Why Innovation is Important to Business Success?

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What is innovation?

Innovation is coming up with a new idea and turning it into an effective process, a new product or service. The implementation of creativity and innovation in business is likely to incorporate success and help you stand competitiveness in the market. Innovation can be referred to as something new or introduced differently and has impact on market or society.

Organizations need development first to keep presence in the market, and second to be competitive. There are a lot reasons why you need innovation in your business. A successful business model won’t be developed if you have a walking dead organization, meaning to have a stagnated business that does not embrace change and refuse or don’t know how to let creativity breath come in.

You need instead dynamism on different levels. You may innovate by coming up with new ideas of new products or reshape existing ones. Innovation can also be implemented by improving services and the way the organization is operating. As businesses and activities vary, there are also different types of innovation, and you choose your model depending on your needs and markets’.

Innovation Importance

Innovation has always been so important, thus it was under the radar of academic research. A lot of scientific studies have been carried by researchers to understand innovation process and how can Innovation Impact Enterprises? They gone through importance of innovation for businesses and investigated the implementation of innovation in different models and measurement of performance.

With the new challenges of globalization and open markets, competition toughens considerably and need for change is becoming more crucial. A recently published study carried by researchers from a Faculty of Management and Economics in Czech Republic has investigated this defy and noticed how Czech business companies “assign big importance to both inner and outer innovation.”

The effective innovation process is something done strategically based on creative thinking and innovation strategy. Unlike the invention process that starts by problem and goes for solutions, effective innovation can start by supposing a solution and looks what problem it solves.

Innovation and Performance

Another study from South Africa has gone through the understanding of “conceptual framework of an innovation system model”. Researchers said that “Education and training bodies were found to be amongst the most important participants, supporting firms in the innovation system due to their contributions to the development of sufficiently qualified human resources and by their contribution to R&D capacity – two of the most important determinants of innovation”.

There are a lot of factors that affect innovation process of business including “science, technology and R&D intermediaries” as stated by the researchers. They also stressed on the importance of government as well as “Financial institutions and venture capitalists… due to the role that finances play in innovative activities.”

Innovation and Knowledge

One of the matters that should not be overlooked in innovation is relation between knowledge and innovation. Researchers focused that “knowledge and expertise are transferred serve as both a source for, and stimulus to, innovation”. So, effective and true innovation is led by knowledge. “The transfer of knowledge from universities to firms or from MNEs to their national branches was one of the better-known knowledge transfer linkages identified” the study confirms.

Measuring Innovation

Innovation is believed to be a generator of growth and success for businesses. As stated in this research “relation between innovation and performance provide evidence that this relation is positive”. Yet, measuring innovation results and their impact has not been something easy. It is something done based on different metrics. “Measuring innovation should be carried out effectively, efficiently (must bring relevant information to the corporate management) and economically (must be done at a reasonable cost)” as stated by the mentioned research.

What differs a business from another is the new ideas it comes up with. You can live on imitating others’ steps for a while, but this won’t last, or it won’t take your far away to meet success you opt for. To ensure success for your business, you need to think out of the box and come up with original ideas that might be in many times simple, but would define your business model and will lead success of your organization.

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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.

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.