In this post I’ll go deeper into one of those criteria, explaining why innovation is important in today’s competitive business environment – and how you can approach projects to make the most of it.
The Importance of innovation – what does it mean for businesses?
The importance of innovation in business cannot be overstated – for a variety of reasons.
Firstly, the act of innovating is itself what gives a business a competitive advantage and pushes industries forwards. Just think where the music industry might be now if Apple hadn’t invented iTunes, or how we might all communicate if the innovations behind touch screen smartphones hadn’t happened.
Of course, Apple is a particularly high-profile of innovation based in the B2C consumer technology space, but as I’ve mentioned in the blogs above, the term can apply to any number of businesses, in a variety of sectors, in all sorts of ways.
Examples could include:
- A food and beverage-based business innovating with new flavours, waste management systems or supply chain developments
- An oil and gas company innovating with new chemical storage, maintenance or transport solutions
- An infrastructure and construction business developing and deploying new collaborative tools or safety equipment.
Whatever your business and sector, there is likely to be a way that innovative thinking and product, service, or process development can move your enterprise forward, winning you new customers and leading to operational growth.
Another reason why innovation is important in today’s competitive business environment is the number of financial incentives on offer.
If you’re at the project planning stage, you’ll be interested to hear there are currently 17 government-backed schemes offering funding opportunities to support business innovation and growth in the United Kingdom.
Each opportunity has its own criteria for scope and eligibility, and there is an in-depth vetting process from initial application to assessment, right the way through to funding approval and ongoing reviews. You must also provide proof that your funding opportunity was well used should you wish to apply for further opportunities on different projects down the line – or risk losing the opportunity to apply again in future.
On the other hand, while grants are designed to help with funding projects that are just beginning, R&D tax credits are designed to help companies to recoup the costs of researching and developing innovative solutions to their business’s supply, product and workflow challenges.
The single biggest government scheme of this nature, countrywide R&D claims can total over £1 billion – and that’s a fraction of what the scheme could pay out if more eligible businesses made an R&D tax credit claim.
The average R&D claim by a small to medium enterprise (SME) is around £60,000, meaning that making claim is incredibly worthwhile for businesses of all sizes who have a commitment to innovation.
But how does a business actually innovate? Where does that process start? And how much of your offering should be devoted to it?
Ways to innovate
I’ll start by answering the final question first. And the short answer is: the 70/20/10 rule.
The rule, described eloquently here by Forbes, essentially dictates that doing away with the old and starting over isn’t necessary – which I’m sure will be a relief if you’re a business owner or senior figure!
Instead, you should focus 70% on improving existing technology, 20% on related products and services, and just 10% on adding entirely new and somewhat unrelated ones. A great example is Google. Their business is 70% search, 20% on services like Gmail, and the last 10% goes on more explorative technologies like electric vehicles.
Once you’ve established what those areas are for you, you can begin thinking about the importance of innovation in business on a more granular level.
Broadly speaking however, these often boil down to an internal need, or external market forced. For instance:
Internal: identifying processes for improvement
In a previous blog post I gave the example of a construction business that struggled with communication between sub-contractors and logging of maintenance needs.
In this example, the innovation-based solution was to build and deploy a bespoke digital app for smartphones and proprietary wearable technology. This just shows how innovation does contribute to the success of a business when used to fix a failing process within a business.
External: reading and exploiting the zeitgeist
In the food industry for instance, businesses that foresaw the rise in popularity of vegan and vegetarian offerings are well placed to corner a lucrative and growing new market.
Those that didn’t are getting a harsh lesson in why innovation is important in today’s competitive business environment. Worse still, they inevitably had to invest heavily after the fact to play catch-up, only to get a smaller share of that market than the ones who led the charge. Spotting your industry’s trends before they take off can be the difference between being in the first group and the second.
There are many other wellsprings from which game-changing innovations can develop. These can include:
- Having your finger on the pulse of your industry’s influential techologies
- Understanding your business’s core consumers and their buying habits
- And investing in improving your own products and services so that you can proudly say you offer the best quality in your field.
If you’re already doing all of those then you already appreciate the importance of innovation in business.
If not (and in truth, not many businesses are), then I can help.
Innovation opportunities are endless
I have over 30 years of experience helping businesses first identify new and exciting innovation opportunities, then bring them to market.
Crucially, I use well thought-out strategies that achieve short-term success and long-term results – both in terms of sales figures, and in establishing the working practices that a business can use to develop and grow for the future.
So if you’re now convinced on why innovation means big money for businesses of all sizes, and you need help in developing your own, then get in touch today.