Businesses best positioned to survive and thrive through the highs and lows of economic cycles are those that continue to innovate. During tough economic times, innovation can help your business by increasing efficiency or finding new markets. In boom times, innovation can help your business cope with the increased demand through improved processes and managing cash.

Innovation may be driven by the need to solve a problem such as changes in the market, technological advances, regulatory changes or increased competition. Or, it may be driven by the desire to seize an opportunity. Innovation is more than simply having a good idea though. It’s about using new ideas and concepts to create value, whether that’s commercial, social or organisational.

Ways to be innovative

Innovation can occur in any aspect of your business. It may be in the form of a major breakthrough such as creating and bringing a new product or service to market, or it may be in a series of small innovations such as finding more efficient ways of working.

The 4 most common types of innovation are:

1. Product or service innovation

When people think of innovation, quite often they’re thinking of product innovation. Product innovation can come in two different forms: the development of a new product, or an improvement in an existing product. The drivers of product innovation might be technological advancements, changes in customer requirements, or an outdated product or service.

2. Process innovation

Process innovation is probably the least glamorous form of innovation and is typically only seen and valued internally.

There are countless ways that business processes can improve – from changes in the equipment and technology used to produce a product or service, to implementing software solutions to help in the supply chain or customer service processes.

Applying an innovative approach to improve operational processes in your business can simultaneously reduce costs and improve business efficiency.

3. Marketing innovation

Even with the greatest product in the world, you still have to convince your customers to buy it. Marketing innovation is simply the implementation of new methods to take your product or service to market, increase your customer base or expand your market.

4. Business model innovation

Business model innovation does not necessarily involve changes in your product or process – it’s a change in the way your product is brought to market.

Where both product and process innovation can be incremental and moderate, business model innovation is almost always radical and transformative.

AirBnB, Uber and Spotify are examples of fast-moving companies that have disrupted conventional business models (hotels, taxis and music) by tweaking or inverting their industry’s traditional way of doing things.

While start-ups have a big advantage in adopting a radical business model, well-established businesses have the benefit of an existing customer base and greater resources. It is certainly possible to challenge your own existing business model and “disrupt” yourself.

Encouraging innovation

A culture that encourages innovation is one in which employees are encouraged to take risks and test their ideas.

Some simple ways you can encourage innovation in your business are:

communicate the importance of innovation when interviewing and inducting new staff
get regular feedback from your team on how they would improve the processes in their role
arranging regular training to increase knowledge
encouraging networking activities and industry participation to stay on top of trends
have methods and processes in place to encourage and capture new ideas
reward and recognise those who come up with new ideas
encourage experimentation and tolerate failure

Protecting your ideas

Protecting your innovation (or your idea) is an important consideration. Whether your idea is a new product or service, or an improvement to an existing product or service, your intellectual property needs protection due to the competitive point of difference it gives you in your market. Learn more about protecting your ideas.

Further help:

Would you like to boost innovation in your business?

Marsh & Partners advisors are passionate about supporting business owners to take control and achieve success. We can provide tailored advice on a range of business topics including business planning, innovations to increase competitiveness, cash flow, growth and grants.

You can reach us on (07) 3023 4800 or at mail@marshpartners.com.au.

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