Why You Need Innovation In Your Business?

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Many reasons would push you as an entrepreneur to adopt new ideas into your business to achieve success which is the ultimate goal of every business. It’s true that businesses differ one from another, so do their priorities and particularities of each sector, but a business that isn’t innovating risks of losing the battle for competitors or just functioning ineffectively. Innovation is a key to businesses in general and for small and medium business in particular.

Scientific studies have always highlighted the importance of innovation on business by investigating various dimensions of innovation including product, process, and market innovation. A recently study has investigated impact of these dimensions of innovation on the performance of SMEs.

The study which is conducted by a group of scientists from Malaysia has tried to answer the question: How Can Innovation Impact Enterprises? The research finds that both product innovation and process innovation are crucial for businesses and has a great impact on the performance of a business. “The findings confirmed the hypotheses that product innovation and process innovation influenced firm performance significantly, where the impact of the former was stronger than the latter” the study stated.

Innovation opens the door wide to find the existing opportunities in the present and potential ones for the future. Innovation gives answers not only to today’s needs, but expect trends of the future and come out with new ideas including a new service or a new product that allows the organization to operate effectively. Innovation is what helps businesses survive the fierce competition in the market, if not leading it.

Another study which is published in a Journal of Innovation Management in Small & Medium Enterprise has inspected the innovative behavior of small businesses. This research stressed out “that innovation is recognized as the strategic mean of survival even for the small businesses.” Researchers noticed in their study that “entrepreneurs have at least adopted the administrative innovations that involve improvements and newness in daily administrative processes.”

Besides, the study has made a number of valuable notices about how likely small businesses are adopting innovation. Scientists observed that “small firms are frequently exposed to severe resource constraint, thus limit their innovation performance compared to larger organizations…Radical innovation and invention have not been carried out by most of the subjects as it requires strong internal resources and established business network.”

Based on the paper’s findings, researchers advised that “entrepreneurs who are in critical situations or without choices need to take creative and bold actions in order to grow.” Also, they added that “small firms must also be encouraged to expand their innovation scopes to product, process and technical innovation…. (As) process and technical innovation are able to generate higher future revenues and profits.”

Challenges that entrepreneurs face include lack of support considering financial and knowledge. The research provided evidence that “small entrepreneurs need more support in terms of resource funding, knowledge and access to information on opportunities and alternatives, and skilled human resources.”

In spite of high costs that might be needed to implement an innovative idea, but if arriving to innovate, the benefits are really high and would participate in the prosperity of the organization in the future. An organization that does not innovate is leading the way down, and sooner or later everything within the business would become obsolete to the changing trends around in the market.

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How Can Innovation Impact Enterprises?

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Innovation refers to implementing new processes, ideas, or shifting existing ones to become more effective and increase chances of a business’ success. In recent years, innovation has become so inevitable for businesses to stay on the level of competitiveness. Businesses that embrace innovation are looking forward to get many benefits, but most enterprises don’t pay much attention to innovation’s impact on the firm performance. So, how innovation affects performance?

A new study carried by a group of researchers from Malaysia and published in a Journal of Innovation Management in Small & Medium Enterprise has investigated how innovation could influence performance in small and medium sized enterprises (SMEs). Researchers studied 284 samples and found that “product innovation and process innovation influenced firm performance significantly, where the impact of the former was stronger than the latter” as stated in the study.

To innovate doesn’t mean to invent new things, but to make changes on a business model and make necessary changes to come up with new products or services. The study has stressed out that “innovation is a critical factor in today’s entrepreneurial activities.” So, policy makers in SMEs should take innovation into consideration when making their business strategies and shaping their strategic visions.

To survive the intense competitiveness in global market, SMEs would need to offer something different to what other businesses are offering. The study stated “a firm would be more competitive if it is able to design, produce, and market products or services superior to those offered by its rivals… innovation is no more a luxury, but a necessity.”

However, innovating is theoretically simple but not practically. Innovation means more costs, so businesses need to consider the financial part when embracing innovation strategy. The study mentioned that “Due to high costs of innovation in terms of R&D expenditure and personnel and resource constraints facing SMEs, this move incurs a high risk to the firms.”

But ignoring innovation would in turn impact the business negatively. So businesses should find a balance that would keep them innovative and avoid any risks. Researchers suggest that “SMEs have to really spend their time and money on gathering enough information about the market demand and trend for their products, competitors and sources of innovation before any decision can be made.”

Innovation can touch every facet of a business, be that products, services or business processes and businesses that embrace innovation produce more proficient work processes and have better productivity and performance. To be innovative would help a business to survive the intense competitiveness forced in the market and more importantly lead growth.