Innovation is an extremely important aspect in our lives as it is what helps us grow, progress and thrive as a society. It is ultimately a reflection of human intelligence and how we learn to introduce something new to the world in order to solve problems and move forward. Innovation is responsible for most of the world’s most significant developments – ranging from the invention of the light bulb to the discovery of various types of medicine that help save ourselves from modern diseases.
Likewise, innovation also plays a crucial role for businesses and organisations, helping them achieve success by solving problems, providing a competitive edge and ultimately generating more profits. This article takes a look at why innovation is so important for businesses and how it can help bring about great progress.
What Are the Different Types of Innovation?
There are various types of innovation that are utilised by businesses to propel growth. A few of them have been discussed below:
Incremental Innovation:
These are usually a series of low-cost improvements that are made to the existing products or services of a company. By doing so, the ultimate objective is to add or sustain value whilst giving itself a competitive edge. Entrepreneur Asia Pacific states that 98% of innovations are incremental as most of them are changes done to an existing product to satisfy customer needs. Source
Sustaining Innovation:
Also referred to as routine innovation, sustaining innovation takes place in response to the demand of the market or customers – or technology improvements. This is used to help companies reduce defects, improve overall product performance and lower product costs & increase profit margins – by improving the efficiency of the production process.
Architectural Innovation:
This typically occurs when technology is used to create new markets for products and services. The architectural innovation process takes an approach from a specific field and applies to a different area – an approach that is commonly observed in most registered patents.
Rapid Innovation:
This type of innovation is used as a response to massive shifts in consumer behaviour or market demands – such as the pandemic or another unexpected crisis. It requires a combination of speed, agility and precision in order to let businesses continue functioning and grow despite the challenges at hand.
Disruptive Innovation:
This process involves the introduction of a new product or service that creates a new market & value network, ultimately dismantling market leaders and firms that are in the forefront of the industry. This is done by using innovation to meet market demands, in a way that no one else has done before. Such an approach creates a massive shift in consumer behaviour and in the way they choose to purchase products and services.
How Has the FinTech Industry Utilised Innovation?
The FinTech industry and innovation go hand in hand as they both heavily rely on technology. Massive leaps in technology were witnessed in the FinTech industry in the recent past – given the various developments in mobile payments, digital currencies, online lending and more. Such innovation was majorly driven by non-banking entities in a bid to disrupt the traditional banking sector and the way traditional financial services were offered.
The Global FinTech report by PWC states that 77% of incumbent financial institutions will seek to focus more on their internal innovations in order to grow customer retention – over the next three to five years. 88% of global finance leaders believe that innovation and technology pose a threat to their current business model and are concerned about the rapid speed of technological change. Source
How Innovation Can Help Grow Businesses
Better customer relationship & increased sales:
Businesses can take advantage of innovation to update or enhance their existing products and services, in order to provide a more current product offering that meets consumer demands and provides an edge over competitors. Doing so will establish better relationships with customers and ultimately grow your sales.
Cost-effective and environment friendly:
A huge amount of waste and unnecessary costs can be reduced by using innovation to enhance process efficiency in the workplace. Innovation assists with cutting down employee idle time, streamlining processes and reducing bottlenecks – which is greatly beneficial for every business.
Enhance brand popularity:
Innovation also helps businesses grab market opportunities by predicting shifts and analysing trends. This allows them to have an edge over competitors using a proactive approach that is ever-ready for future challenges. Businesses that are able to keep up with dynamic market demands are likely to be favoured by consumers, thus boosting brand popularity.
Better employee-employer relationships:
Innovative ideas can also be suggested by employees in the company. Good employers are able to make good use of such feedback and suggestions and identify how they can be used to better the company’s productivity. By ensuring that every innovative idea is listened to and taken into consideration, employee and employer relationships can strengthen immensely.
Gaining a competitive edge:
Any business that is constantly studying its competition and identifying how to gain a competitive edge over them – is sure to do well. Innovation plays a major role in helping add creativity on how to differentiate your brand from others. An out-of-the-box strategy is generally what helps businesses truly stand out.
Improving workplace productivity:
Innovation can help reduce unnecessary workload for employees once processes are properly streamlined and effectively implemented. Tracking work progress takes a closer look at what works and what does not work, whilst devising a strategy to ease workflow, increase employee satisfaction and improve productivity.
Reach your target audience and build word-of-mouth:
In terms of marketing, the role played by innovation is crucial. New technological innovations are now helping marketers reach out to their intended audience easier than ever before – geographically and demographically, with a great deal of precision. This greatly exemplifies the results of marketing efforts as this targeted approach can help brands generate a better brand reputation via word-of-mouth. Effective marketing is also able to effectively convey the value provided by your products and services – leading to your customers being the strongest advocates for your offerings.
