Without business innovation, businesses would be stuck. Innovation is what drives business and fuels competitiveness, often becoming an essential ingredient for success, especially in a market as saturated as today. Innovative businesses achieve competitive differentiation and improve their profitability.
|All You Need to Know About Business Innovation|
It is no coincidence that William Ford Jr., president of Ford Motor, recently announced that “innovation will be the compass that will mark the direction of the company” and that Jeffrey Immelt, president of General Electric, a company that has more than one hundred highly creative projects to boost growth, constantly mention the “Empire of Innovation”.
What is Business Innovation?
|What is Business Innovation?|
The business innovation is creating new value for customers and the company through creative changes in some of the dimensions of the enterprise system. It can involve both the development of new products and/or services and the improvement of existing technology in order to generate commercial value and solve the new demands that are generated.
This concept goes far beyond R & D because it does not only involve research and development, and is not limited to creating new products, but it entails a broader vision that can be extended to business management tools and the relationship with consumers or customers.
What identifies innovative companies?
The company directors must understand that business innovation goes beyond creating a new product, it is a new way of conceiving the business as a whole. Starbucks, for example, has not been able to get its customers to pay more for a cup of coffee because of its original flavor, but because it has been able to create a rewarding experience in their coffee shops. Dell has also not become the most successful computer manufacturer solely because of its investment in R & D, but making its products easier to use and innovating in its supply chain.
The innovative companies are aware that the key lies not only in inventing new products but to add value. They also develop a 360-degree vision that allows them to find new opportunities to innovate. The “Do it yourself” concept developed by The Home Depot is an excellent example of business innovation, thanks to which the company became the first DIY retailer in the world.
What types of business innovation exist?
1. Incremental innovation.
Business innovation does not necessarily mean creating a new product or service, you can focus on increasing the value of an existing product or service, either improve its performance or efficiency, adding features, or simply improving its design to make it more attractive.
2. Innovation of processes and/or services.
In this case, the improvement focuses on the process of manufacturing or distribution of the product, with the aim of facilitating the procedures or achieving a faster delivery that increases customer satisfaction. This is what Amazon has done by automating a large part of its warehouses in order to ensure faster delivery than its competitors.
3. Innovation of the business model.
It is about reinventing the business to provide a unique differential value and achieve greater profitability by attracting more customers. An iconic example is the “power for hours” concept of the aircraft engine manufacturer Rolls-Royce. Instead of buying the engine, airlines pay for hours of operation, so that the engines remain the property of Rolls-Royce, and maintenance and repair are at their expense. This business innovation has benefited Rolls Royce but it also helps airlines to be more competitive.
4. Frugal innovation
Sometimes the profitability of a company does not depend on increasing sales but on reducing its costs. This type of business innovation is very important because it focuses on doing more with less, a model that many startups follow to get the most out of their investment. It is also the concept behind guerrilla marketing: amplify the message by using creativity to minimize the costs of the campaign.
5. Ecological innovation
In a world where corporate social responsibility and eco-innovation gain prominence, innovative and responsible businesses have a competitive advantage. This type of business innovation refers to the redesign of the operation of the business or a part of it with the aim of minimizing its ecological footprint and remain profitable. This is what Levi Strauss has done with his Water Less process, thanks to which he has reduced the consumption of water in the manufacture of his jeans by up to 96%.
- Amazon is American electronic commerce and cloud computing company based in Seattle, Washington, that was founded by Jeff Bezos on July 5, 1994. (Reference: Wikipedia)
- Rolls-Royce Holdings is a British multinational public limited company incorporated in February 2011 that owns Rolls-Royce. Rolls-Royce is the world’s second-largest maker of aircraft engines and has major businesses in the marine propulsion and energy sectors. (Reference: Wikipedia)
- Guerrilla marketing is an advertisement strategy to promote products or services on the streets or other public places with little money. This involves getting the attention of the public. (Reference: Wikipedia)
- Levi Strauss was a German-American businessman who founded the first company to manufacture blue jeans. His firm of Levi Strauss & Co. began in 1847 in San Francisco, California. (Reference: Wikipedia)