To thrive in a competitive landscape, companies must be willing to adapt and change, but what exactly is business innovation? And is it simple?
Innovation is the process of making a product new or better. It can also be the process of providing some service or action in a new way. In addition, business innovation should also include the concept of improvement.
Innovating in business is not just doing something different, but doing or improving something.
What is business innovation?
Business innovation is when an organization introduces new processes, services or products to bring about a positive change in its business.
This may include improving existing methods or practices, or starting from scratch.
Another good definition of business innovation would be: Business innovation involves developing new or improving existing technologies, processes, designs, and marketing to solve problems, increase efficiencies, reach new customers, and ultimately increase profits.
In the end, the goal is to reinvigorate a business, creating new value and driving growth and/or productivity.
In the business world, innovation often becomes little more than a synonym for research and development. A limited and limiting definition.
Innovation, as the OECD puts it, goes well beyond the limits of research laboratories to users, suppliers and consumers around the world.
Governments, companies and NGOs, across borders, sectors and institutions can greatly benefit from innovation.
Research and development only contributes to innovation. In fact, in the Global Innovation Index it is just one factor in a list of more than 50 that contribute to a country’s innovation score.
Why is business innovation important?
Business innovation is important for one simple reason: value.
For your business to prosper, it is crucial to continually innovate and improve. When this technique is successful it always relates to finding new revenue opportunities, optimizing existing channels and ultimately generating higher profits.
It should also give companies an advantage over their competitors.
Three types of business innovation.
There is more than one way to innovate, and organizations of different sizes and degrees of experience will have different reasons for embarking on a business innovation process.
For some it may be a case of reassessing the ways in which the business generates income, for others it may be necessary to move into a completely different industry, or even create a new one!
Before beginning any cycle, it is important that organizations understand the different business innovation models available.
Revenue model innovation
When increasing profits is the primary motivation for business innovation, many organizations may choose to change their revenue model as their first action.
This may involve reassessing the products or services offered or taking another look at the company’s pricing strategy.
Innovation doesn’t have to be radicalsometimes changing even one element can produce significant results.
Business model innovation
This business innovation model requires organizations to identify which of their processes, products or services could be improved to increase the profitability of the company.
Innovation in this case could refer to forming new alliances, outsourcing specific tasks or implementing new technologies.
This could include changing where the business is in the Value Chain, leveraging a network of partners, or even outsourcing non-core activities.
Industry innovation model
This is possibly the most radical model of business innovation. Ambitious organizations may choose to change the industry entirely to meet the goals of innovation, or even create a whole new industry for themselves.
Examples of this may include: Google led the way with self-driving cars, Virgin went from airlines to selling fiber broadband, and Dell went from selling only mass-produced to customizable PCs.
What technologies are driving business innovation?
Artificial intelligence
The power and potential of artificial intelligence (AI) cannot be overstated. Almost every industry and walk of life is destined to be transformed by it.
There is an estimate that by 2020, 95 percent of all customer interactions will be carried out using some form of AI.
When it comes to business innovation, this is one of the most exciting technologies available. There are studies that estimate that it could add $15.7 trillion to the global economy by 2030.
Everything invented in the last 150 years will be reinvented using AI in the next 15 years.
Randy Dean
It is already having a transformative effect on various industries. In sales, AI can help strengthen arguments by detecting and reacting to consumer emotions.
The Japanese investment bank, Daiwa Securities, found that the purchase rate of customers increased 2.7 times after they implemented the AI technology.
In the pharmaceutical and healthcare sectors, AI tools have been created that can sort and accumulate medical knowledge and data on a scale that humans could only dream of.
At one end of the spectrum are dosing error deduction and virtual nursing assistants, and genome sequencing at the other.
AI has reduced the time and cost of sequencing someone’s genome, which is what determines the unique arrangement of their DNA, to 24 hours and for just $1,000.
super fast internet
It has long been recognized that time is money, and the most important tool for business innovation is one that can help organizations move faster.
In the UK, the rural provider Gigaclear offers a fixed line service with speeds of 900 megabits per second. For reference, “super fast internet” starts at 24 Mbps.
But in South Korea, speeds of 2,500 Mbps have already been achieved. And mobile networks will be transformed, too, with the advent of 5G making speeds of 1,000 Mbsp possible on a smartphone.
To put this in the context of business innovation: it will now be possible to restore a medium-sized corporate server in just over an hour, compared to 28 days previously.
Companies will be able to share data between remote facilities almost instantly.
For example, having ultra-fast fiber connectivity will allow your group to harmonize production by sharing data instantly, such as test reports and production templates, which are key to production facilities.
This allows significant operational savings. And none of this would have been possible on a normal speed internet connection.
Who is responsible for business innovation?
In a 2017 study of global CEOs, nearly 25 percent had innovation at the top of their priority list for the coming year, but Are CEOs really the ones who can drive business innovation?
It is vital that business leaders foster an environment where innovation is a natural part of the company culture.
It’s important that our organizations can attract the people with the right technology skills, but also develop those skills internally.
In addition to recruiting people with digital skills, organizations need to focus on training their people to be adaptive, creative, and critical thinkers.
However, although top-down leadership of business innovation is crucial, there are key roles and departments whose collaboration and knowledge are necessary to achieve change.
IT department
In 2015, there was a study on innovation in the workplace.
This study revealed that more than a quarter of those surveyed saw IT as the main driver of innovation, a view that has hardly changed since then.
With technology at the heart of business, those with the ability to master it have the power to bring about change. Not to mention, the IT department has close working relationships with every part of a business, allowing them to drive innovation and improve collaboration across the organization.
data manager
It is still a fairly new title and everyone believes that most large companies will have appointed a chief data officer (CDO) by the end of 2019.
The intelligent use of data is key to business innovation. CIOs are responsible for locating where opportunities and threats lie.
CDOs need to sell the benefits. Their role is to seek efficiencies, simplify needs, demonstrate cost benefits, and encourage companies to be open and transparent.
Through their chief data officers, companies are empowered and the data they work with is driving their business innovation, where information is verified, analytics are powerful, and data use is effective.
CTO
According to LinkedIn, there are 121 chief technology officers (CTOs) in the UK alone, along with hundreds of business transformation officers, digital transformation officers and the like.
But it’s not a job title that’s been around for a long time. It has emerged over the last decade or so as organizations realize the need to be more receptive to change.
The term chief technology officer has a broad meaning: some CTOs see themselves as visionaries, while others are essentially project managers for an overhaul of an organization’s processes, often through technological change.
Either way, a successful CTO could be exactly the person responsible for driving business innovation.
We are all experiencing intense change, the pace of which is only accelerating.
Regardless of the area in which they are located, all companies need people whose passion is focused on the products and services they can develop to help their customers take advantage of the opportunities that the company provides.
Expert advice: how to get started
The business innovation experience will vary greatly from company to company, but there are some common pitfalls that can and should be avoided.
Don’t obsess over distant goals
A sound strategy should avoid global initiatives without careful understanding and planning.
Instead, looking for “quick wins” will help drive a clear impact on operations and profits. This can be done by running multiple…
