How Innovation Can Help Businesses Increase Efficiency and Profits
Innovation is all about coming up with new ideas that can help businesses increase efficiency and profits. Creating innovative ideas involves a lot of brainstorming, trial and error, and feedback from customers. Many innovations come from the outside, but it’s also possible to innovate internally. One way to do this is by encouraging staff to think laterally. Another is by implementing open communication and ensuring that employees feel safe to share their ideas.
The best sources of innovation are often unexpected. For example, in 1928 Alexander Fleming discovered the first effective antibiotic, penicillin, but it was not until 15 years later that it began to be used regularly. Alan Turing had the idea for a universal computer in 1936 but it wasn’t until the 1990s that computers began to have an impact on productivity statistics. Other sources of innovation include exploiting incongruities between different types of reality. For instance, when an industry has a steadily growing market but declining profit margins (such as steel in developed countries between 1950 and 1970) this can be seen as an opportunity for innovation.
Moreover, it’s worth noting that innovation rarely happens in isolation, and is almost always the product of synthesis across domains. Darwin’s theory of natural selection borrowed from the work of Thomas Malthus and Charles Lyell, while Watson and Crick’s discovery of DNA came from combining discoveries in biology, chemistry, and x-ray diffraction.
While it may seem counterintuitive, the most successful innovators are those that have a good understanding of the needs and capabilities of their customers. This is what allows them to identify the most relevant and valuable opportunities for innovation. This includes a thorough analysis of the current situation in your industry, the existing gaps, and who the other actors are that can influence the outcome of an innovation.
Finally, it’s important to note that the majority of innovations never make it off the ground. It’s often referred to as the S-curve: many ideas enter at the wide end on the left, but only a few innovations come to market at the narrow end on the right.
To overcome this challenge, companies need to develop an approach to innovation that reduces the likelihood of failure and provides a return on investment. This can be done by adopting methodologies such as Outcome Driven or Lean Start-Up model. These methodologies are based on the same principles of Test – Fail – Refine. However, they are designed to reduce the odds of failure rather than to guarantee that a winning product will be produced. As such, they are a great starting point for any company seeking to become more innovative. Ultimately, innovation is the key to improving your business’s competitive advantage. So, what are you waiting for? Get started today!