The business environment in which companies operate is constantly changing. If you don’t innovate, you will eventually lose business to better and smarter competitors. The rate at which this happens varies from industry to industry, but eventually all industries change, so if you are not innovating you are losing out to competitors who are.
Innovation in business leads to higher and more sustainable profitability, the ability to stay ahead of your competition and provides higher value to customers. It offers a way of meeting challenges both inside and outside your business. It enables businesses to compete effectively in the increasingly competitive global environment.
Unless innovation is part of your business, you will still be going to meetings on horses while your competitors are polishing their fleet of fuel-efficient hybrid cars.
Innovation starts with identifying opportunities that are not currently being exploited, either by yourself or by your competitors. This could be a problem or frustrations customers have with existing products or services, or in the way these products/services are made available to them. It could be that they now have greater expectations due to improved technology or improvements in other industries. Look at how the Internet has radically changed the retail and service sectors. Or how technological advances combined with increasing concern about the environment and related government legislation has changed the automotive and lighting industries.
The next stage is to identify new ideas that will exploit these opportunities: ideas for products, services, or new or improved processes. These could be radical new ideas, incremental changes to existing products, or exploitation of a brand new market.
The path from new ideas to successful exploitation can be a fraught, uncertain and financially expensive journey. How will your new idea fit with your existing business? Can you prevent your competitors finding out about your idea and get it to market first? Can you fund it? Do you have the necessary technical or business or operational skills? Can you make or produce it so it produces a profit in the right timescale? Many large businesses have R&D departments where the primary focus is to innovate. SMEs rarely have this luxury.
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