Innovation can change the trajectory of a company. Just ask Starbucks, whose employees developed the Frappuccino, one of its all-time best sellers. Like the Frappuccino, all business innovations change the way products, services, business models, or marketing strategies function. At times they may change not only the company where they originate but also their entire industry.
Forty percent of innovative businesses that introduced product innovations saw product-related cost savings as a result, and 20% of sales came from products new to the business or one of the business markets, according to the Survey of Innovation and Business Strategy (SIBS).
Companies that innovate empower employees to try something new, even if it’s just a small adjustment to a long-standing process that can save time or money. Those small changes can add up to business success, which is why innovation is more important than ever in 2024. Businesses face fierce competition and challenges like never before.
Here we explore what innovation is, how to embrace it, and the many benefits it yields.
What Does Real Innovation Look Like?
Innovation is setting into motion new processes or products in a way that positively impacts customers, the company, or both. Innovation is typically recognized in 3 major areas: business model, product, and marketing. What all of these types of innovation have in common is that the process is repeatable and scalable and has a significant impact on the business.
- Business model innovation is based on how a company operates. Innovation at this level can be risky if it changes fundamental ways in which the company creates revenue, but it can also have a big payoff when successful.
- Product innovation is creating a new offering, especially one that diverges considerably from what’s already on the market.
- Marketing innovation serves to increase market share or tap entirely new markets, including introducing new uses for existing products. It usually entails new ways for a company to engage with customers.
The following video explains factors that support business innovation:
Innovation Outcomes
Top-tier businesses have achieved their status by embracing innovation. Consider Apple, which disrupted the status quo many times over by releasing products like the iPhone, the iPad, and the Apple Watch. These are examples of the product innovation model, as well as the marketing model.
Or, consider Airbnb and Uber’s business models. These successful companies upended the way people think about transportation and travel accommodations, respectively, completely overhauling their industries.
One of the keys to innovation is the willingness to put ideas into action. Consider the example of Netflix, which bet people would be receptive to receiving movies in the mail. This innovative business model was so successful that it put less innovative competitors like Blockbuster out of business.
Companies that innovate benefit in numerous ways:
- Increased efficiency. Innovations made in everyday processes may not be glamorous but even small ones can save companies large sums of money.
- Brand recognition. When companies innovate products or services, or the way in which they’re delivered, they gain the reputation of having something unique to offer.
- Higher revenue. Companies that innovate are typically on the lookout for new ways to please customers. With customer experience becoming increasingly important, those who feel delighted at every touchpoint are likely to return and bring their friends with them.
How to Support Innovation
For employees to innovate, companies must support actions that lead to it. Returning to the Frappuccino example, this innovation was only possible because the team members who developed it were permitted to make and sell the drink locally to show its popularity. Management could see the real results and quickly embraced the product company-wide.
The best innovations come from all worker levels and savvy businesses include standard processes for exploring them. In fact, beyond just having innovation as something employees do, innovation-friendly companies build the process into part of who they are. Here are some ways they do it:
- Make it known that innovation is encouraged. Include the notion of innovation on the company website, in recruitment materials, and when onboarding new hires. Teach leaders to encourage team members to think outside what’s already being done and to speak up if they have ideas about different offerings or ways of doing things.
- Replace “failure” with “progress.” When team members do share their ideas, but those options don’t end up working out, don’t conceptualize the event as a failure. Instead, view it as progress toward understanding what works and what doesn’t, and getting ideas that might be modified into something better.
- Create innovation opportunities. Don’t just wait for innovation to happen. Encourage it with events like contests in which the creator or team of creators of the best idea gets a prize. Make sure each submission gets recognized to show that a variety of ideas are encouraged. Ask participants to write about their experience on a centralized communication platform.
- Provide innovation instruction. Don’t assume all team members know how to observe what’s happening around them and come up with new ideas as a result. Instead, use workshops and other learning opportunities to teach them how this process fits into their everyday routine.
- Show courage. By definition, an innovation must be implemented. Otherwise, it’s just a great idea. Make sure to deploy at least some of the ideas offered by team members, even if there is risk involved. Showing courage in the face of that risk will lead to both company and employee success.
More Than a Buzzword
Innovation is more than just a buzzword for businesses. It’s a concept that all companies should integrate into their cultures and plans for the future. Those that don’t can certainly survive, but those that do will truly thrive. Companies that innovate are leaders in their fields and examples that others will want to emulate. Those that encourage innovation are also the most likely to attract the best talent, ensuring ongoing success.
