What Is Business Innovation and Why Is It Important?
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Innovation is an important component of the business world because it's what drives professionals to create new products, methods, services and standards that may affect the economy positively. Business innovation also helps ensure that a business stays competitive and acts as a leader in its industry. Understanding how business innovation works can help professionals implement it more effectively at work. In this article, we explain what business innovation is, why it's important and how it can benefit a company, then list industries that often use it and jobs that support it.
What is business innovation?
Business innovation is the process of generating new ideas for products, services, industry standards or company policies. Innovating means creating new or improved processes to achieve the same goals or set larger goals. For example, a company might innovate its injection mold process to revolutionize the process and make it more efficient, saving time and money. Innovation often benefits the entire industry, but sometimes only benefits one or a few companies. Innovation is often a goal for companies, because innovation can bring new customers, cement the company's place as an industry leader and genuinely improve people's lives.
Businesses innovate in a variety of ways. There are typically three kinds of innovation, including:
Revenue model innovation: Revenue model innovation that occurs when a company's main goal is to increase its revenue. Companies might focus on reducing costs and re-assessing the company's pricing strategy to find innovative ways to increase revenue.
Business model innovation: Business model innovation is innovating on the business side of the company. This could include forming new business relationships, outsourcing tasks to reduce costs or adopting new technology to reduce the need for human labor.
Industry model innovation: Industry model innovation is when a company enters an entirely new industry or creates one of its own for the purpose of innovation. This can generate new products, influence public opinion about the company and encourage steady growth.
Why is business innovation important?
Innovation can be critical to an organization and society because it:
One of the most important reasons to encourage innovation is that it can create new jobs. New jobs help encourage a healthier economy where more people are working and contributing to the larger economy. For example, if a company innovates its production process with a new kind of conveyor belt, they might create a maintenance position for that kind of belt, since it requires specialized knowledge to operate and maintain. Innovation is crucial to a healthier economy also because it helps encourage competition, which can further innovation and provide more options to consumers.
Encourages business growth
With innovative products or services, many businesses experience significant growth. Certain innovations may attract new customers or even potential investors for the company. Innovative products and services can often offer a significant return on initial investments, so businesses may increase their revenue and growth. Some businesses, like tech companies, rely on innovation to survive because technology constantly changes and evolves. Innovation is a necessity in the technology sector, especially because there is so much competition. It can help smaller startups attract investors and customer attention in an otherwise crowded industry.
Improves customer trust
Innovation can be a great way to improve customer trust in the company. Customers that see innovative efforts at their favorite companies may be more loyal to the brand and continue to buy its products. Innovation is a way for the business to show its customers that the money they spend on the company's products or services contributes to newer, better and safer products. Customers may be more trusting and willing to recommend a product that offers constant innovation and improvement even to established products.
Expands company capabilities
Innovation can create new tools, processes or methods that allow a business to expand its operations and potentially increase its revenue. For example, a steel plant might revolutionize the smelting process with a hotter, more efficient furnace, reducing processing time and increasing the company's steel output. The increased output can help reinforce trust between the steel manufacturer and its customers and can earn the company more money.
Benefits of business innovation
Business innovation offers many benefits, including:
One of the most important benefits of innovation is that it can increase a company's revenue. Improved products, processes or services can help reduce the company's overall costs, attract more customers, encourage more sales and improve customer confidence in the brand. Each of these factors may contribute to an increase in company revenue, which the business can use for further innovation, bonuses or wage increases or business expansion.
Innovation can also attract talented employees to an organization. Professionals with specific qualities or ideas typically want to work for a company that supports or encourages new ideas, so they might look for innovative businesses for jobs. A more talented and diverse workforce can help businesses expand their operations, increase customer confidence and even improve their competitive standing in their respective industry.
Innovation often focuses on making standard processes more efficient, which means they can achieve more in the same amount of time. Greater efficiency for a business can mean processing paperwork more quickly, reducing the costs of advertising or creating a production process that uses fewer raw materials. Increasing efficiency with innovation can allow companies to expand more quickly and potentially create a better work environment for their employees.
Related: What Is Innovation Management?
Improved brand recognition
An innovative brand may attract a lot of attention from industry competitors and the consumer. This increase in brand recognition can help companies establish a wider customer base and cement themselves as innovative leaders in an industry. With more attention and potentially more customers, companies ultimately earn more and have more money to re-invest in innovation. Many companies depend on innovation to continue to impress customers. For example, smartphone companies consistently update hardware and software to improve their brand recognition over competitors.
What industries commonly see business innovation?
Many industries typically see business innovation. Here are a few examples:
The tech industry is a common place for innovation, as technology constantly evolves and improves. Tech companies often base their success on the amount of innovation they can inspire in the market, and often, more innovative companies thrive. Customers typically expect innovation in technology as it becomes more and more crucial to everyday life.
Health care industry
Health care is an industry that also depends on innovation. As researchers learn more about the human body and anything that affects it, like viruses, diseases and trauma, new technology and methods emerge. For example, pharmaceutical research depends on innovation to reduce side effects and improve the efficacy of drugs and create new ones for new issues.
The automotive industry depends on innovation to create safer, more autonomous vehicles. Research helps automotive manufacturers design vehicles that can withstand impacts and alert drivers to changing road conditions and other potential hazards. Innovation also helps manufacturers increase their competitive advantage by outperforming the competition.
3 careers that support business innovation
Here are three careers that support business innovation. For the most up-to-date Indeed salaries, please click on the links below:
National average salary: $36,115 per year
Primary duties: Automotive production assemblers operate production machinery and follow specific procedures to assemble automotive parts and vehicles. They work as part of an assembly team and contribute to the innovation of the field by identifying more efficient processes, minimizing errors in production and assembling safer, more reliable parts and vehicles.
National average salary: $98,902 per year
Primary duties: Medical technologists work in a laboratory setting performing tests on bodily fluids and tissue samples and determine cell counts, blood type and alcohol or drug content in blood samples. Medical technologists contribute to innovation by identifying new diseases, pathogens or methods of identification and providing valuable research data for medical researchers and doctors.
Read more: Learn About Being a Medical Technologist
National average salary: $119,960 per year
Primary duties: Software engineers are technology professionals who design, create and test new software for a variety of industries. They contribute to innovation by designing newer, more efficient software, creating new programs to solve problems and identifying key errors in existing software or enhancing cybersecurity protections.
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