Research and innovation are important factors in smart and sustainable development but also in job creation. Innovation is defined as the practical application of new ideas for the of creation of new products, services, processes, or new business models. Every innovation can improve, disrupt, and create innovative solutions.
The inspiration behind an innovation is not that important. What is important, however, is that every business must be innovative since innovation can ensure its survival.
This article will analyze the sectors as well as the four types of business innovation that exist.
8 areas of business innovation
The result of innovation can take many forms. When people speak about innovation they mostly people think of a new product. However, business innovation affects many more areas. These are the most common areas of business innovation:
1. Product innovation
Product innovation means the development of a new product or the improvement of an existing one. This is probably one of the most common ways businesses innovate.
2. Technological innovation
New technologies are often the basis for the development of other innovations. One such example is the internet, which, although it was an innovation in itself, it formed the basis for the development of many more innovations based on it.
3. Business model innovation
Many of the most successful companies in the world have managed to innovate in the way they operate. These innovations can involve introducing new technologies into their daily processes or even targeting new markets. Thus, they are forced to modify the way they operate to create and offer more value to their customers.
4. Organizational innovation
How corporate resources are organized and allocated is also an area where business innovation can help. Thus, a business can find new ways to utilize its resources and assets.
5. Process innovation
Innovation in a company’s processes can enhance its effectiveness. Candidates for process innovations include changes in production, distribution or customer service among others.
6. Innovation in marketing and sales
Innovations in this area focus on developing new ways to capture the attention of customers. This is done through innovative practices in marketing and sales or by expanding customer acquisition channels.
7. Network innovation
Innovations in networks and networking in general bring together different actors and stakeholders to create additional value. Innovations of this type are mainly achieved using new information and communication technologies.
8. Customer engagement and retention innovation
These concern the use of innovative practices for more active customer participation with the aim of maintaining or expanding the existing clientele.
The 4 types of business innovation
First, it is important to understand how innovation can affect a company’s products, services and/or processes in many ways. More commonly, however, innovations are distinguished at four levels that express the relationship between the use of an existing or a new technology and the penetration of an already existing or a new market.
1. Incremental innovation
Existing Technology, Existing Market
Incremental innovation is perhaps one of the most common forms of innovation that we can encounter in the market. This type of business innovation uses the same existing technology and simply adds differentiating tweaks such as adding new features or making design changes.
If we take for example the case of smart phones, incremental innovations concern software updates or the addition of new features such as a camera, sensors, etc.
2. Disruptive innovation
New Technology, Existing Market
Disruptive innovation is a type of business innovation that leverages new technologies or new business models by disrupting the existing market. Many times, these innovations, especially when they are at an early stage, seem inferior to the competition, but in the long run they are the ones that eventually prevail in the market.
To understand, we can take as an example the iPhones which first introduced and made touch screens fashionable over traditional button mobiles.
3. ΒIncremental innovation
Existing Technology, New Market
Incremental innovations are something that tech giants like Amazon or Google use a lot. Their accumulated knowledge, the technologies they have developed and the human resources they have gathered allow them to launch products in new markets.
A typical example is the entry of Amazon with Amazon Care in the health sector. Using its experience in building apps and platforms, as well as its large consumer base, it brings its existing expertise to a previously untapped market.
4. Radical innovation
New Technology, New Market
This is perhaps the most stereotypical way an average person sees innovation. Although it is its rarest form. For an innovation to be considered radical it should make use of entirely new technologies, services and business models that create new markets.
An example of a radical innovation is the invention of aeronautics and the creation of airplanes. This drastically changed the way people travel, but it also created a new industry and a whole new market.
The importance of innovation for businesses
As we have seen so far, innovation in a business can take many forms. There are also different types of business innovation. The most important thing to take away from this article is that innovation can make the difference between a business being successful or not.
More specifically, innovation can help a business to:
1. Grow
The growth of a business it also means more profits. Thus, a successful business innovation offers more value and increases its profits. Without innovation, profits remain stagnant, while there is a risk that a company will be left out of competition.
2. Be competitive
With globalization markets are changing at breakneck speed and there are more competing businesses than ever before. Innovative thinking helps entrepreneurs to better anticipate changes in a market as well as consumer needs. Those who do not invest in innovation constantly see their competitors bring new ideas to the market and be profitable, while they struggle to stay competitive.
3. Integrate of new technologies
With rapid changes in technology, new ways of producing new products, services, and analysing business performance are constantly being discovered. Following the technological developments, a company can become more innovative in all areas but also maintain its competitive advantage.
Innovation is a vital not only for the survival, but also for the growth of every business. For this reason, it is important for companies to know the different areas where innovation can take place but also the existing types of business innovation.
Innovation is synonymous with JOIST
JOIST Innovation Park is the latest and biggest venture of the Institute of Entrepreneurship Development – iED in the city of Larissa. Its main objective is to promote innovation as being of prime importance in all aspects of life. We hope that with a systematic cultivation of an innovative way of thinking from a young age, JOIST can inspire the new generation and instil an innovative entrepreneurial spirit. This can improve the personal and professional development of everyone, create new businesses, and boost the local and national economy.
For more information about the JOIST Innovation Park, you can visit the official website.