As a business owner, you might sometimes be engrossed with work that you lose track of time but the world of business is ever changing and the wisest entrepreneurs have learned to observe and monitor trends in order to flow with the tide or what people refer to as innovation.
A lot of people think innovation must be technology driven, but this is not necessarily so. Innovation starts with a search for new ideas to make things better than they were and to also implement those ideas in ways that serve a purpose or creates impact. Now, this could mean to make things easier to manage, more sophisticated or advanced.
A famous economist known for his definition of innovation and how businesses are affected, Joseph Schumpeter, believed that anyone seeking profit must innovate. He also believed that innovation in business is the major reason for increased investments and business fluctuations such that he classified innovation into five segments, namely:
Launching a new product
Applying new methods of production or sales
Opening a new market
Applying new sources of supply
New industry structure such as breaking a monopoly.
However, it is not advisable to innovate just for the purpose of giving the impression that you are advanced or aware of trends. Steve Jobs, founder of Apple once said, “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
It is important then, to identify reasons why you must innovate. Here are three key reasons to innovate:
1: To be competitive
Imagine being the customer of a bank that does not offer mobile banking services. It can be very frustrating indeed. That is what it feels like when a business fails to innovate when it becomes necessary – they frustrate their customers.
As a business, innovation should be motivated by a need. Steve Jobs also said innovation should be aimed at making people’s lives easier, or better. He cautioned that it should not be about making sales or profits alone but about creating products or services that satisfy the customer.
“A lot of times, people don’t know what they want until you show it to them.”- Steve Jobs.
Hence, being up to date should be more about understanding what a customer needs at a certain point in time, not necessarily what they want. Hence, one can only identify the need for innovation by monitoring trends. And these can be competitor or consumer trends. Being up to date does not only speak well of your organisation, but gives your customers the impression that you care about them and put their needs first.
In an increasingly competitive age, being updated with trends within the industry and the external environment of the business puts you at par with competitors. It demonstrates that you are an expert in your field and nothing beats expertise as a unique selling point. People want to patronize businesses that know what they do and do it well.
How do you monitor trends and understand what your customers need?
Seek to know what your customers are saying. Get their views on the things they feel will make their lives easier, and the challenges they face with using certain products or services, or even in their personal lives. Then monitor the environment. Find out what’s trending and apply it to your business. Think outside the box. Ask yourself how do I make this product or service idea benefit my customers. It is also key to conduct adequate research.
2. To meet demand
Sometimes it’s the demand for a product or service that inspires innovation. Innovation can be as a result of identifying a gap in the market and seeking the best or easy way to close it. Always refer to the bottom line idea for innovation – innovation is not an idea, but a translation of your idea into something tangible for use (Kastelle and Steen, 2011).
3. To stay in business
Entrepreneurs soon learn that the best way to remain in business is innovation or being left behind by competitors. A case in point would be the recent changes and developments in the banking sector. If banks did not innovate from time to time, a lot of them would be irrelevant today and would have shut down long ago.
It is in your business’ best interest to innovate. Find new ways of doing things, explore better avenues for implementing projects and let your innovation serve a purpose.
Refer back to Schumpeter’s innovation model. It may be a new product, or something that makes production easier and more profitable or even enhances productivity among members of staff. A critical look at the internal and external market environments closely, often exposes the observer to something tangible that requires innovation.