Innovate or stagnate: The crucial driver behind business success

Daniel Saunders

Chief Executive Officer

Photo by Djim Loic on Unsplash

I know what you’re thinking. Of course, I  would promote the benefits of innovation. But there’s no need to take my word for it. The annals of history are jam-packed with stories of innovators who led their businesses to unparalleled success alongside those who failed to innovate and paid the price. 

There is nuance, however; it’s not as simple as adding “innovative” to your core values. To reap the benefits of innovation, businesses need an explicit, well-resourced innovation strategy that considers both strategic and sustaining approaches. To effectively implement the strategy, there needs to be a supportive culture open to novel ideas, data-driven decision-making and an acceptance that failure is part of the process. 

If the above is in place, then the benefits a company can experience are wide-ranging. Let’s explore the top four benefits that innovation can deliver. 

Top four benefits of innovation 

Innovation generates additional value.

innovations pay off by creating new business models, products or services that create diversified revenue streams, capture additional market share or increase the share of wallet with existing customers. 

However innovation is sometimes perceived as a cost centre, and while some initiatives require substantial investments, the output should be net positive. Spending more on R&D doesn’t correlate with increased financial performance—so, chucking more money at innovation isn’t the route to better financial results. Instead, teams should practice lean experimentation, meaning the innovation process is cheaper, quicker and generates a higher return on investment. 

Innovation isn’t just about new shiny things but finding ways to increase efficiency and reduce costs, such as developing new machinery, processes, or products that reduce labour or materials. These innovations add value by increasing productivity and profitability. 

Finally, businesses that are known to be innovative receive higher valuations, as investors and the market reward businesses that have their finger on the pulse. In fact, the stock market rewards innovative organisations even before the diversification efforts are fully realised. 

Innovation builds stronger customer relationships. 

To create successful new products, services or business models, you must truly understand your customers—their wants, needs, and the problems they face. This understanding increases empathy between business and customer, which helps foster deeper relationships and strengthen brand loyalty—two significant benefits in an age of endless alternatives. I saw a great example of this recently from the pharmaceutical company Nurofen, whose customer understanding led them to uncover “The Gender Pain Gap,” in which 1 in 2 women feel their pain is ignored or dismissed because of their gender. This insight is driving product innovations that address women’s pain while strengthening their relationship with this customer segment. 

Innovation helps attract and retain employees.

The innovation process requires companies to;

• Make decisions using data, not opinions.  
• Provide a clear set of goals and vision for the business
• Accept failures that generate learnings. 

For employees on the ground, this means that decisions aren’t based on arbitrary factors, favouritism, or who’s loudest. They don’t fear making mistakes or ideas being unsuccessful. They know where the business is going and what success looks like. All of these factors make it an attractive place to work. Employees feel valued, engaged, and supported, which can reduce absenteeism and employee turnover while increasing productivity and profitability. To boost these advantages further, businesses can introduce an intrapreneurship programme to engage more staff across the business. 

Innovation helps businesses get ready for what comes next.

The world changes fast. Competitors often stretch far beyond country borders. Competing in such an environment is increasingly challenging but less so for businesses with their finger on the pulse. 

To innovate, companies must keep abreast of the latest developments, market trends and consumer preferences. It means that when innovation is a core (and ongoing) part of the business strategy, your team will be aware of upcoming changes, giving you more time to react and adapt. Not only this, but your organisation can be the source of innovation—leading the way by developing new processes, business models, products or services. The first-mover advantage can offer considerable benefits in highly competitive markets, including defendable IP, market dominance, and being seen as a true innovator. 

Summary

Innovation is an indispensable catalyst for business success, offering many advantages, such as; 

• Adding value: A lean experimentation approach hastens the generation of valuable and validated ideas that diversify revenue streams, offer growth opportunities and attract higher business valuations from investors. Innovations can also improve efficiency, which lifts profit margins.
• Deeper customer relationships: Empathising with customers fosters stronger brand loyalty and retention. 
• Attracting and motivating employees: An innovation-focused environment empowers teams with data-driven decisions, clear goals, and the space to pursue ideas. This nurturing atmosphere attracts and retains talented employees.
• Future readiness: Amid global competition and rapid market changes, an innovation-driven business is aware of trends and emerging developments, offering a valuable first-mover advantage and greater adaptability. 

If you need help launching your innovation programme please do get in touch.