Innovations help companies adopt new technologies and improve their productivity. They can also lower costs and enhance sustainability. Innovations also make companies more competitive in their market. In this article, we’ll explore some of the benefits of innovation. In addition, we’ll look at some ways companies can take advantage of them.
Enables Companies to Take Advantage of New Technologies
Infographic provided by Atlantic Pacific Equipment, Inc., an industry expert scaffolding supplier
Innovation is utilizing new technologies to improve existing products and services. It can also include incorporating new technology to create a new business model. This type of innovation does not necessarily require a technological breakthrough, but it must challenge the business model of an existing company. For example, Google’s Android operating system disrupted Apple and Microsoft by providing a free alternative operating system.
The Innovation Landscape Map is a visualization of the various stages in the innovation process. Based on the work of several scholars, it depicts innovation along two dimensions: change in technology and change in the business model. These dimensions are interrelated and suggest four quadrants representing different stages in innovation when viewed together.
The first category is product-related and is the most traditional definition of innovation. Many businesses focus on adding value to their product lines in this category. This innovation involves adding complementary products and services that complement the core product.
Increases Productivity
Innovations increase productivity in several ways. First, higher productivity produces more goods and services, increasing wages and business profitability. It also encourages hiring and investment by people and firms. And the result is higher profits and more jobs. This is the key reason why innovation is so important for business, so learn more about innovations and enroll in business education online. Innovations increase productivity by lowering the cost of production. Productivity is typically measured as the ratio of output to input. Productivity is a major cause of the increase in per capita living standards. A good example is a spinning jenny, which increased thread production productivity immensely. The invention of the spinning mule and spinning jenny significantly increased productivity in thread manufacturing.
Firms’ ability to innovate depends on their organizational strategies and internal capabilities. The use of ICT is just one aspect of a larger system of organizational and technological change.
Reduces Costs
In addition to new products and services, innovations can also cut costs for businesses by remaking the old ones or eliminating unnecessary parts. Especially in the digital sector, cost reduction through innovation is paramount. Google, for example, has made it a point to stress cost reduction through innovation. The massive data centers it uses for its vast computing power are one example of how incremental innovation can reduce business costs.
Companies can make various other cost reductions, ranging from better efficiency to sourcing from firms with superior economies of scale. One example is the sale of data centers, which can help a company build a more cost-effective computing platform. Another innovation is reducing the number of employees, which can help cut labor costs.
Boosts Sustainability
Technological innovation is a major contributor to tackling the many environmental, social, and economic challenges our society faces today. It is increasingly becoming a part of all business activities and plays an important role in the long-term economic viability of many small and mid-sized enterprises. In addition, customers no longer only want products and services that are profitable but also those that are resilient and sustainable. As a result, companies that fail to commit to sustainability may find it difficult to obtain financing and may even have trouble competing against their competitors.
Many companies have responded to environmental concerns by taking a holistic approach to business operations, analyzing each link along the value chain, and making changes where they are most obvious. Some, such as General Electric, have taken the lead in several industries. Sustainability initiatives also entail recruiting and retaining the right people. Approximately three-fourths of new workforce entrants regard environmental and social commitment as important factors in their decision to work for a particular organization.
