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What Is Business Innovation and Why Is It Important?

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Innovation is at the heart of some of the world’s most successful businesses. Adopting an innovative approach to our work helps us discover better solutions, come up with better ideas, and push our companies forward.

However, the definition of what innovation is – and why it’s so important – can make the concept seem confusing.

In this article, we’ll be looking at what business innovation really means in the modern world and why it’s so important.

What is business innovation? 

Business innovation means introducing a new concept to your company.

This could be in the form of a new product, strategy, service, or communication method. Whatever it is that you bring to the table, it should have the ability to provide value and fuel growth for your business.

But innovation doesn’t just come down to generating ideas, it relies on managers listening to creative concepts and finding the best solutions to implement them. Without collaboration between employees and management, innovative ideas cannot have an impact on businesses.

Why is innovation important in business?

If you want a business to grow successfully, innovation plays an important part in helping you reach your goals.

Here are some of the reasons why innovation is so important in business today:

Innovation promotes adaptability

It is difficult, if not impossible to predict the future. Throughout the pandemic, businesses across the have faced severe disruption and a complete change to normal operations, and many of us have had to learn how to adapt.

The businesses that have continued without making changes have frequently been the ones to face the most negative consequences during the pandemic. Companies that took an innovative approach, however, were able to overcome the challenges that they have been faced with.

Innovation can help grow your business

Innovation can add significant value to your business by finding more profitable ways of doing things, introducing popular new products or services, or optimising your operations.

All these things will ultimately result in an increase in profit. Without these innovations, your business may struggle to keep up with trends, potentially resulting in customers tiring of the same offerings.

Innovation helps you to stand out against your competitors 

Business can be hard when you’re trying to reduce competition and become a leader in your industry. Innovation is critical to staying ahead.

Many industries are full of companies offering similar products and services. But if you offer customers differentiation, it can help to distinguish your business from all the others in your sector.

Innovation helps you make the most of new technologies

We’re living in a time in which technology is revolutionizing our everyday lives. With technology becoming ever-more advanced, profitable opportunities are open to businesses who are willing to take risks.

There are now efficient technologies that can manufacture products quicker, optimize productivity, promote your business to customers worldwide and track your performance.

If you learn how to take advantage of the technology available, you can help to optimize your business for success.

Examples of innovation in business

There are plenty of examples of innovation in the world of business that we can all take inspiration from, including:

The Apple iPhone

Many people can still remember the days before Apple iPhones when mobile phones were large and impractical. The iPhone was one of the most important modern innovations that completely changed the way in which cellular technology is used.

Even now, the brand have continued to push the boundaries when it comes to what a mobile phone can be, creating powerful portable devices.

Ford’s innovative use of crowdsourcing

After revolutionizing the world of automobile manufacturing, Ford remains an important innovator in business. It is one of a group of businesses to have pioneered the idea of crowdsourcing.

Ford uses the knowledge of its employees and customers to tackle various problems and projects efficiently – a concept known as its IdeaSpace innovation accelerator.

Opening up idea generation to people has allowed the company to come up with innovative campaigns, solutions and ideas, helping to advance the brand and differentiate it from its competitors.

Amazon and the world of e-commerce

For some it is difficult to imagine a life before Amazon, such is its impact on the landscape of modern retail. 

Not only has it made fast delivery and unlimited choice the norm, one of the company’s boldest innovative ideas was letting vendors sell products on their website. In doing so, other businesses can benefit from Amazon’s popularity and large customer base, while Amazon takes a percentage of each sale.

Models of innovation

Innovation isn’t a completely black and white phenomenon. There are three main approaches that businesses can use to come up with more innovative, profitable ideas.

The three different models are:

  1. Revenue model innovation: This is where managers look to their revenue model to help uncover more innovative solutions. The goal of this approach is to increase revenues and profits by creating new products, discontinuing other products, changing supply chain, or updating pricing.
  2. Industry model innovation: This is where companies look at the industry they’re operating in to help come up with innovative ideas for improvement. Using this approach, a business may choose to target new industries, or create a whole new industry to sell their innovative products and services.
  3. Business model innovation: This is where a business looks at its business models as a whole in order to find opportunities for innovation. They may choose to take an innovative approach to their business processes, strategies or technologies.

Want to learn more about innovation in business?

At EU Business School we are passionate about instilling the quality of innovative thinking. 

Business innovation is extremely important, acting as the driving force behind some of the most successful companies in operation today.

If you want to learn more about innovation in business, take a look at our innovation and entrepreneurship program.

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