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Importance of innovation to the success of your business

There are several reasons why it is important to always try to generate new ideas in a company. Although every organisation has its own priorities, if they do not innovate, they take the risk to lose ground compared to their competitors. Innovation can be what will make you different from your rivals.

Innovation can help you discover what the current trends are, but also what they could be in the future, so that you can anticipate. Successful businesses do not only try to respond to their competitors, they also try to create and develop an idea, a product or a service, that will help them to meet the future demand rapidly and effectively.

In order to successfully innovate, companies have to find the strategies that best fit their needs and goals. When trying to be innovative, businesses can choose from a variety of different strategies. Each strategy offers advantages and disadvantages.

Open innovation is when a company use external ideas, as well as internal ideas to help advance its operations. This strategy was originated by Henry Chesbrough, a professor at University of California in Berkley. According to him, open innovation is a more profitable way because, when properly done, it has the potential to reduce costs, increase differentiation in the market and create new revenue streams.

Disruptive innovation describes a process through which a product or service initially takes root in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. Disruptive innovation was coined by professor, author and entrepreneur Clay Christensen. 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 innovation is the strategy of innovating in emerging (or developing) markets and then distributing these innovations in developed markets. Many companies are developing products in emerging countries like China and India and then globally distributing them.

Incremental innovation is when companies make small changes on products and services to ensure they keep their spots in the marketplace. Rather than changing a product or a service completely, incremental innovation simply builds on what already exists.

Finally, breakthrough innovation is developing completely new ideas and concepts that do not build from any existing product or service. Examples of the breakthrough innovations include the Internet and transistors.

By choosing the right strategies that best fit with the needs of your company, you will successfully apply new ideas within your organisation that will help you to differentiate from your competitors, which is really important.

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