The business case for innovation

It is important to be clear about the difference between invention and innovation. Invention is a new idea. Innovation is the commercial application and successful exploitation of the idea. Fundamentally, innovation means introducing something new into your business. This could be:

1. Improving or replacing business processes to increase efficiency and productivity, or to enable the business to extend the range or quality of existing products and/or services

2. Developing entirely new and improved products and services – often to meet rapidly changing customer or consumer demands or needs

3. Adding value to existing products, services or markets to differentiate the business from its competitors and increase the perceived value to the customers and markets

Innovation can mean a single major breakthrough – e.g. a totally new product or service. However, it can also be a series of small, incremental changes. Whatever form it takes, innovation is a creative process. The ideas may come from:

1. Inside the business, e.g. from employees, managers or in-house research and development work

2. Outside the business, e.g. suppliers, customers, media reports, market research published by another organisation, or universities and other sources of new technologies

Success comes from filtering those ideas, identifying those that the business will focus on and applying resources to exploit them. Introducing innovation can help you to:

1. Improve productivity

2. Reduce costs

3. Be more competitive

3. Build the value of your brand

4. Establish new partnerships and relationships

5. Increase turnover and improve profitability

Businesses that fail to innovate run the risk of:

1. Losing market share to competitors

2. Falling productivity and efficiency

3. Losing key staff

4. Experiencing steadily reducing margins and profit

5. Going out of business