Today Invest Ottawa launched our Innovation Management Clinic which will help companies profit from their innovation practices. Read more about it here.
Below Dr Sorin Cohn, one of the leads in our new business innovation study, breaks down the five ways a company can profit from innovation:
We covered last time that Business Innovation is often a misused and misunderstood term. It’s not just the research and development of ideas; innovation is a multi faceted process that includes the implementation and commercialization of great ideas.
Firms face a relentless stream of disruptions in their operational environment because of evolving technologies, new customer demands, shorter product life-cycles, geopolitical instabilities and competitive threats. To maintain their positions, companies must develop innovative capabilities and exploit them in the market. Some businesses get to the top of their industries thanks to innovation, but very few stay there year after year. Sustaining innovation at a full-throttle level is key to remaining at the top.
Here are the five fundamental ways by which businesses profit from innovation:
- More Powerful Strategies Based on Better Market Understanding and Winning Business Models.
Businesses can benefit from innovation by fundamentally upgrading their business model; i.e. the “system” that integrates them with the market – how they consider the market, how they understand it, how they interact with customers, suppliers, distributors, etc., and how they make money and achieve value.
Innovation within the business model itself requires a holistic understanding of the critical relationships between the firm, its customers, suppliers and distributors – both of today and of tomorrow. Companies like Apple, Google, FedEx, Dell, Amazon, eBay, IBM and many others have become market leaders through business model innovation, while companies like DEC, Wang, Nortel, Kodak or RIM have lost their status, despite being technology leaders, precisely because they did not innovate their business models.
- Better Use of Resources and Capabilities
Businesses profit by innovating their capabilities to handle the future through enhancements in their resources – be they people, partners, facilities, tools, machinery, or the technology platforms on which the products are built. It is only by having competitive resources that a company can maintain and enhance its position in the evolving markets.
- Stronger Culture of Entrepreneurship and an Organization for Efficient Success
“Culture is the secret sauce” has been one of the key findings by the Center for Business Innovation at the Conference Board of Canada. It is the corporate culture that animates the leaders and all the people in the company to continually search for better ways to serve their market and enhance the company value. Without the right spirit of competitiveness, respect, trust and collaboration, not much can be achieved in a company. Values and culture determine whether a company will succeed or fail.
- Better Solutions: Products and Services for the market as well as Corporate Processes (internal and external)
Businesses profit by innovating the “solutions” they develop, implement and deliver to the market. Having the right product (or service) for the right customer at the right price and at the right time via a trusted channel is what leads to sales and bigger and bigger revenues.
It is not sufficient to have competitive products. Many companies do not survive, not because their products (or services) are deficient, but because they lack either cost-effective production capabilities, or worse, they have ineffective commercial processes and weak channels to market.
- Better Value and Outcomes
Businesses profit by achieving outcomes of higher values: financial outcomes, customer outcomes (better and more customers), territorial outcomes (new markets opened for the company), brand outcomes (better corporate recognition in the market and higher attraction for its products and services), social and environmental outcomes, etc.
Read more about our Innovation Clinic here.