Why Business Innovation is Important?
Whatever the case, it's important to understand how important it is to your business and why so that you can incorporate it into the way you run your company or market your products or services.
Business innovation definition
Business innovation refers to any product, service, or process introduced by a company in its business practice. In other words, business innovation means an original idea that's carried out effectively to create value for customers and profits for shareholders.
Businesses have always been at risk of disruption by competitors, so business innovation is necessary to avoid being overtaken.
Models of business innovation
Business innovation models describe business processes and methods that can be used by businesses to innovate. There are several models of business innovation: open-source, crowdsourcing, and open innovation as examples.
Open Innovation
Open innovation focuses on identifying potential research projects outside of a company's current line of work and developing those ideas into products, services, or knowledge. Open Innovation generally occurs in two ways: through open R&D collaborations with partners that often compete with each other to drive progress; and through open product designs where companies invite external input during development by releasing specifications publicly or early-stage prototypes.
Open innovation originated in Scandinavia when Eric von Hippel - who would go on to publish a book called Democratizing Innovation - discovered while studying MIT undergraduates that he was only able to observe 6% of their creative output.
Closed Innovation
In a closed innovation model, firms develop innovations on their own. Innovation takes place within the company exclusively, from idea generation to development and marketing. For example, when developing a new iPhone, they release nothing about it until the product is officially launched.
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Crowdsourcing innovation
In a crowdsourced innovation, innovators make their ideas available to companies and individuals who offer their feedback on development. Crowdsourcing allows businesses to develop innovative products and services that they might not have thought of otherwise. We do know examples when companies turned failed projects into successfully implemented crowdsourced ideas.
A well-known example of a crowdsourced idea turned into a real product is the Portable North Pole website where users can send letters to Santa Claus or choose an appropriate gift for free by providing some personal information about themselves and Christmas wishes – could be a wish for an iPhone or help in buying expensive camera instead toys. Another good example of Open Innovation can be the Tesla Roadster car from 2012, which was built on top of Lotus Elise chassis. It's safe to say that business innovation helps us with becoming more productive - we benefit from processes and tools that allow us to create better products or reach our audience faster. This also means business success will always depend on people you work with being interested in something new.
Open-source Innovation
The open-source model of business innovation - or just open source for short - involves companies pooling resources to develop software, hardware, and materials. The resulting products are usually licensed with a permissive free and open source license (FOSS) to help encourage community involvement. Linux is perhaps one of the most well known examples of FOSS technology that's become pervasive in just about every aspect of business computing, from databases to web servers. Hadoop, Zend Framework, MariaDB, and Apache Kafka are a few other FOSS projects that have gained traction in recent years as well.
There are lots more we can say about business innovation, but our main point here is simple: businesses should constantly be innovating in order to survive market disruptors.
What is open innovation?
Types of business models
Disruptive business innovation models seek to transform existing industries by introducing previously unknown products or services with significant benefits over previous iterations of existing offerings. Businesses pursuing disruptive innovations must anticipate shifts in trends across industries—or even completely overthrow existing markets—as customers look for more efficient, effective methods of buying and using goods or services.
Sustaining business innovation models focus on maximizing existing market opportunities; sustaining businesses rely on incremental improvements to better match their customers' demands. The survival of a business can hinge upon these smaller changes, as we've seen time and again with companies that fail to keep up with industry standards or consistently improve their product line—the result is often slow death through obsolescence.
Tips for creating an innovative business model
1. Know your limitations – Your core competencies aren't always transferable to other areas of your business; if you can identify your strengths, you can more easily figure out where you shouldn't focus resources. Trying something new should never come at the expense of doing what you do best. A comfortable degree of risk is acceptable but don't push too far outside your areas of expertise or ability and risk being completely blindsided by unexpected costs - possibly preventing growth altogether.
2. Keep learning – If a successful company with a profitable business model isn't willing to be open-minded about trying new ideas, it will fall behind in competitive marketplaces and eventually go bankrupt. When you have employees who feel free to voice their opinions (even when they disagree with management), there are fewer opportunities for those unknown unknowns to sneak up on you later on down the road.
3. Do right by your team – Company culture is crucial for long-term success; not only does an innovative workplace attract top talent who want to work somewhere that values creativity and experimentation, but it also gives them a sense of loyalty that keeps them coming back as customers over time.
4. Take risks when necessary – The modern market requires you to be forward-thinking at all times. If you can't keep up with what's happening around you and how it could affect your bottom line, your business will eventually become obsolete - causing sales to plummet (and taking jobs with them). As daunting as making significant changes may seem, they offer a much better chance of driving future growth than stubbornly clinging to outdated policies and outmoded ideas about what customers want from their experience.
5. Communicate clearly across different departments - Better communication between sales and marketing results in more efficient leads being turned into actual sales because there's no question about where new customers are originating from or why they're buying from you.
6. Find your niche – Offering products or services to everyone will lead to a one-size-fits-all mentality that can ultimately be fatal for your company; you should aim to focus on an ideal customer base that truly represents your strengths as a brand, regardless of whether it means turning away other potential buyers initially.
7. Be aware of fads – Some businesses have been started by thinking outside of the box, but many have failed by doing just that; social media marketing agencies, for example, exploded onto the scene when platforms like Facebook were becoming established... but how many were able to adapt their strategies as those same platforms matured and became over-saturated with similar companies vying for attention? By taking risks too far outside your wheelhouse, you run a higher risk of falling victim to trends that don't last or changes in customer expectations.
8. Keep it relevant – The internet makes it easy for customers to quickly discover products and services offered by other companies - even if they're very different from yours - making it possible for them to switch allegiances with little effort or consequence. If you want your clients coming back year after year, you need a solid reason why they would continue buying from you instead of one of your competitors who happens to offer something a little different or better suited to their needs at any given time (which could be anything from discounts on bulk orders or seasonal items).
9. Stay connected – It's not enough to produce amazing content and products - you also need a solid plan for getting those items in front of your ideal customers. If they can't find you, they can't buy from you; if a new audience could benefit from what you have to offer but doesn't know it exists, they won't buy either. With traditional advertising channels (like TV or billboards) becoming less effective as more people look to social media as their source for news and updates, it's more important than ever to connect with potential customers online and build an authentic community around your brand before making a sale (rather than after).
10. Don't lose sight of who your core customer really is – Entrepreneurs often see their ideas on paper and believe that anyone would be willing to pay for it - only later discovering that there wasn't nearly as much demand for their product or service as they believed there was when putting together marketing materials and financial forecasts. Not every product or service is going to appeal to everyone, so don't chase interest outside your core demographic; focus on who will genuinely want what you're offering instead of trying (and failing) to convince everyone that it'll work for them too.
What should be taken into account when implementing new business models?
Innovation ideas in business
Marketing innovation ideas
Conclusion
