Business innovation is when companies implement new processes, ideas, services, or products with the goal of boosting the bottom line. It could mean launching new and improved products or services (which can lead to higher revenue), making an existing process more efficient, or solving a current business problem (both of which cut down on costs and save time). A business focus on brainstorming, design thinking, or the establishment of an innovation lab can drive business innovations. The key element of innovation is that it drives revenue for the company.
Importance of Business Innovation :
Innovation offers companies four main benefits:
Getting ahead of potential disruption - When done right, business innovation takes stock of where the market is going due to potential disruptors or changing consumer demands. Businesses use that information to make strategic changes and to entice internal employees to be entrepreneurial. Those changes can include building a product or service similar to what new startups are making, buying it from others in the industry, or partnering with the upstarts (known as the “buy, build, partner” model).
Increased efficiency- A lot of business innovation happens by making existing business processes less costly, less time-consuming to complete, and more sustainable. Those changes save time and make it easier for an organization to adapt to industry shifts with agility, which cushions against volatility and risk.
Talent attraction and retention - More than ever, employees—particularly millennials and Gen Z—want to work for mission-driven, fast-moving companies that they believe have a bright future.
Brand Perception - Consumers are more willing to buy from companies they perceive to be innovative and socially conscious.
Types of business innovation
Business innovation can, but doesn’t have to, involve the creation of a new product or service. There are many examples of innovation in business, including:
Product innovation - Creating a completely new product that’s adjacent to a business’s core offering. Think of Dyson extending into hand dryers or Apple launching the smartphone.
Process innovation - Designing a new way to be more efficient in the core business. Examples of this include Amazon using robots in the warehouse, or Chase Bank implementing mobile check deposit.
Business model innovation - Introducing a new way of making or saving money, such as Zipcar launching car-sharing subscriptions, or Rent the Runway offering a subscription service for clothing rental.