How Innovation Benefits My Business: Is It a Need, a Privilege, or a Catalyst?
In This Blog Post, We Will Explore the Role of Innovation in Business Success and Ways to Implement it.
Introduction
You cannot achieve long-term sustainable success by relying solely on your current strategies and technologies. The world is dynamic and rapidly changing, and you need to change and adapt. Innovation is imperative to ensure long-term sustainability, enhance competitiveness, and drive business growth. In this post, we aim to help you understand the importance of innovation in achieving business success.
What is Innovation?
Innovation is the process of developing and implementing new concepts, goods, services, procedures, or business models that enhance, transform, or improve your company. It involves turning original concepts into solutions that increase productivity, boost growth, and give you a competitive edge. It may include product development, marketing strategies, operations, customer experience, and organizational culture. It is not limited to technology alone. It involves taking calculated risks, challenging norms, and embracing change to meet evolving consumer demands and market dynamics.
- The goal of innovation in business is to foster continuous improvement and find better ways to address emerging challenges, seize opportunities, and stay ahead of competitors.
- Innovation requires a proactive and forward-thinking mindset, a willingness to experiment and learn from failures, and a culture that encourages creativity, collaboration, and the exploration of new possibilities.
- Innovation can have positive and negative impacts, depending on how it is used and who benefits from it.
- Innovation can be fostered through collaboration and partnerships between stakeholders, such as businesses, governments, academia, and civil society organizations.
- Innovation can be driven by various factors, including customer needs, market trends, technological advancements, and regulatory changes.
- Innovation can take many forms, including product, process, business model, and organizational innovation.
When explaining what something is, examples can help clarify the answer. Let’s explore notable inventions that revolutionized markets and transformed our lives and workplaces.
- Internet: It’s interesting to see how the internet, maybe the most significant innovation in a century, has drastically affected communication and commerce. The internet has transformed how people connect and communicate, enabling instant global communication and overcoming geographical barriers. It has also revolutionized the business landscape, creating new e-commerce and digital marketing opportunities. Moreover, the Internet has facilitated remote work and virtual collaboration, allowing individuals to work from anywhere.
- Smartphones: The introduction of smartphones and their influence on daily life is a kind of innovation that has further accelerated the impact of the Internet on communication and commerce. Smartphones provide constant internet access, allowing people to stay connected and conduct business anytime and anywhere. This has led to a significant increase in mobile commerce and the creation of diverse mobile applications catering to various needs and interests. Furthermore, smartphones have revolutionized social media usage, simplifying connections between individuals, businesses, and their target audience for promoting products or services.
- Artificial Intelligence: The application of AI has significantly increased the accuracy and efficiency of decision-making processes in some areas, including healthcare and finance. AI-powered algorithms analyzing large-scale data can provide valuable insights for healthcare diagnosis, treatment planning, financial forecasts, and risk assessments. Virtual assistants like Siri and Alexa enhance the user experience and provide personalized recommendations based on individual interests and behaviors. Recent advancements in Generative AI have expanded the impact even further unlocking new possibilities for content creators and augmenting the software development process. Read Atchai’s post “Beyond Copilot: How AI will Revolutionize the Software Development Lifecycle” for a detailed walkthrough.
- Cloud Computing: Adopting cloud computing has transformed IT infrastructure by enabling organizations to reinvent how they manage data and use technology to enhance consumer experiences. For example, Amazon Web Services (AWS) has pioneered cloud computing, offering a wide range of services that have revolutionized how businesses operate. Companies like Netflix have used AWS to rapidly scale their infrastructure and provide seamless streaming experiences to millions of global users.
- Blockchain Technology: The creation of blockchain technology has dramatically affected finance and threatens to disrupt gaming, supply chain and other industries. For instance, in finance, blockchain technology has facilitated the creation of smart contracts that automate and enforce agreements without intermediaries. This has revolutionized processes like loan disbursements, insurance claims, and international remittances by reducing paperwork, eliminating delays, and increasing transparency.
Why do it?
In essence, the phrase ‘why-do-it’ translates to being competitive and achieving growth as a company. It’s a mindset that can propel your business forward and keep you ahead of the game. But let’s break this down into a more concrete correlation between innovation and business success.
Innovation helps you to:
- Proactively respond to customers’ needs instead of waiting for potential threats to your business.
- Harness new technologies, develop groundbreaking products, and create unique solutions that delight your customers.
- Anticipate market trends and adapt to new challenges.
- Explore untapped opportunities, expand into new markets, and gain a competitive edge over rivals.
- Foster a culture of creativity and continuous improvement within an organization that benefits quality, efficiency and other critical organizational aspects. Encourage employees to think outside the box, experiment with new ideas, and push the boundaries of what is possible. Enhances employee engagement.
- Attract and retain top talent. Professionals are drawn to companies that prioritize innovation as it allows them to work on exciting projects and contribute to groundbreaking advancements.
- Build a reputation for being innovative, which can differentiate the company as attractive to customers.
What can we learn from common industries research?
There is much research on innovation impact conducted by the largest consulting firms. Let’s look at some excerpts from a few.
An analysis of 650 large public companies that achieved profitable growth relative to their industry from 2016 to 2021.
The research names 53 companies as “innovative growers” that consistently excel in both growth and innovation, outperforming their peers in terms of total shareholder returns and economic-profit power curve.
They build innovation into their overall strategy aspirations. They activate critical growth pathways within their core businesses and enter only those adjacent markets where they have the strongest competitive advantage. They pursue excellence in execution and invest in key innovation capabilities.
Innovative growers tend to deliver more tangible outcomes from their R&D investments than their peers. In our research, they generated, on average, 100-plus more patents than their peers.
The Most Innovative Companies 2020: Successful Innovators Walk the Talk | The Serial Innovation Imperative | BCG
An annual survey since 2015, where executives name the top innovators in all sectors.
Committed innovators are winning. Almost 60% of them report generating a rising proportion of sales from products and services launched in the past three years, compared with only 30% of the skeptics and 47% of the confused.
Our research has shown that companies doubling down on innovation during downturns — using the opportunity to invest and position for the recovery
The research surfaces the importance of investing in innovation systematically, meaning doing it repeatedly and constantly improving the innovation system.
By looking at the research data, we can make our points less vague and more grounded in observations. It links a company’s success to continuous investment in innovation and even suggests that companies should consider doubling down in downturns.
When to do it?
When is the right time to invest in innovation? It’s easier to start an innovation project when the company has a spare budget, resources and focus, but this is rarely the case. One way to avoid resource contention and distracting teams focused on core delivery is to do it as a ‘side project’. For that, it might help to have a technological innovation partner, like Atchai, who can bring in the relevant skills required to build prototypes or to perform the technological research necessary to prove the potential impact of an innovation project.
For example, Atchai recently partnered with the UK’s Cabinet Office — a central government department that understands the need for innovation and recognizes the challenges of performing it in-house. We rapidly applied AI and data science technology to demonstrate a real impact on knowledge management and compliance within the organization. Our work received a positive review in The Times and has been described by Luke Sands (Head of Digital at Cabinet Office) as: “The best use of AI I’ve seen within government”.
How do you do it responsibly?
There are many ways companies can choose to pursue their innovation goals. M&A is one possible route however in this post, we will focus on companies’ organic innovation.
Culture: The first prerequisite will be to foster a culture of innovation and encourage company employees to think outside the box.
Measure it: As with any investment, measuring what you get back is imperative. With innovation, the benefits might not be as straightforward as with other activities since it involves tangible deliverables and cultural and engagement impact. All of these need to be considered in the overall ROI calculation.
Failures: Failures are inevitable as you continue to learn and make progress. Innovation requires a culture of experimentation, risk-taking, continuous learning, and a willingness to embrace failure and learn from it.
Guardrails: Having guardrails in place while pursuing fast-paced ventures is challenging, so those must be carefully selected to ensure the right balance of freedom and risk containment. Those guardrails should align with the organization’s long-term strategic goals. Some aspects that need to be considered:
- Lean budget guardrails to ensure the cost of the venture is under control. This should include dedicated organizational resources to prevent innovation projects from being affected by the organization’s core activities and vice versa.
- Strategic alignment guardrails should ensure that the project is aligned with the organization’s strategic goals and does not drift as many innovations tend to do by their nature.
- Security, compliance, legal and ethical guardrails should guarantee that investments adhere to standards, safeguarding the organization’s reputation and integrity. For example, see the security and compliance risks that need to be considered for projects involving Generative AI technology.
Collaboration: Innovation is better fostered through collaboration and partnerships between different stakeholders. These could be groups within the organization, other businesses, or through collaboration with government academia, etc.
Graduation: Without a systematic approach to promoting the most promising innovation and terminating an investment in ideas with less potential, the entire innovation strategy can become ineffective. It is difficult, or even impossible, to predict the impact of an innovation project early on at the initial idea phase. The graduation process, where the project’s impact is periodically reassessed based on the last iteration’s achievements and further resource allocation decided, is critical.
Why is it hard?
Innovation is extremely challenging because it significantly differs from other business processes and investments.
- It is unpredictable, and the impact of invested effort is hard to estimate ahead of time.
- It relays specific traits of the company’s culture, which are impossible to change overnight and take time to adjust.
- You need to be able to allocate resources in an agile manner, bring unique expertise and make quick iterations.
- In certain domains, regulation, legal, or intellectual property factors might be a resisting force.
- There may be resistance to change and a risk-averse culture.
Call to Action
At Atchai, we help our clients achieve success by working together — combining their in-depth understanding of the problems they need to solve with our expertise in cutting-edge methodologies and technology.
If you are looking for an experienced innovation partner, please get in touch — we develop a strategy and put in place a team based around your goals.
