Benefits of innovation

From CEOpedia | Management online

Innovation is a process of introducing something new, generating ideas, and implementation into a company's activities. Doing something new and outside of the box might seem risky and it is to some extent, but in today's world innovating is essential in the day-to-day operations of most organizations, especially to stay competitive. People come up with genius ideas every day, turning ideas in to new products or further developing already existing ones. Therefore, a much bigger risk for business is the lack of innovating.

Advantages of innovation in business

  1. Stay ahead of your competitors. In every industry the biggest threat to a company's growth and profitability is competition. The entrance of new competitors can be overwhelming in many markets as they grow and evolve. New customers is vital to the health of the business along with maintaining customer loyalty. Innovation is the key to keeping a business competitive regardless of the market. Creative thinking, improved products, new designs always draw people's attention. A good example of a business process innovation is Amazon Prime, as they are adding new customers to their base and their innovation has helped them to maintain customer loyalty.
  2. Marketing your business. Such aspects as brand image, reputation, business personality is important for attracting customers, partnerships, and collaborations with other companies. People generally forget the majority of advertisements and commercials, so innovative marketing gives a new and fresh way to remember something unique about the business and keep coming back to it when in need of a particular product or service.
  3. New business angle. Another benefit of innovation is an opportunity to look at difficult problems from a new angle, which allows to opportunity to solve the given issue. Maybe the answer lies just a little outside of the box and all that is needed is creative thinking. Maybe there is a better, more efficient, way of delivery, production process, operations management, storage or customer service.

Innovation in the workplace

Innovation in the workplace is becoming more and more mainstream in Europe according to the study conducted by Stan De Spiegelaere, Guy Van Gyes, and Geert Van Hootegem. They used the data from a large-scale Belgian employee level survey in five different industries and focused on the connection between mainstream innovation and workplace learning. Their research states that innovation from lower-level employees is a rare occurrence. Despite that fact, workplace learning, which consists job trainings and inhouse trainings, is potentially a strong factor of motivation for all types of employees. Additionally, the article notes that successfully developing and implementing innovation depends on various conditions. One of the most crucial is consistent involvement of every stakeholder whereas initiative should come from all hierarchical levels of the organization The study highlights three types of innovation: top-down innovation, bottom-up innovation, and employee driven innovation; a company will be more successful if they utilize more than one area of innovation. Employee driven innovation can be found in several different scenarios. First it is consistent with the bottom-up innovation, when an employee takes full initiative and takes over the innovation process and development as a whole. Secondly, employee driven innovation may be a situation where the efforts are divided, so the initial idea comes from the employee, but is further passed to managers, supervisors to introduce to the organization. The third type of employee driven innovation covers a case when the employees develop the idea, which came from the higher levels of the company, management for example. Further distinguishing factors between the several types of the third employee driven innovation are proposed in the research:

  1. Delegation - Management invites employees to take part in the innovation process, so generating ideas, developing them, testing and finally bringing into life. Higher levels of organization still stay in control of the process to a particular extent.
  2. Ideation - This type is limited to only suggesting ideas and giving personal opinions concerning workplace innovation to management. A classic example of that would be brainstorming.
  3. Execution - This type allows employees to introduce their innovative ideas on the work floor. Therefore, employees do not possess any influence on actual development of the innovation and final decisions, but it is a good way to change up work practices with a potential of further integrating innovations into the workplace.

Examples of Benefits of innovation

  • Increased Efficiency: Innovation enables companies to become more efficient. By introducing new technologies, processes, and systems, businesses can reduce costs, streamline operations, and increase productivity in their operations. For example, Amazon is known for its innovative approach to retail and e-commerce, which has enabled them to become one of the most successful companies in the world.
  • Improved Customer Service: Innovative processes and technologies can also help businesses improve customer service. By introducing automated systems, businesses can help customers find the products they need quickly and easily. For example, the online retail giant, Walmart, has developed an innovative mobile app that allows customers to shop from their smartphones.
  • New Revenue Streams: Innovative approaches can also help businesses open up new revenue streams. By introducing products and services that are different from what’s already on the market, businesses can set themselves apart and attract new customers. For example, Apple has successfully launched a line of wearable technology products, such as the Apple Watch, which has become a major source of revenue for the company.
  • Increased Competitiveness: Innovation can help businesses stay ahead of the competition. By continuously introducing new products and services that are better than the competition, businesses can ensure they remain competitive in their respective markets. For example, Uber has revolutionized the transportation industry by introducing an innovative ride sharing app that has disrupted the traditional taxi industry.

Limitations of Benefits of innovation

  • One of the limitations of the benefits of innovation is the cost. Generating new ideas and creating new products or services can be expensive. Companies must consider the potential return on investment to determine whether an innovation is worth the cost.
  • Another limitation is the risk of failure. Not all innovations are successful, and failure can be costly. Companies must carefully assess the potential risks and benefits of any innovation before deciding to move forward with it.
  • A third limitation is the lack of resources required to implement the innovation. Companies may not have the resources or personnel to put the innovation into practice. This can be a huge obstacle for companies that are trying to innovate.
  • Finally, there is the difficulty of staying ahead of the competition. When one company innovates, their competitors will often follow suit, making it more difficult for the innovating company to stay ahead of the curve.

Other approaches related to Benefits of innovation

In addition to introducing something new, there are several other approaches related to the benefits of innovation.

  • Utilizing Existing Resources: Innovation can help a business utilize existing resources more efficiently to create new products or services. This can help a business save costs and increase profits.
  • Employee Motivation: By introducing innovative ideas and processes, businesses can motivate their employees and create a more collaborative work environment.
  • Improving Relationships: Innovation can help businesses build better relationships with customers, suppliers, and partners by offering new products or services.
  • Adapting to Change: Innovation can help businesses adapt to changes in the market by offering new solutions. This can help businesses stay ahead of the competition.
  • Creating Value: Innovation can help businesses create value by offering new products or services that customers can benefit from.

In summary, innovation can help businesses introduce something new, utilize existing resources more efficiently, motivate employees, improve relationships, adapt to change, and create value. These approaches can help businesses stay competitive and increase their profits.

Conclusion

The benefits of innovation to any business far outweighs the risk required. In today's business world, innovations are not only beneficial but are crucial to keep the organization's customers and employees satisfied. Innovation can be a catalyst for growth and success of the business helping to adapt to a particular marketplace, lead the market in a new direction, and discover solutions.


Benefits of innovation — recommended articles
Radical innovation — Disruptive business model — Value innovation — Innovation and entrepreneurship — Types of innovation — Breakthrough innovation — Business model innovation — Competitive disadvantage — Brand innovation

References

Author: Daria Boiko, Kaleigh Krieger

Retrieved from "https://ceopedia.org/index.php?title=Benefits_of_innovation&oldid=89669"