“Innovation” is the word on everyone’s lips, from government to entrepreneurs, users to the person on the street. So why is innovation so important for companies? Here’s a reminder!
1/ Increase your productivity
Your company can innovate on many levels: with products or services, sales, distribution methods, production methods, or even organizational methods. In any case, the purpose of innovation is to create value by doing something differently or creating something new.
2/ Find new markets
Innovation can respond to existing needs that have no satisfactory solution. By positioning yourself at the forefront of innovation, you won’t need to deal with other economic actors – at least at first – and will have free rein to design your offering, decide your prices, make a name for yourself and think about the next innovation!
3/ Get ahead of the competition
Want to shake off your competitors? Innovation is the way forward! For example, simplifying your production process by using new technologies might allow you to offer a more attractive sales price.
Being the first in your market to offer a new product/service will keep you one step ahead, something that is particularly helpful if you’re an agile SME and your competitors are large groups.
With a little imagination (and a good market research study) you can also find new fields of application for your innovation and expand you customer base.
4/ Obtain finance
Public funds for innovation have doubled over the last fifteen years, and companies and countries worldwide want to increase their productivity. Innovative projects benefit from numerous sources of start-up and business development funds such as loans, research tax credits, special statuses for innovative start-ups, etc.
5/ Develop brand image
Making it known that you innovate is positive for brand image. Wound dressings company Hansaplast discovered this after launching the first spray plaster onto the market. Hansaplast went from “forgotten brand” to being a dynamic company able to shake up a stagnant market sector. Also beneficial in terms of brand image are innovations that are environmentally friendly, socially responsible, or respect a certain ethic.
Convinced? Be careful though, innovation is only a key factor in your success once it’s found its market. Don’t forget to constantly tweak your strategy to respond to changes in the market. You need a secret weapon: the market research study!
A little overview of Innovation
At its most basic, innovation simply means finding new solutions. Several types of innovation exist, defined by their degree and impact:
– “Radical” innovations: a completely new product is created that has a profound effect on consumer habits and competition conditions. E.g. the invention of the train, invention of the airplane, etc.
– “Incremental” innovations: in this case, the innovation slightly improves a product/service, an economic model. The upgrade from the iPhone 5s to the iPhone 6 (changing its shape, addition of new features, etc.) is a perfect example of this.
– “Adjacent” innovations: a product (or technology) from another market is added to an existing product, or a product is given a new use, creating a new market. E.g. Dyson used the extraction system from a sawmill to create a bagless vacuum cleaner.
– “Breakthrough” innovations: offering an existing product or service at a lower cost with a simplified use. One well-known example was the arrival of “Free” onto the telecommunications market.