Why Is Innovation Sometimes Necessary for Businesses
Around 62% of fast-growing businesses are willing to invest in initiatives that boost innovation. Not only that, but 84% of executives believe that innovation is crucial to their success.
What do these statistics show? Innovation is the foundation of your business’ long-term growth. It is necessary — not sometimes, but all the time. It boosts creativity, collaboration, and teamwork within your workforce, and gives your company a competitive edge in the market.
In this post, we will discuss all the reasons that make innovation a necessity for businesses.
What Is Innovation?
Innovation is defined as a process of creating or improving services, products, or processes to add value to the business. Innovations help solve problems in an efficient manner. It all starts with an idea, which is then converted into practical solutions to enhance business performance.
An innovation has many forms. It could be:
Products, such as the first iPhone in 2007. It was a phone, a music player, and a revolutionary device used for internet browsing.
Process, designed to enhance the production quality of a product or service. For instance, Toyota launched a production process focused on reducing waste and improving efficiency, resulting in the company becoming one of the top automakers in the world.
A business model, such as Airbnb, which was started off by two individuals, through renting out a lounge space with mattresses to people who couldn't get rooms in hotels.
Social practices, such as microfinance by Grameen Bank in Bangladesh, were launched to help poor people, especially women, through lending small loans to encourage them to start their own businesses.
Technology to design new opportunities or solve a problem. Electric cars by Tesla are a popular example that not only help reduce pollution but also transform the auto industry for the better.
Why Is Innovation Necessary At Times?
Innovation is more than just creating something unique and becoming popular. It is a process with a vision to help you evolve with emerging technologies and markets.
Gives You a Competitive Edge
Do you know why Nokia, unlike Apple, failed to evolve in the smartphone industry? The company that was once a global leader in the phone industry is now at the bottom of the innovative firms.
The reason? It couldn't innovate at the right time.
In 2014, Nokia sold its entire mobile phone business to Microsoft, effectively ending its status as a major player in the phone market.
Apple, on the other hand, started off with an iPhone that combined a phone, a music player, and a browsing device, making it a revolutionary invention. Today, the company has a vast product range, making it the third-largest company in the world by market capitalization.
Since markets evolve due to new technologies and changing customer preferences, companies that fail to innovate often see themselves falling behind.
Solves Emerging Problems
The world doesn't remain the same. Remember how the COVID-19 pandemic created a huge global health crisis?
However, the mRNA technology helped companies like Pfizer-BioNTech and Moderna develop vaccines that proved to be highly effective. These vaccines were developed in under a year to address this emerging crisis that no one had ever imagined would occur.
Reduces Costs
Innovations are essential for increasing efficiency and reducing costs, enabling organizations to accomplish more in less time. There are many companies, like Tesla, that have now integrated AI into their processes to enhance production speeds and reduce the likelihood of errors.
According to a report by McKinsey, innovative automation platforms can reduce operational costs by 30%.
Meets Consumer Needs and Expectations
In today’s world, consumers demand fast speed, personalized experiences, and good customer care. Achieving these and more is impossible without new ideas and innovations.
Consider Amazon as an example. The company continues to evolve with the help of AI. From features like one-click payment to personalized product recommendations, Amazon ensures that it meets customer expectations faster than anticipated.
Result? Amazon is the world’s largest online retailer with more than 310 million active users.
Drives Economic Growth
Companies that invest in innovation tend to experience faster economic growth than nations that don't.
South Korea has transformed from a war-torn country to a leading economy. How?
From its innovation in electronics and automotive (Hyundai) to building a strong technology infrastructure, South Korea has done it all to sustain itself as a global leader of innovators. South Korea secured the sixth spot in the Global Innovation Index 2024, ranking among 133 economies.
Creates a Strong Social Impact
Innovations are not just encouraged for profit purposes. Some inventions can have a significant social impact, supporting the underprivileged.
For instance, many organizations, such as WaterAid, have developed modern solar-powered water purification devices to enable rural African communities to access clean drinking water. These devices offer these services without the use of chemicals or electricity. While these devices are simple, they are innovative and life-changing for the masses.
How to Encourage Innovation
Innovation starts from the ground level. It is not created by accident but through following a proper mindset, creating a supportive environment, and elevating curiosity.
Begin by creating a safe space where everyone can communicate and generate ideas. Allow all employees to take their time off to think outside the box. You can follow the example of Google, which encourages employees to spend 20% of their time on passion projects.
Offer training and courses to encourage participants to ask questions and engage in discussions. Develop their curiosity through workshops and positive feedback.
Encourage collaboration by building diverse teams. You can also create spaces for people to share ideas casually.
Ensure that you set clear goals, but also give your employees some freedom to debate. You should also support trial and error to encourage the curation of creative solutions.
Finally, don't forget to reward your employees for their ideas. At the same time, accept their failures as learning opportunities for your company.
Wrapping Up
The importance of innovation in this changing world is undeniable. Innovation can help you meet consumer demands, outperform the competition, grow, and fulfill the social needs of society.
However, encouraging innovation is not as easy as it may seem. You should create a space to facilitate creative thinking and analysis before giving people the freedom to generate ideas.
Allow people to feel empowered to think differently so they can innovate with the aim of solving real problems. For more insights, check out Sheri Jacobs’ talks on innovation and change leadership.
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