Are you having difficulty keeping up with competition from your business competitors? Then you need to learn how to innovate in business.
Companies usually have a cautious approach to doing things differently.
This is because there’s a fear that customers and stakeholders won’t be receptive to the subsequent change.
Of course, accepting new ideas could be difficult for people who have worked in an industry for a long time.
Hence, brilliant employees often withhold their creative inputs to avoid “stirring up the pot.”
In addition, senior business leaders often use familiarity as a security blanket.
They tend to create an environment that doesn’t promote innovative thinking.
Although, business executives still agree that innovation is key to sustained success.
Innovation in business is, however, difficult to foster.
How to Innovate in Business
What Is Business Innovation?
Business innovation is the process of translating new ideas into something profitable.
This involves changing practices and processes to suit the demands of the marketplace.
A business innovation strategy serves as a catalyst for growth and keeps the company fresh over time.
Innovative ideas must meet a specific need.
Also, they should be easy to replicate at a practical cost.
The successful application of concepts relies on information, imagination, and initiative.
The goal of innovation in business is to derive greater value from existing resources.
Creativity in business is vital.
When you innovate in business, penetrating the market place becomes easier.
You also gain a foothold in developing markets.
This opens up bigger and better opportunities.
You can still rely on tried-and-tested methods.
However, you must also give new ideas room to grow.
If you fail to be innovative in business, you indirectly set an end date on your business.
You need the confidence to take risks to be an innovator.
You should be aware of several innovation techniques are at your disposal to address your business needs and goals.
Types of Innovation in Business
Having a breakthrough is not always necessary.
There are different innovation techniques that you can pursue, depending on the situation.
In general, innovation can either be evolutionary or revolutionary.
Evolutionary innovation is a continuous process associated with many incremental adjustments to existing products or services.
On the other hand, revolutionary innovation offers something totally new.
These broad categories branch into specific types of innovation in business.
Each has its own advantages and disadvantages.
1. Radical Innovation
This is perhaps the most celebrated type of innovation.
It involves the development of original ideas not founded on current products or services or operations.
Radical innovation, also known as breakthrough innovation, is usually associated with invention in business.
Breakthroughs often come from the creation of new technology.
Some examples include the Internet, transistors, and airplanes.
These discoveries gave birth to new markets and industries.
Tech and pharmaceutical businesses, in particular, depend on radical innovations.
That’s why they invest big money in innovation teams.
By creating a new product or service, companies have a higher potential to climb to the top.
Nevertheless, this also involves a higher level of risk.
Revolutionary products and technologies lead to the formation of new markets.
Business pioneers must weave through unfamiliar territory before they can accomplish success.
2. Incremental Innovation
All businesses engage in this innovation strategy in one form or another.
It involves small changes to an existing product or service.
Incremental innovation adds value to merchandise in the hope of keeping its position in the marketplace.
The added value may come from improving product performance or enhancing the customers’ experience.
Even more, you can remove undesirable features to save up on production costs.
It’s easier to make improvements than to innovate in business.
However, feedback is usually the driving force behind continuous innovation.
You need to have a good understanding of client satisfaction before making any updates on an existing product.
Traces of incremental innovation are found everywhere.
Take for instance your mobile phone.
It is a prime example of evolving technology.
Back in the days, it was only used for texting and calling.
However, now you can do everything with your phone, from playing games to paying the bills.
Then again, innovation doesn’t need to be that complex.
It could be as simple as enhancing the menu in your restaurant.
Additionally, it could simply be giving a discount on the price of an unpopular product in your online shop.
3. Open Innovation
Professor Henry Chesbrough of the University of California at Berkley is a pioneer of open invention.
He defines open innovation as the use of external and internal inputs to speed up internal innovation and widen the market for its use.
This approach allows companies to combine their resources with external cooperators.
In open innovation, research and development are not confined within the boundaries of a company.
You can use external resources and technology to boost your innovation initiatives.
At the same time, you can also make your innovation initiatives available to other organizations.
This could happen at any stage of product development.
The results can be sold to interested parties who don’t have the capacity or experience to develop the product into completion.
By opening the channels of knowledge, projects are accomplished with less time and cost.
Furthermore, it becomes easier to come up with solutions when more innovation teams contribute.
Even more, products and services are also made available to an expanded network.
Lego is one of the many companies that see reasons to innovate in business.
They put up the Lego Ideas website to give their patrons an opportunity to suggest new product concepts.
When an idea reaches a significant amount of support, they evaluate the design and produce it under the Lego Ideas label.
One of the hits was a Lego set based on the comedy TV series “The Big Bang Theory.”
4. Reverse Innovation
This strategy consists of creating innovations in developing countries and then finding a market for the same goods in richer nations.
Many companies focus on emerging economies such as China, India among others before launching their products globally.
The ‘reverse innovation’ concept was popularized by Vijay Govindarajan.
Vijay is the founding director of Tuck’s Center for Global Leadership.
Developing countries create inexpensive goods to address local needs.
If successful, they can be upgraded and sold in the developed world as low-cost alternatives.
The low-cost and low-fat dried noodles that Nestle first released in rural India is a good example of this kind of innovation.
The product was introduced in New Zealand and Australia as a healthy food choice.
Reverse innovation is also making waves in the healthcare system.
An American-based company, GE, invented the ultra-portable electrocardiogram (ECG) machine for doctors serving the remote areas of India and China.
The device is now sold in the United States.
In addition, it is 80% cheaper than similar products.
5. Disruptive Innovation
The term was coined by Clay Christensen.
He was a renowned business professor and author.
Disruptive innovation happens when a new technology or product is introduced to the market.
It starts out at the bottom of the heap but gradually displaces the competitors to end up at the top.
Affordability, simplicity, and accessibility are reasons for choosing any innovation over the status quo.
Disruptive innovations often start out in niche markets.
They may appear at first as unattractive and non-threatening to industry leaders.
After several iterations on the original design, they eventually disrupt the industry by catching the interest of the market’s majority.
For example, collaborative commerce such as Airbnb and Uber have reshaped the hospitality industry and taxi cab business, respectively.
Meanwhile, Netflix is a technology that radicalized the way people watch TV serials and movies.
The streaming site allows uninterrupted viewing at your own time.
Traditional television is even entering the online realm to keep with recent trends.
6. Architectural Innovation
Architectural innovation involves applying skills and technology within a different market.
It is profitable if the new market is receptive to innovation.
This strategy comes with low risks because it already relies on proven technology.
With just a few tweaks, you can reintroduce goods to match new market requirements.
The memory foam technology is among these architectural innovations.
Although it gained widespread success in the mattress business.
However, it was initially for aircraft cushions.
NASA’s Ames Research Center invented the foam in 1966 to improve aircraft safety.
The material reacts to applied pressure but returns to its original shape after contact.
There are no limitations on how to innovate in business.
You can use one or a combination of any of these innovation trends in business to achieve your own success.
Creating An Innovative Business Model
Innovations are not just about products and technology.
Markets are now facing changing customer behaviors and globalization.
Hence, business models also need to evolve.
Innovating the entire business model is more advantageous than just improving the merchandise.
The business model is a detailed plan of how a company generates its revenues.
It has to be both assessable and flexible.
Implementing conscious changes to the model may generate value for the company and its customers.
Important Facts About Business Model Innovation
Here are some important facts about business model innovation.
- Business models need to be changed at some point to ensure the company’s long term success and survival.
- Use Business models to analyze the level of customer satisfaction from the company.
- It’s not necessary for innovations to be radical.
The business and its market can also benefit from minor changes.
- Visualization tools make it easy to design, question, and revise your business models.
Some of the platforms which enable you to do these are the Business Model Canvas, 4-Dimension Concept, or BMI Pattern Cards.
- Test Business models with a prototype before full-scale implementation.
- You don’t need to think of totally new concepts to innovate.
It’s easier to combine existing ideas.
Your old business model can act as a starting point to build up a new one.
- Changing your business model doesn’t require a brand new technology or product.
You only need an innovative business model to profit from a breakthrough product.
- You have the freedom to operate multiple business models simultaneously.
Likewise, several business models can be effective in one industry.
Conclusively, business model innovations can impact an entire industry radically.
The 4-Dimensional Concept
A clear concept is handy when you’re developing a business model.
It has to describe and discuss the basic principles of how your company creates value.
Concepts vary in detail and complexity.
The simplest one is the 4-Dimensional Concept.
This was developed by the University of St. Gallen.
It addresses the following key components:
- WHO are the company’s target customers?
- WHAT can the customers and the partners in value creation benefit from the company?
- HOW will the company create and deliver this benefit?
- HOW will the company profit from this?
Any of these four dimensions can inspire innovative action.
The Hilti Corporation Case Study
This is what Hilti Corporation did to become successful.
In their old business model, they sold various drilling machines to construction companies.
Products were ordered according to different requirements.
This depended on the material and application.
Customers would give a hefty one-time payment in exchange for the tools.
Their initial business model failed to satisfy its customer’s essential needs.
Furthermore, problems in terms of reliability and cost began to surface.
The tools were sold individually.
Additionally, independent providers were in charge of their maintenance.
Service companies hardly responded fast to repairs.
Even more, tools usually got lost or stolen at construction sites.
Defective and missing tools resulted in construction delays, which caused contractors to lose money.
Hilti’s clients were also subjected to high purchase costs that discouraged them from making future transactions.
Specialized machines were even more expensive.
Based on these concerns, Hilti overhauled its business model.
They introduced a direct sales system to deal with customers’ needs on the spot.
This also ensured that all devices were fully functional.
The decentralized Hilti Centers provided clients with comprehensive services.
They provide repairs, maintenance, replacements, and machine security.
Hilti also established a Fleet Management Program that enabled the availability of the right tools at the time and place they were needed.
They started to engage in long-term maintenance contracts.
Also, instead of selling expensive equipment, Hilti implemented an easier leasing system for their clients.
These innovations led to stable customer relationships.
Today, at least 1 million Hilti units are under contract globally.
And their fleet management serves above 100,000 clients.
How To Start Innovating
Whether you’re running a start-up or an established enterprise, you need to learn how to innovate in business.
It is a business leader’s responsibility to build a working environment that supports innovation.
Get ideas flowing by using some of these suggestions.
1. Collect Feedback From Customers
Consumers have the most important opinions regarding a product or service.
After all, you are looking to win their satisfaction.
They can point out where you need to improve.
If you listen to them actively, you will begin to see opportunities for innovation.
2. Observe How The Market Uses Your Products
Customers often find new and unexpected ways of using products.
The clothing line Levi Strauss noticed that shoppers deliberately ripped their denim jeans at home.
This drove the brand to release a line of pre-ripped jeans.
3. Treat Complaints Constructively
Your clients may experience difficulties or inconveniences that you haven’t foreseen during product development.
You must be innovative to overcome these problems.
4. Apply Tried And Tested Ideas Gathered Elsewhere
Copy innovative concepts from other industries and see where they can help with your business.
For instance, Ford’s assembly line model was inspired by meat-packing houses in Chicago.
5. Encourage Your People To Speak Up
Employees are closer to real action since they have direct contact with your customers.
Push them to find better ways of doing things around the company.
You can even reward their good ideas.
Delta Airlines famously saved $1.4 million of capital expenditure by doing away with the lettuce in their inflight menu.
It was a member of the cabin crew who noticed that passengers don’t even eat the lettuce found at the base of salad and sandwich plates.
6. Collaborate With Firms Or Partners That Have A Different Set Of Skills
Sometimes, the lack of resources can obstruct your ability to innovate in business.
But, if you work with other entities that have a similar goal, real magic can happen.
For example, Mercedes’s collaboration with Swatch brought about Smart Cars.
7. Organize A Contest Cum Brainstorm Activity
You can let the public come up with new ideas for your business.
Set a clear goal.
Then, offer a prize to anyone with the best idea that will achieve that goal.
These competitions are particularly enticing to college students who are brimming with creativity.
8. Adapt A Product To A Different Market
Determine if your existing product can have an entirely different purpose.
For instance, De Beers found a new way to market diamonds aside their original use for industrial cutters
They introduced the trend of celebrating engagements with a diamond ring.
This opened up a lucrative market for them.
9. Take Advantage Of Social Networks
You can find innovative trends in business on sites like Facebook, Twitter or LinkedIn.
Final Words on How to Innovate in Business
So, innovating requires the infusion of creativity in business.
Conclusively, your imagination and willingness to take risks will determine which business innovation strategy you would adopt.