trying to achieve something that is impossible for others even to think. He created the demands and competition in the market. And through his business and market share, he is now the richest person in the world. While others are struggling in business. And the reason is simple “innovation and creativity” in culture, work environment, team building, customer selection, and the selection of technology.
You have to understand that if you’re in business to earn the money then a job is much better for you than a business. But if you’re in the business then as an entrepreneur you have to take the risk, innovate, think better and bigger for the customers and as well for the people who worked with you and support you.
Is it that easy? Are innovation and creativity being possible to implement in small businesses?
But to achieve exceptional results in business, you have to put exceptional inputs of time, resources, money, team and efforts.
For example, if you’re running a shop. The next innovative goal for you is to sell your products online.
After that, the next innovation for you is to automate the online business or online selling through technologies and teams.
Innovative mindset and creative thinking to run the business do not come in one day. It build-in you daily when you try to think and do new things. With new things, you take risks. When you take risks then you create an opportunity to grow your business. You might fail on 1st attempt. But then you try again. And you will keep doing it despite failure and success. And sooner it becomes your habit.
And the habit of growth and innovation will never be a bad thing.
2. Innovation is important to solve consumer problems:
If you’re looking for new business growth ideas, then you just have to think about the problems that people are getting in daily life and business. You can do something to solve that problem, or you do something to remove that problem forever by launching a new product.
It can be a big problem or it can be a small problem. To start a business, you don’t need a big idea but you just need a small idea. And it can be to help housewives in makeup, to help people to buy the best product, to help people to use certain technology, to help to reduce office costs, to help people to reduce dust problems, etc.
- For example, Air purifier, purify the air.
- Google Search helps to get and find whatever you want on the internet.
Every business start with a small idea or problem. But for that, you have to think innovatively. LCD light bulb was enough, but now we’re using LED bulbs. The problem was high consumption and bill and the innovation in LCD or Light Bulb helped to create LED Bulb.
The products and services that we’re using today, are not enough and perfect and nor they become.
It’s just simple: Problem – Innovation – Problem
Remember, innovation is also a problem in itself. For example, a social media networking website was an innovation and it connects us with known and unknown for personal updates.
But the way we use it created new problems:
- Privacy problem
- Time Wastage
- Distractions and depressions
- Too much data to consume.
- Fake News
- Lack of excitement
Now to solve these problems it needs innovation. If social media companies do it then it’s good and improves the customer experiences. But if not then someone else will create the new social network after identifying it.
Problems are the business. For example, online marketing and eCommerce is the biggest problem for small business owners. But for others, it’s innovation and online business models.
Now offline small business owners (sellers/shopkeepers) have two innovative options: They will start selling online and they will create something that will change people from eCommerce to their product/services.
3. Innovation is important to manage a talented and skilled workforce:
Highly talented and skilled people select companies and clients based on many things. They select those who have the potential to grow, who have enough funding with flexible working hours.
That’s why if you have the same business model or similar products or services that are already existed in the market then it’s tough for you to attract good talent and workforce. It’s because you have less chance for growth and to capture market share.
But you can solve this problem through innovation in hiring and team management:
You can hire people online or remote staff or freelance. It will be less costly.
You can speed up the work and execution by giving hourly jobs.
Now online hiring is an innovation in itself. If others have 10 employees offline, then your 5 employees online can compete with them.
But the important thing here is that you have to be innovative and have to provide flexibility, freedom and wealth for your team and management. And you have to inspire your team to work with you. It can be through regular training and development. You can train your workforce through online classes and training programs. And it will cost less and provide learning and growth opportunities for your employees. Similarly, you can create competition within a team or set the monthly or daily goals and for those who perform well, you can give the incentives.
To manage, communicate, and collaborate with the remote and onsite team you can use collaboration tools such as Slack, video conferencing. You can build a culture for improvement and innovation.
For example for hiring you can set goals:
1.) Can a candidate improve your current business, process, product, services?
2.) Can a candidate innovate or brings new ideas to the current products and services.
Now if you don’t get such candidates who fit in both innovation and improvement then you have to train them. Or you can teach or train your few high-performing members for innovation and creativity.
The point here is that you have to build a culture that is bringing innovation and improve the current product/services line.
4. Innovation breaks the monopoly:
Innovation in product/Pricing/Features: Innovation is important for the market. Innovation brings new products, services, pricing models to the market. That help to break the monopoly by a few companies and businesses. There are various strategies to break the monopoly and lead in the market. One that I am sharing with you is that bring some part of the product to the market instead of the complete product of a competitor.
For example, there is a graphics design software leading the 80% market. In the software, there are many features such as graphics design, photo-editing, website design, brochure design, animation, and many other things.
The software is targeting web and print markets and consumers. But the problem with the software is that it’s very highly-priced that low-income-level designers unable to pay for it. And many features in the software are not useable for that person. So here is the point of innovation. Innovation starts from here and it’s the best example for innovation especially in the IT industry.
Existed product: Priced e.g. $300 with all most all graphics design features. And renewal is necessary that is priced the same as the actual price $300.
Now the innovative idea is here:
Product A: Focused on Logo Design Features. Priced $20 and with $10 renewal. SAAS(Software as a service business model).
If there are 100000+ professionals around the world who use this software for logo design work then the gross income for sellers will be around $200000 per year. It can be priced at $20 for a single user.
It’s a great idea, in which software producers can focus more on logo design features and quality improvement. The profit can be higher in 2nd year if followed by the following conditions:
- Renewal after 12 months.
- New customers in 12 months.
- Updates and support.
Now the add-on (priced/free) innovation can be following for logo design:
– Logo design portal for Freelancers/Clients.
– Logo Design Course/Training (Free/Paid)
Now the same innovation idea is possible in many other features such as:
Product B: Focused on Photo Editing Features.
Product C: Focused on Vector-Based Graphics
Product D: Focused on Web Design/Apps Design
Now above is just an example of innovation and the benefits of doing this are the following:
1.) It will make break the monopoly of the market leader, no matter how strong the company is.
2.) It will bring new opportunities for employment.
3.) Product cost is now low so that every professional can acquire this.
4.) The profit from the market is divided now by 5-10 parties instead of 1.
Now it’s an open competition, where the consumer is king.
Now understand, why innovation is important to break the monopoly. And even market leaders can innovate the product/services by using similar innovative product strategies.
5. Innovation in pricing or revenue model makes product/services purchasable for every income level people:
I need to pay $500 each month for certain services in my business. As per the SAAS business model. No matter I use the product or not, I have to pay in all the conditions. Now in this condition, the customer looks like a slave of the IT company and customers need to pay each year $500.
Now, this price is suitable for many but not for all. But then here innovation starts in the business. The innovation in pricing can be by the same company or competitor. So let’s take an example of company B, how to capture the market through innovation in the pricing.
Company A is selling the product is $500 with a yearly renewal or repurchase rate of $500.
Now Company B can innovate with different pricing strategy who is getting less customer such as:
Company B can be priced as per the use of the product/services. And there are no renewal fees. The more people use the more they can pay and if they are not using they don’t need to pay.
How innovation makes a difference in business, Following are the examples:
Using the product of Company A:
- The software is used to create a $100 value.
- Used only in 30 days in all 365 days.
- I paid $500
- I need to pay $400 for repurchase or renewal after a year to continue.
So by using the product of Company A, the customers getting the non-transparent loss but companies keep earning a profit it’s because there is no other pricing option for the consumer and there is no transparency.
And it’s happening with many professionals and companies these days by using various IT-related or cloud computing services.
Now with Company B (Innovation/Startup/Idea)
Using the product of Company B:
- The software is used to create a $100 value.
- Used only in 30 days in all 365 days.
- I paid $500
- But my balance is $490. It means I can still use the product without paying. Just like we pay as per the duration of a mobile call.
- I need to pay for repurchase or renewal.
Now with Company C (Innovation/Startup/Idea)
Using the product of Company C:
- The software is used to create a $100 value.
- Used only in 30 days in all 365 days.
- I paid $50 once for 30 days.
- I don’t need to pay for repurchase or renewal.
- I will pay again when I need to use it.
So in this example, Company B, C or D, E can compete on pricing models and systems. And it highlights the importance of innovation in pricing the product/services.
The benefits can be following by innovation in pricing for customers:
1). The customer is satisfied and doesn’t feel cheated.
2.) The customer doesn’t have to pay $500 for $100 value work.
3.) Improvement in the speed of execution or use of the product.
4.) Option for marketing strategy in pricing for business.
That’s why innovation is important in business to compete with big brands and competitors and provide great value for customers.
6. Innovation in building the market that profits to all
Those markets don’t grow where everyone is selling the same or similar products. That’s why you can see in small cities and villages that markets don’t grow. And these markets are captures by bigger shopping malls or big bazaars. It one is the king in between 10 business, it’s because 1 is selling more and marketing more.
Now the innovation is important here to divide the profit or create an entry for more customers and businesses in the market:
In this case:
In Cloth Market A:
Business A: Selling all kinds of trousers.
business B: Selling all kind of Shirts
Business C: Selling all kinds of shoes.
Business D: Selling complete trending fashion style included hairdressing and makeup.
In the IT market B:
Business A: Selling Laptops
business B: Selling Computers
Business C: Selling CCTV Camera
Business D: Selling Accessories
Business E: Selling installation services
Business F: Selling Website Design Services
Business G: Selling basic computer courses
Now, this is an example. but the benefits are the following:
1) All businesses get income and customers and it’s a series or customer journey. It can be by one company in a mall or 3 businesses in the small market.
2). The customer gets all the solutions in one place.
3.) 1 Customer purchased items from all 10.
4.) Everyone is happy.
Else 1 business is making more profit and others are just there for the business adventure.
That’s why it’s important to build a market or think about innovation and product launching as per the market. In which the others don’t get affection from my presence and instead I can get benefits from all those that are already existed. That’s why innovation is important in business not only to grow business but to start a business.
7. Innovation in business creates opportunities for startups:
The success of one product creates add-on products. Google is the best example of this. Google Inc or parent company own google ads, google translator, Gmail, google trends, google news, google for education, google academy and google analytics and many other mobile apps and operating system along with search engines.
Now we can learn three ways for innovation from google:
- Create add-on products/services that add value. Such as Google Ads, google keyword planner, google trends, google analytics and google AdWords fundamentals is a group.
- The 2nd focuses on customers/users while thinking about innovation. Such as google assistant is a very great experience for those who can’t type for many reasons.
- Expand business, reduce risk, and over dependability on one product/services/business models. The investment in cloud computing/ cloud storage. Android and some of the latest such as in Google home hub, pixel slate, and Google car and hundreds of others.
Now today, due to the consistent thinking and execution of innovative ideas Google Inc or parent company Alphabet Inc. is stable and here in the market for the next 100 years. It’s because users/people are dependable on them for information and solutions.
If they thought that the search engine is enough then they can’t grow the business to this level like it’s today.
Still, they are walking towards success and investing in innovation after achieving a milestone.
That’s why innovation is important to expand the business. And business expands it creates opportunities for new people and startups. Such as Google Ads or PPC advertising services, online advertising and marketing and monetization methods.
You can say it’s about big business. But innovation is also important in small business. Innovation is important for almost every professional and human being. We can’t’ be the same all the time. And we’re not. We change as per the situation and demands.
Creativity and innovation are almost similar. Creativity is more original and it’s about a new invention that does not exist before. But recent innovations are mostly from the copy and paste or reinvention of the wheel in different colors, sizes, structures, prices. Each of today’s things connected with each other for profit-making.
So innovation is important in business to grow and to produce new solutions and ideas into the market that is valuable for customers and society. Tomorrow the new invention can be flying machines, robots in health management and search engine without links. And anything can be possible when someone thinks to grow, expand, start. Everyone (mostly leaders/business leaders/starters) has to think differently but the majority follow the working formulas then creativity and innovation.
8. From failure to success in business
Innovation is not only important when you’re successful in your business but very important when you’re failing.
For example, you’re making a marginal profit from 3 years and at the same cost. And when you make a change in pricing the marginal profits go even down.
But at the same time if instead of making a change in marketing, if you reduce the production cost, speed up the delivery and market or sell creatively by introducing a unique selling plan things can work and possibly grow the business.
This just an example, but what I mean here is that if you keep innovating and launching your new ideas even at the macro level, it will work.
And in the situation of loss, innovation and creativity is the only option to bounce back.
Innovation includes risks too, such as over innovation in the product can reduce the quality of the product. Such as today’s operating systems’ visibility and functionality are more complex than previous versions.
The SAAS cloud computing business model is innovative but it’s also negative and more profitable for companies than customers. And there is a higher possibility that it will fail or will take time to grow. It’s because the pricing model is monopolistic.
But whatever that is positive and negative is because of innovation and creativity. Technology has more disadvantages than advantages but still, everyone uses it and becoming slaves of artificial intelligence that have no moral, social, environmental values or humanity.
In conclusion, I can say that governments can increase GDP and Employment by creating innovative business policies. Innovative thinking in business leaders improves the living standard of societies. Innovation in IT can provide business opportunities for non-IT people. Innovation in education creates environment-friendly new business leaders and entrepreneurs. And innovation in training/skills improves speed in execution and quality in the business. Innovation in quality increases the demand and positions the brand in the market strongly That’s why innovation is important in business.
That’s what I know so far! I hope it will be helpful.