Why innovation is essential to your business and understanding innovative technologies available.
So many people believe either companies are innovative or they are not. In reality, this view is very simplistic and polarizing and fails to consider the numerous types of innovation companies can and do pursue.
Even though it’s common to hear about innovation in terms of technological advancement, and it’s true that technological advancement has been, and will likely remain, the most obvious form of innovation, several other types exist.
Many innovations are incremental improvements to existing products, processes, and services; however, some innovations are technological breakthroughs or business models that significantly change industries.
In a constantly changing environment, you must be able to improve your business in different areas to help solve emerging problems and provide new value to your customers.
An organization can discover the types of innovations most suitable to its business by understanding what types of innovations are available. You can improve your ability to grow the business by understanding and focus on the most potential ones.
In the following article, you will learn why innovation is essential to your business and which types of innovation strategies you can use to get your company to the next level.
Understanding Innovative Technologies
Innovation also refers to incremental, gradual, and continuous improvements to existing products, services, and concepts.
In addition to slight differences in the product formulation or delivery method, incremental improvements are just a little better than their predecessors.
By continuously improving services, products can be made smaller, easier to use, and more attractive without changing their core functionality.
For instance, the use of email extractors these days to find emails for lead generation.
Advantages of Incremental Innovation
Although incremental innovation does not create new markets and does not use radical new technologies, it can bring in higher paying customers because it meets their needs, as revealed by their behavior or feedback.
The product or service may also appeal to a broader, mainstream market if you can offer the same functionality and value at a lower cost.
A mobile phone is a perfect example of both of these scenarios. It is constantly improved, and there are new models, yet the concept and components remain largely unchanged. For example, a good battery backup mobile phone can easily be obtained for a few hundred dollars, while a long-lasting battery backup with a good camera quality mobile phone can easily be obtained for thousands of dollars.
The advantage of incremental innovation is that it is often easy to sell because people are already familiar with the key principles of your product or service.
The Disadvantage of Incremental Innovation
Additionally, incremental innovations are unlikely to have a huge impact if they are merely marginally better than what already exists.
A second risk is over-complicating products and adding features no one wants to pay for. Unless you specifically target the more demanding customer segment and provide them with premium products, you shouldn’t ignore the customers who want a simple, low-cost alternative to your product.
Another risk associated with incremental innovation is the possibility that the market may change (and probably will) at some point due to disruption. In that case, incremental innovation alone will not suffice to keep up with the changes.
Therefore, it is important to discover new business models, work on disruptive innovations, and improve the core business.
This innovation theory describes concepts, products, or services that create a new value network by entering an existing market or creating a brand new market. When measured by traditional value metrics, disruptive innovations initially have lower performance, but a small market segment values different aspects.
Despite their potential to convert non-customers into customers, these innovations don’t necessarily appeal to the needs and preferences of mainstream customers, at least not yet. Moreover, established organizations are very rational when making decisions about their existing business, which makes disruptive innovation difficult.
Due to their focus on optimizing an existing offering or business model that has shown success in the market, they fail to adapt to the new competition. As a result, it is more likely that a new entrant than an incumbent will disrupt the market.
Business disruption occurs when old methods fail and require new capabilities. Although the risks are high, there’s a great deal of growth potential if everything goes right.
Disruptive Innovation Example
In comparison with more traditional car manufacturers, Tesla has different capabilities. For example, traditional automakers aren’t very good at software, battery technology, and iteration; gaining those capabilities will take time and resources.
Disruptive innovation is also evident in Netflix, which didn’t initially appeal to Blockbuster’s mainstream customers but attracted early adopters familiar with online shopping.
Despite this, Netflix did not reach a mainstream audience until it transitioned from its DVD mail service to online streaming. Currently, customers can choose from a wide variety of online movie subscription services, which have slowly become the norm, transforming the industry.
Therefore, rather than just sticking with your past success in serving the most profitable segment of customers, you should also focus on business model innovation to discover new profit centers that may not appear as appealing now but could have significant growth potential shortly.
In contrast to disruptive innovation, sustainable innovation exists in the current market. Instead of creating new value networks, it improves and grows the existing ones by satisfying the customer’s needs. With each iteration of sustaining innovation, the product performance is made slightly better, reducing defects. If the new, improved product version targets more demanding, high-end customers with better performance, it can be more expensive and have higher margins than the previous version.
There is often no substitute for traditional business methods or sustainable innovation since they are profitable and lower risk. On the other hand, a disruption usually generates top-line growth: larger market share gains or the creation of entirely new markets. However, it is not typically profitable for a long time since disruptors spend a lot of money growing.
The market continues to grow slowly through sustained innovation, but not similarly. As a result, the focus shifts to increasing profits.
Sustaining Innovation Example
iPhone is one example of a once disruptive but now sustaining and profitable innovation, as the recent versions of the phone appeal to the same segments of customers and do not create new value networks. Apple’s profits have grown simultaneously as criticism of the iPhone’s lack of innovation has increased.
In the premium segment of the market, the new phone models sustain the existing business model, which meets the needs of customers willing to pay more for a newer and slightly better phone.
Disruptive innovation has similar characteristics to radical innovation, but it is different because it simultaneously uses revolutionary technology and a new business model.
Unlike what we are used to, radical innovations solve global problems and address needs in completely different ways, and can even solve problems and needs we did not know we had, completely transforming the market or perhaps even the economy.
Recent years have seen a rise in radical innovations, though they are rare. Innovative technology, such as the personal computer and the internet, has transformed how the world functions and communicates.
Understanding Innovative Technologies and Its Impact
As a result of these disruptive innovations, our economy is experiencing highly accelerated growth, leading to highly accelerated development. People usually experience significant resistance to radical innovation at first because it is so different from what they are used to. These innovations typically take a great deal of time and technology development to reach mainstream markets.