As per Arthur Freydin, Innovation in business is the time when a business introduces new or improved business model(s) or processes products or services to increase profit, revenue and market shares. In other words, the objective of innovation in business is to increase the value of your business' bottom line by the identification and implementation of business processes that cut costs, boost efficiency, or meet the needs of your customers in any aspects of these:
- What you make: your products and services
- How do you create ityour operations and organizational system
- How to market it the strategy you use to market it
4 Business models innovation
Innovation in business is more than the creation of new products and technology, says Arthur Freydin. Here are four business innovations strategies that can lead to significant expansion in your company.
Revenue model innovation
With the help of revenue model innovation businesses are redefining the way, and where the sources of their revenue are derived. The most common examples of this can be found in the digital technology where recurring subscription pricing models are becoming increasingly used in lieu of the traditional single transaction that was common in the past.
Microsoft Office, is a great example of this, a product historically upgraded by businesses every few years, and is now a (rebranded) software-as-a-subscription service, Microsoft 365.
Arthur Freydin said many of the most ingenuity-driven SaaS companies are in existence in the present largely because of this model, and the freedom it gives companies to come up with, develop and refine their ideas in a short time to stay ahead of rivals.
Business model innovation
Innovation in an organization's model may be the most extensive strategy for an organization, and is likely to involve significant processes, and could even include an overhaul of the business's core.
One example by Arthur Freydin could be energy companies that historically focused on fossil fuels which are now reversing their focus to adopt more environmentally friendly policies.
What innovation model suitable to you?
Whatever model (or combinations of) your SME decides to adopt the strategy, it must be viewed from the whole picture.
As with the Butterfly Effect, change in one area can affect another and vice versa, so you must be aware ( and listen to the opinions) from your own internal customers - your marketing, sales supply chain, manufacturing departments when it is time to choose what areas your company focuses on.
Expert in innovation Mohan Sawhney points out, looking at innovation in a narrow way "blinds companies to opportunities and leaves them vulnerable to competitors with broader perspectives." (Source: "The 12 Different Ways for Companies to Innovate," MIT Sloan Management Review)
The most often ignored aspect of a business strategy that is innovative
Of course, feedback and ideas from the internal stakeholder group are important as well, the opinions of your customers are crucial and any actions to introduce new ideas should be driven by buyers.
This is especially true for B2B markets, which target mid-size and corporate customers, since consumers and buyers aren't identical, and there is usually an "buying group" of decision-makers that might not be aware of or utilize products or services.
In these situations, the main goal in increasing and expanding your company, is to constantly find ways to provide worth to the decision-makers you serve Find ways to meet their requirements, their issues and their top strategic priorities.
When you take this buyer-driven strategy, you will be an expert advisor for your partners in business, leading to more long-term relationships as well as greater revenue opportunities, increasing the success of your company.
Innovation is often not in line with the strategic demands. It's a widely known and well-known fact. It is usually not an issue of the inventor rather the people who are inventing but who aren't sharing the idea or not recognizing all the implications it could result in shifting resources, investing funds or even ignoring the difficulties that are often associated in the process of innovation to develop the strategy, validate it, and implement the benefits of this strategy.
Unfortunately, many innovators are doing their thing with no specific guidelines, aside from the general idea that "we need to be more innovative" and this lack of coherence that is emanating from the boardroom, and failing to spread across the organization is leaving this part of strategic innovations should be designed from being clear. They don't get caught up in the necessity for changes and their consequences from an innovative point of view. Alignment needs to be an unbiased assessment.
The ability to innovate requires understanding and reflection of the company's business practices. Innovative people must be aware of the value-creation aspects which will result in profit-generating and capital-efficient growth, and then "go on the hunt to make their contribution towards these objectives.