What is innovation?
The word is used frequently and without much rigour. Most people only think of the invention of a product and not so much about the successful development of a business model.
Innovation is at heart a combination of two processes: invention development and adoption development. Each new innovation has to succeed at both of these, as invention alone is not enough.
So who needs to innovate?
Startups
Startups are the classic vehicles of innovation. In many cases the innovation is the company, and the entire focus of the startup is to succeed in innovation. However, while there are some similarities between innovation in a startup and innovation in an established company, the organisational challenges are very different. A steep learning curve in all areas of business and the high-risk nature of the venture mean that the startup is vulnerable to failure without the right support.
Market-leading organisations
For an established, successful organisation, innovation is critical to defending the market position and ensuring sustained growth.
When you are the market leader, there are two important things to realise:
- Sustained growth in the organisation requires innovation to build new markets or find new growth in your existing market.
- Your existing market share is at risk from disruption and innovation is required to keep you ahead of your competitors.
All market-leading organisations should have an innovation policy to ensure that they can identify new areas for innovation and facilitate the actions and activity needed to seize these opportunities.
Underdog organisations
Organisations who are fighting to take market share from the market leader often make the mistake of competing head-to-head with them. There is a big benefit to innovating in the business model or product to find some clearer space where they are fighting smarter, not harder.
As an underdog there are unique benefits such as less of a customer support overhead or less technical legacy, not to mention the chance to build a newer, more appealing brand. Innovation for the underdog can be the key factor in succeeding.