Innovation is a constantly changing and evolving concept. Innovation is the creative application of scientific, technological, economic, social, or religious ideas resulting in the creation of new products or services, improvement in providing existing products or services, or the improvement of distributing services or products. Innovation can be a process, product, technique, idea, or set of processes or products. In a broader sense, innovation can refer to the procedure by which ideas are applied to solve problems.
For a business to transform into an innovative firm, it must have an innovation strategy or plan. In order for a business to compete in today’s market, it must come up with new value added procedures or processes to capture, instead of replacing, current market opportunities. Innovation is important to businesses that are looking to build a foundation where they can grow, such as smaller companies that aim to penetrate the global market by introducing innovative products or services to consumers at lower cost. On the other hand, large companies can also apply innovation to increase their market share by capturing a new segment of the market. Either way, innovation helps a company to improve upon its performance and establish a position in its respective industry.
The success of any business lies on its ability to innovate and stay ahead of competitors. In fact, over the past several years, the United States economy has grown more than six percent per year on average. This means that the country is now the leader in cutting-edge innovation. The definition of innovation therefore involves the use of new technologies, information, and methods to solve problems, make money, or achieve any other goal. As a part of a company’s innovation strategy, strategic management must first create a vision or a business plan specifying the goals of the organization. The next step entails a comprehensive research on the available sources of innovations to identify the sources of differentiation to build a unique competitive advantage.
Innovation may also entail finding the right people who can contribute ideas and bring them into the innovation process. With innovative ideas, processes, and people, it is likely to have a significant impact on the quality and quantity of innovation performed by the organization. The key is to find the right mix between top-notch workers and top-quality equipment, marketing, and customer solutions. Moreover, strategic management must set clear standards for defining innovation capability and measuring it against the organization’s actual results. Achieving a high level of innovation capability involves careful leveraging of existing resources and systematic process improvement strategies.
Another important element to innovation is establishing a new market for a product or a service. The old markets are being tapped to create something new that can be applied to resolve a problem or increase the effectiveness of an existing product. This process is known as disruptive innovation. Examples include novel medical devices that offer new treatment options or products that rework old products to deliver improved performance.
There is no doubt that innovation helps to solve problems. However, it is also vital for innovation to be a sustainable activity. Companies need to periodically reinvent themselves in order to stay ahead of the competition and come up with new ideas to solve problems. If companies allow their innovation processes to stagnate, then they will miss out on the significant opportunities that emerging markets provide. Innovation must be nurtured at every stage to ensure its long term sustainability.