Why is innovation critical for any business?

In a modern world of terminology and industry buzzwords, it can easily happen that two people use the same term, but mean completely different things. Let’s start with defining innovation.

What do you mean innovation?

Innovation and creativity can sometimes be used interchangeably. While similar, they are not the same thing at all. Leveraging creativity in business is important because it serves as a precursor to innovative thinking and finally innovative solutions. Where innovation is implemented creativity that creates value to support the business and/or it's clients.

So what is innovation exactly then?

Innovation is a product, service, business model or strategy that is both novel and produces value. A single innovative product or feature does not have to be a major breakthrough, but does add a slight edge to the greater eco-system. Innovation can be as simple as leveraging a new platform or feature in a way to slightly increase traffic to your website or changing the way information is captured from clients to make the process simpler.

That is great, but why is innovation so important then?

Well, if you think about some of the most impactful businesses in recent years, what exactly did they do to become so impactful? Think about Amazon or Uber; these businesses started with a simple idea: “create an online bookstore” or “order a taxi with your phone”. The fact is, those ideas aren’t that innovative or impactful if you think about it. The thing that helped these businesses become incredibly impactful is the innovative way they decided to build these businesses.

You see, Amazon made it incredibly easy to find any book you could think of. They believed in the innovative idea that a book store is only as useful as the number of books that they stock. So, they went out to stock or have the ability to source any book you could want. They applied an innovative lens to something as simple as a bookstore.

Similarly, Uber did a similar thing. Hailing a taxi via your cellphone was not a new idea, you could call a taxi company and a cab would show up on the curb in a few minutes or hours. The thing that made Uber impactful was that you could now hail a taxi anywhere in the world in a few minutes, without having to know who to call or what to say. It was the innovative way that they built their business that made them so incredibly impactful.

Simply put, you can summarize the importance of innovation into three major points

1. Innovation enables adaptability: We don’t have to tell any business how important it is be adaptive, weather it is being adaptive to a new global pandemic or changing market climate. Businesses that can adapt, survive and thrive.
2. It fosters growth: For any business to be successful , it needs to grow. Without growth a business can’t produce returns for their investors or compete with ever changing competitors. Innovation helps businesses grow by maximizing the total nett value they can deliver to their clients.
3. It differentiates the business and the value that it produces: In a marketplace where price and feature wars run rampant, and the name of the game is how to get the upper hand over your competition, innovation has become king, helping you differentiate yourself by offering new, different and valuable products and services to a market that craves it.