There’s a very famous quote. “Every business has only two functions- Marketing and Innovation.” This quote is attributed to both, American business magnate and management expert, Peter F. Drucker and Czech-born French writer, Milan Kundera. Whoever said these words is immaterial. What they signify indeed holds supreme significance for every business small and large.
Marketing is vital for every business for several reasons. It needs to create awareness about its very existence among the general public to attract customers and also to come up with marketing strategies. Business needs to engage proactively with consumers if it’s serious about remaining in business.
Often, such engagement generates newer ideas and concepts. Consumers can provide vital inputs about features or elements they desire in a product or service.
Innovation is generally a result of these vital inputs from consumers. A business will innovate its range of offerings only when there’s a justifiable demand. Furthermore, companies that are serious about retaining clients while attracting new ones are the first ones to innovate. Innovation contributes to the success of a business.
How Innovation Contributes to Success of Business
There’re several ways of how innovation contributes to the success of a business. Understandably, it would depend upon the nature of the business and its location. However, most elements remain somewhat similar.
Innovation Generates Loyalty
As I mentioned earlier, listening to customer feedback is important. What’s more important is taking the corresponding action over such feedback. A customer doesn’t provide feedback without reason. It implies, they’re genuinely interested in your business and brand. And they’d love to see some features that suit their needs better.
Often, such feedback is also a veiled warning that should your business fail to meet expectations, the consumer would move away to a rival. Here, it’s worth remembering the customer is actually providing you an opportunity, a window to enhance your offerings. If not, they would have already moved to your competitor.
When you act on such feedback and innovate your products or services, a customer tends to identify with your business. They’re aware your business cares about their needs. That you’re not interested in merely making money but in serving the people. These elements add up to generate vital loyalty for your business. Loyalty automatically translates as success in business.
Extension of Product, Service Lines
Innovation helps your extension of an existing line of products or services. This means, you can retain the existing ones that have a good market. At the same time, you can launch newer products or services under the same brand, with some innovative features. Not every client or customer would be interested in paying for a new, innovative product or service. Especially if this innovation is going to cost the buyer a little more money.
When you extend a line of products or services through innovations, it’s possible to cater to a much broader segment of the market. Thus, you can have a single brand that caters to regular, medium and premium market segments. Since the line has full range of products or services, it helps your business defray higher costs that it would incur through innovations. Your business is also able to produce only specific quantities of premium products, depending upon the market demand.
Venturing into Newer Markets
Innovation contributes immensely to a business that wishes to venture into newer, unexplored markets. This is evident from the success that most Multinational Companies (MNCs) operating worldwide enjoy. All MNCs were born as small local or at best, domestic businesses. Innovation saw their products gaining popularity across their country. And they were able to spread worldwide because they could innovate their base products to meet specific ethnicities and nationalities.
If we examine the products and services of MNCs, it would be very clear that their product and service offerings differ in every market. Though the brand remains the same, the stuff often changes. Understandably, one of the reasons because MNCs also use indigenous raw materials and ingredients. However, they innovate with locally available material to create an altogether new product under the same brand that suits local needs while keeping prices low.
Pumps New Life into Business
So far, we’ve spoken about how innovation contributes to the success of a business in terms of products and services. Therefore, let’s change gears and discuss how innovative thinking can actually swing the fortunes of a small business ideas and help it succeed in a heavily competitive marketplace. Unless there’re innovative thinkers at the helm of a business, it is bound to stagnate before eventually floundering and even fading into oblivion.
Innovative thinking actually pumps new life into an old business. As famous scientist Albert Einstein puts it: “We can’t solve today’s problems with yesterday’s mindset.” Naturally, every business in today’s world would definitely encounter a plethora of problems despite the best efforts to stay clear. Most problems occur due to intrinsic deficiencies within the business. They remain camouflaged as operating procedures and surface only when the going gets tough for any reason.
However, businesses that are run by innovative thinkers are able to maneuver away from crises with fair ease. Rather than adopting that traditional, canned approach towards any issue, they implement innovative techniques. And these new solutions that nobody thought about before often prove most effective.
Innovation Saves Money
Indeed, innovation saves a lot of money for every business. There’re no thumb rules that innovations have to be expensive or involve extensive research and development. Instead, innovation can be something as simple as implementing a new Standard Operating Procedures (SOP). A new SOP can often help businesses circumvent long payrolls caused by overstaffing. Instead, they can work as leaner, meaner and more profit-oriented businesses.
When every staff member has work cut out clearly, there’s little room for redundancy. This, in turn, helps trim the payroll and keep it at affordable levels. Furthermore, innovation allows companies to outsource work from freelancers to other organizations. Hence, they can avail of skills that would otherwise cost a mini fortune as fulltime hire. Businesses can outsource only those tasks where the core leadership and existent staff lacks specific skills. Limits can be placed on how much work should be outsourced to keep cash outflows minimal.
Innovation Implies Progress
Any business that believes that tastes and likes will carry forward from one generation to another is destined for doom. As generations evolve, so do tastes and preferences. Obviously, there’ll still be some demand for those contemporary products or services of yesteryears. Yet, they’ll fade as newer generations of consumers crop up across the globe. This is an unavoidable phenomenon. Hence, any business serious about staying in business has to innovate to meet modern needs and preferences.
The best examples of rapid innovation are companies that manufacture smartphones. They innovate on their already latest brands to come up with more modern offerings that appeal to the younger buyer. Hence, they’re able to phase out devices that came into the market just a year ago while offering newer ones that come with more features that people desire. And these companies generate an artificial need through trendy ads that appeal to the younger generation.
Any business that innovates its offerings witnesses progress. Its brand or product or service never goes ‘out of fashion.” Instead, the business ensures continuing patronage over a wide cross-section of generations.
Innovation Brings Efficiency
People nowadays lay greater emphasis on the value of time than ever before in the history of mankind. Hence, they look for quicker services. Days, when people would willingly wait at queues to get some work done, are going extinct fast. Instead, they want near-instant service. That’s where innovation plays a major role in corporates. It can offer speedier services at fraction of a cost. Excellent examples of innovation include the use of Artificial Intelligence by banks, Non-Banking Financial Institutions and others where the emphasis on customer service is greater.
In the US, we have robo-advisors that utilize complex algorithms to compute inputs from customers and offer best savings and investment solutions. While high net-worth individuals and families can afford the luxury of a human financial advisor, others use a Robo-advisor because they’re efficient for making relatively smaller investments. In fact, several American financial institutions provide a Robo-advisor for a small fee to customers. This creates a win-win situation. The financial institution promotes its savings and investments products and services while a client gets the best deal for their money.
As we have seen above, these are some ways of how innovation contributes to the success of a business. Unfortunately, for every business that innovates its operations and offerings, there’re countless others that shy away from this simple task. The results are there for everyone to see. These businesses, despite being formidable giants during an era, die a whimpering death due to lack of innovation that causes clients to lose interest. It’s worth remembering that a customer or supplier’s needs and demands continue to evolve. Without rapid innovation, meeting these expectations often proves a Herculean task.