What is Innovation in Business? The 6 Key Types Explained
You might have been told that for your business to grow you’re going to need to be innovative. But what does that mean, exactly? What is innovation in business? Why is innovation important for the growth and success of a company? Below, we’ve explored these questions and set out some advice on what you can do to encourage innovation in your own business.
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What is Innovation in Business?
Innovation in business is when a company introduces new processes, products, or services with the goal of boosting the bottom line and affecting positive change in the organisation overall. It’s a business strategy, involving the development and application of ideas to improve the way things are done in the business itself, or even simply seeing what can be achieved when these ideas are tested out.
Innovative strategy is often driven by brainstorming sessions, design thinking, or by establishing an innovation lab, and the ultimate goal is always to improve the company’s revenue over time. This can be done using a number of different methods, but is usually achieved by building on productivity and efficiency within your firm. As a result, your business may also see changes in the way its products and services are marketed, or the introduction of new technology to help raise standards.
What is Open Innovation?
Open innovation is when a business doesn’t simply rely on its own internal knowledge and resources to implement change and innovative solutions. Instead, the company will turn to a number of external sources in order to improve and develop. These external sources include:
- Competitors
- Customer feedback
- External agencies
- Published patents
- The public themselves
Even though there are multiple names and a long list of terms that can be used to describe open innovation models, there are two basic types. These are inbound open innovation and outbound open innovation, both of which we have defined below:
Inbound Open Innovation
This type is about sourcing information and acquiring expertise from outside the organisation. It involves investigation and looking at the external environment to find the information needed, which then helps a company to identify, select, utilise, and internalise the ideas that will be most beneficial in the future.
Outbound Open Innovation
This type involves taking internally developed ideas and commercialising them for the company’s external environment. The strategy might be carried out by selecting a particular product to reveal to journalists or reviewers, or by selling specific technology or services to customers with the goal of getting feedback in return.
Types of Innovation in Business
There are a host of different types of innovation in business. We’ve listed some of the most common and well-known models and categories so you can start thinking about which ideas will work best for your own company and its needs:
Product or Service
This involves thinking of innovative solutions around products and services, particularly creating new products and thinking up new services to offer clients and customers. It may also involve enhancing existing products and services, or introducing new technology to your business.
Process
Improving processes means finding ways to be more efficient in the core business. This often means making changes in how your company operates in terms of finances, HR, its internal methodologies, and IT services.
Marketing
The marketing innovation process involves looking at and improving how your products or services are promoted. It also means building on (or even changing) the channels that are used to distribute them.
Delivery
To implement the delivery innovation process, you have to take a look at the way your company is interacting with customers and finding a new way to do this. For example, you might choose to improve your current customer service, or start selling your goods online.
Business Model
Business model innovation has a number of different ways of being implemented and experts will often disagree over the main methods and overall goal of the strategy. However, a popular use of the type is to introduce a new way of making the company more profitable, either by increasing the amount of money made or by saving money wherever possible.
Industry Model
This is often considered one of the most radical innovation models because it involves completely changing your industry (think Virgin making the move from aeroplanes to broadband) for the purposes of innovation.
Why is Innovation Important in Business?
You want your business to grow and thrive in a market that’s becoming more competitive every day. To do this, you’re going to need to implement innovative strategy and develop ideas that help your company respond to change whenever needed. By regularly and consistently thinking up innovative solutions and carrying them out, you’ll be ensuring this happens.
You’ll also be benefiting your company in a number of other ways as well:
Increased Efficiency Saves Time
Innovative solutions that save you money will often save you time as well, and are often more sustainable. This can often help a company to adapt to shifts in the industry, helping to protect them from volatility and risk.
You’ll Stay Ahead of Potential Disruption
When it’s carried out as it should be, an innovative strategy can help a business to stay ahead by keeping an eye on where the market is going, based on potential disruptors and changes in consumer demand. This information can then be used to make changes to products and processes that might give you a competitive advantage.
You’ll Attract Employees
By presenting your firm as innovative, you’re more likely to attract new employees, while retaining team members you’ve already hired.
Brand Perception Will Go Up
Consumers in the modern day are more likely to buy from a brand that they think is innovative. If your firm is also socially conscious, this is likely to improve public perception as well.
Encouraging Innovation in Your Business
Developing an innovation strategy doesn’t happen instantly, and it won’t necessarily work right away. It needs to be encouraged within your business and worked on consistently to achieve the results you’d like to see. There may be risks involved with this, but it is often a rewarding experience for businesses ‒ even if only to see what doesn’t work for your firm.
You can encourage and test out innovative strategy in your business by:
- Rewarding innovative thinking
- Encouraging staff to provide ideas and be creative in their solutions
- Actively building innovation into your strategies and operation planning
- Investing in new resources to promote effective innovation
- Carrying out research and undertaking development activities
- Seeking feedback from customers wherever possible
Is Your Business Growing?
If your company is well on the road to success and you know that you’ll soon need a new office space to comfortably accommodate all your team and equipment, get in touch with our team here at Halkin. We’re proud to offer a fantastic range of spaces to rent across London, each with their own personality and aesthetic appeal, so you’re guaranteed to find a location which suits you.
We’re dedicated to helping your business succeed wherever we can, and our flexible tenancies even mean that we can help you move to a new address, should you ever need to expand even further and find a fresh space to impress your clients.
Alternatively, if you’re just starting out and need a place to host an innovative brainstorming session or a get-together with investors, we’ll be happy to lend you the use of an affordably priced meeting room. If you contact our team today your schedule could be set in no time at all!