Innovation is critical to success essay

Entrepreneurs Answer the Question: ‘Why Is Innovation Important’

One of the keys to any successful business is being able to come up with new ideas to keep operations, products and services fresh. The process of bringing those ideas to reality is called innovation. While thinking up new ideas is one step of the process, businesses have a much greater task in trying to turn that into an actual product or service that will benefit customers.

In an article he wrote for BusinessNewsDaily, Fusion92 vice president of innovation Jacob Beckley said while innovation might have slightly different meanings depending on the industry, its core is universal.

«It embodies the improvement of something that has come before,» Beckley wrote. «It is the evolution of convenience, efficiencyand effectiveness.»

The companies that do this best, according to Beckley, are the ones that will ultimately have sustained success.

«In the vast sea of innovation, companies that take the largest risk, close the biggest gaps and identify the newest opportunities are rewarded with the title of true innovators and leaders by their consumers and peers,» he said. «These true innovators are setting themselves apart from any and all competition.»

The majority of business professionals agree that innovation is critical to their success. A recent study by Accenture revealed thatmore than 90 percent of executives believe long-term success of their organization’s strategy depends on their ability to develop new ideas.

Despite its importance, research also shows that most employees feel their organization isn’t doing enough to foster innovation. The Accenture study found a decline in the satisfaction with innovation performance over the past three years, while a different by study by Deloitte Touche Tohmatsu Limited discovered that just one quarter of millennial employees think business leaders are doing enough to encourage practices that foster the development of new ideas.

The problem is that too many businesses are trying to develop new ideas in ways that aren’t productive, according to author Maria Ferrante-Schepis, a veteran in the insurance and financialservices industry who now consults Fortune 100 companies. In an interview with BusinessNewsDaily, the Ferrante-Schepis argues that it can be hard to see a need and invent a way to fill that need when you’ve been inside one business or industry for a long time.

«You can’t innovate from inside the [proverbial] jar, and if you aren’t innovating, you’re just waiting for the expiration date on your business,» Ferrante-Schepis said.

In order to successfully innovate, businesses need to install the strategies that best fit their needs and goals.

Types of innovation

When trying to be innovative, businesses can choose from a variety of different strategies. Each offers advantages and disadvantages. Among the different types of innovation processes business can employ:

Open: Originated by Henry Chesbrough, a professor at University of California at Berkley and executive director for the Center for Open Innovation. Open innovation is when companies use internal and external ideas to help advance their operations. «Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively,» Chesbrough wrote in his book «Open Innovation: Researching a New Paradigm» (Oxford University press 2006). «[This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.» Chesbrough believes open innovation is a more profitable way to innovate, because when done correctly it has the potential to reduce costs, accelerate time to market, increase differentiation in the market and create new revenue streams.

Disruptive: Coined by professor, author and entrepreneur Clay Christensen. Disruptive innovation is when new products or services start out at the bottom of the marketplace but end up eventually moving up and displacing their competitors. According to the Clayton Christensen Institute for Disruptive Innovation, the «theoryexplains the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost are the status quo. Initially, a disruptive innovation is formed in a niche market that may appear unattractive or inconsequential to industry incumbents, but eventually the new product or idea completely redefines the industry.» Examples of disruptive technology include the refrigerator being introduced as a replacement for the icebox and mobile phones being developed as a replacement for home phones. Both products were not highly welcomed when they first hit the market, but over time, as they improved on the original designs, the products eventually took hold with consumers.

Reverse: Reverse innovation is when products or services are developed first for use in developing nations. In an article for the Harvard Business Review, Vijay Govindarajan, author of «Reverse Innovation» (HBR Press, 2012) wrote, «at its core, reverse innovation describes solutions adopted first in poorer, emerging nations that subsequently — and disruptively — find a market in richer, developed nations.» Examples of reverse innovation include dried noodles that Nestle developed for use in India that eventually became popular in Australia and New Zealand, and smaller format Wal-Mart stores, which originally were developed for use in Mexico, but eventually became popular in the United States as well.

Incremental: Incremental innovation is when companies make small changes to products and services to ensure they keep their spot in the marketplace. Rather than changing the products or services completely, incremental innovation simply builds upon what already exists. Examples of incremental innovation include men’s razor blades, which started with one blade and now have three or four, and the automobile, which is consistently being updated with new features and technology.

Breakthrough: Breakthrough innovation, also commonly referred to as radical innovation, is developing completely new ideas and concepts that don’t build off any existing products, servicers or operations. Often developed by research and development teams, breakthrough innovations often use new technology as a way to quickly climb to the top of new markets. Examples of the breakthrough innovations include the Internet and transistors.

Innovation is critical to success essay

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AXD Technologies is a business development company focused on the mobile and digital sector in Africa. We deliver commercial due diligence for investors and companies planning investment.

We also offer growth advice for start-ups, scaling companies and older companies planning re-invention.

Innovation defined: New, useful, real and critical to long-term success

Find out how industry experts define innovation and why they believe it’s critical to every company’s long-term success.

Innovation. Every company wants it. Entire books have been written about it. Scores of business consultants make their living off it. And the press are always applying it as a label to whatever product, company, or idea is hot at the moment. But the use of the term ‘innovation’ to describe so many different things has pushed the concept dangerously close to becoming nothing more than an overused corporate buzzword with no real meaning. And meaning matters.

Knowing the definition of a concept gives us a target at which to aim our efforts. Without a clear understanding of what ‘innovation’ actually is, we won’t know how to get there, how to measure our progress toward the destination, or even what the destination looks like. (This holds true even if ‘innovation’ isn’t an endpoint, but in reality a process.)

Innovation: New, useful and real

What is the definition of ‘innovation’? In her book Collective Genius, Dr. Linda Hill, the Wallace Brett Donham Professor of Business Administration at the Harvard Business School, and her co-authors describe innovation as «the creation of something both novel and useful.» And that specific ‘something’ can be a product, service, process, business model, or even a novel way of organizing. Innovations can big or small and occur via a breakthrough or incrementally.

Dr. Darin Eich, founder of InnovationLearning. org and author of Innovation Step-by-Step: How to Create & Develop Ideas for your Challenge, also uses the concepts of newness and usefulness to define innovation, but takes it one step further. «An innovation is a high-impact new idea that was developed and brought to life in response to a challenge,» Eich wrote. «An innovation could be for a product, service, technology, communication, method, application, or new and better way of doing something.» And that innovation can be built off something that already exists or be completely new. Eich likes to define innovation so that it’s accessible to anyone and the unique challenges they face.

So, innovations must be new and useful. Anything else? Yes. There’s at least one more concept we should add to our definition, and it’s a big one. Innovations must also be real. According to venture capitalist and speaker Terry Jones, «creativity is about thinking up new things, innovation is about doing them.» Jones, who was also the founder of Travelocity, founding Chairman of Kayak and Chairman for Wayblazer, told me that it’s all about putting ideas to work. «I hold four patents but they are not innovations, only paper on a wall, as the company I worked for never reduced them to products!»

I know defining innovation as something that’s new, useful and real might seem overly general and meaningless, but the work of Hill and her colleagues shows otherwise. «The leaders we studied,» Hill told me, «wisely defined innovation in broad terms as well, which sent a message to their teams that innovation is not the sole province of one group or function — it can come from anywhere in the organization.»

Innovation is also necessary

Now that we have a better understanding of what innovation is, we must ask ourselves if it’s actually something we should work toward. Answering this question is critical, because building a culture of innovation within an organization is often a difficult process, especially for companies that don’t have a history of fostering creative behavior or following through on new ideas. So, is innovation critical to a company’s success?

«Even very traditional organizations are starting innovation initiatives because they know their future growth depends on it,» Eich told me. IT and business leaders agree. In a 2015 Tech Pro Research study, over 90 percent of respondents said innovation was ‘very important’ or ‘somewhat important’ to their company’s success right now. An even greater number (95%) said the same when thinking about the success of their company over the next five years.

«Most companies will have to be more innovative whether they like it or not because new technologies, methods, trends, and business models are transforming multiple industries,» Eich continued. «These changes or new innovations have ripple effects, sometimes in a disruptive or game changing way, that cause non-innovative companies to have to respond or wither.»

Jones echoed the importance of innovation for a company’s future growth. «Innovation is critical to any company’s success if they are in it for the long term,» he wrote. «And the long term today is getting shorter and shorter. Consumer tastes and technology are pushing companies to innovate at a quicker and quicker pace if they mean to stay relevant to the market.»

Innovation must also be a continuous process. A single innovative product or service does not ensure long-term success. Companies, like popstars, can be one-hit-wonders. «There is no question that innovation can drive success, but in today’s rapidly changing and uncertain world, it actually takes more than a breakthrough to sustain competitive advantage,» Hill said. «What will really set a company apart is if it can innovate not just once, but time and again.»

«That is why we admire innovators like Tesla, Apple, Google, Amazon, Netflix, and even our local coffee shop or design firm who is committed to adding value for its customers in new ways,» said Eich.

Weaving innovation into the very fabric of your company

Armed with a definition for innovation and the knowledge that it is critical to one’s long-term success, organizations must take the next step, which is building a culture of innovation. And this is when the real work begins, because organizations can’t just spend their way to successful innovation.

Corporate leaders must manage innovation as a core business function. They must put policies and practices in place that cultivate innovation. They must provide adequate resources for the process. And most important, leaders can’t become roadblocks.

«Many of the challenges we now face as a global community are so complex that organizations also need to become skilled at building innovation ecosystems that can cut across industries and even sectors,» Hill said. «In order to do so, we need to rethink much of what we have previously learned about leadership.»

Additional resources to help you cultivate innovation within your organization: