Simply put, an innovation is a new idea, a new device, a new system, or a new process. In business, it could mean the introduction and implementation of new ideas, systems and processes, or the development of products and services, with the goal of making the business succeed and grow. In short, innovation is what every business needs in order to be competitive in the face of ever-changing business climates.
Innovation vs. Invention vs. Improvement
Many erroneously interchange innovation with invention, and innovation with improvement, thinking they are one and the same. The simple definition, as stated above, seems to support this misconception. However, there are marked differences among these three.
If you are creating something entirely new or unique from scratch, or from the ground up, that is invention. It is basically a new and original idea. Innovation is when this invention, or new idea, is translated, altered, or changed into another idea that gives better results or outcomes.
On the other hand, many are likely to say that innovation is the same as improvement. This is not necessarily true, since improvement can be defined as “doing something better”, whereas innovation runs more along the lines of “doing something different” or “doing something differently”. The difference also lies in the amount of risk involved. Improvement is less risky, since there is only one or two expected outcomes (bigger, better, more). With innovation, the wider range of possible results or outcomes make it riskier.
Innovation in Business
Clayton Christensen introduced the Theory of Disruptive Innovation in his book, “The Innovator’s Dilemma”, stating that being innovative will begin by disrupting the old way of doing things. The innovation – or the disruptor – starts out small, or at the low end, working continuously towards bigger results, such as improved processes, more advanced products, or better services.
For the longest time, Apple has been touted as the most innovative company in the world, churning out breakthrough products that are instrumental in changing the way people view – and use – communication and computing gadgets. When MP3 and other portable music players were the norm, Apple’s innovativeness surfaced when it introduced the iPod, then the iPhone, and then the iPad. Of course, the progression from the original iPhone to the iPhone 5 falls more under improvement than innovation.
Common Types of Innovations in Business
Process innovation – this refers to the organizational and operational structure of businesses, as well as its core processes.
Product or service innovation – this focuses on the offerings of the business. It refers to the key features of what product or service they are offering.
Product or service delivery innovation – this may also be called “marketing innovation”. It refers to how the product or the service is communicated or made accessible to customers or clients. The innovative ideas center mostly on how to make a better customer or client experience.
Financial innovation – more often than not, this pertains to innovations regarding the business model and the value network of the business.
When applied, innovation requires a lot of time, money and resources. However, when done right, it could also save a lot of time, money and resources. Essentially, innovation can make or break a business.