Why Companies Need To Constantly Innovate
Technology galloping ahead at the pace that it does, there is always a need for companies to keep pace with it, or risk being left behind. However, keeping up with technological advancements is not the only reason why companies have to keep striving to adapt, change, reinvent and innovate. There are many other reasons why innovation is vital to any company’s long-term prospects:
Keeping up with the competition
This probably the most obvious reason for constantly innovating and reinventing: the fact that your competition is doing it. As a business you have to presume that your competition has its finger on the pulse of your customers and that its eye on market trends. You have to presume that they are doing what they need to, to remain current and competitive. The aim of your business has to be to keep up or surge ahead of your competition! Without innovation, this is simply not possible. Innovate, grow, succeed, says this piece by Forbes. It speaks of how passionate innovators were the ones behind the success of America; how they are really the ones that propelled the country to be a world leader in so many different areas. The writer speaks about the importance of thinking outside the box, about businesses being aware that their customers don’t always know what they want and about how paying too much attention to traditional business metrics can inhibit companies from making breakthroughs.
Putting automation systems in place, streamlining processes and removing redundancies is not a onetime effort. It has to be a constant process; ergo on-going innovation! No business can afford not to work towards keeping costs low because it has a direct impact on overall profitability. Every company has to ensure that they are utilising emerging technology to streamline processes, to automate and to reduce redundancies. Failing this, costs will remain bloated; driving down efficiency and profitability. A study examined the importance of innovation for companies in the pharma sector and the way that this impacted overall profitability. The peculiar problem of patent expiration that faces this industry in particular, underlines the vital importance of innovation even more! With looming patent expirations threatening to drive down profitability, companies manufacturing medicines and medical implements have to innovate with products and processes in order to keep costs low.
Being static is lethal for progress. No matter how sound your business model is to begin with; no matter how well received by your customers, innovation is an absolute must if you hope to prosper, grow and diversify. Consider how innovation spurred the growth of certain grocery services while others fell by the wayside: players such as Big Basket not only widened their area of operation to keep growing, they also innovate constantly. The company constantly adds to the inventory of products offered, tweaks the mobile app to let the user create shopping lists, add and choose from several delivery addresses. It maintains a no-questions-asked return policy and reimburses customers for late or inadequate deliveries. Another example is that of Grofers. After bad phase that saw part closure of operations and layoffs, the company experimented with an inventory led model which paid rich dividends. Building warehouses, increasing efficiency and the pivot towards the new business model resulted in the company growing to six times its size in just the past 15 months; even earning the founders a ‘Comeback Kid’ award at the Economic Times Startup Awards.
Every company has to cater to its target demographic and has to adapt to changing buying habits. If demographic changes present opportunities to meet the needs of an aging population on the one hand, on the other hand are increasing numbers of millennials who are now a part of the workforce and the buying demographic. A company ignores these changing and growing demographics at its own peril! A failure to keep pace with this tech-savvy generation of buyers with expendable incomes or changing to keep pace with the needs of an aging population means becoming irrelevant and obsolete. Companies have to keep a sharp eye on their target demographic and their changing needs.
Ultimately it is the profit motive that must inform the working of businesses. There is an established link between corporate innovation and profitability as studies have demonstrated. Companies that came up with and implemented new ideas were seen to experience higher growth rates in income and profit. It isn’t simply about keeping pace with galloping technology; it is also about innovating based on an intuitive knowledge of what the customer wants.
‘Cutting edge’, ‘state of the art’, ‘innovation led’, ‘technology driven’ are some of the terms that become associated with a product or a brand that constantly reinvents itself and its customer experience. This painstakingly created image is important to maintain. Consistency and reliability are the vital qualities that inspire trust in a brand.
Making use of opportunity
Changing market trends can be viewed as a problem to be overcome or an opportunity to be embraced. Consider for instance the world becoming more ecologically conscious and concerned about climate change. As a result of this, consumers are demanding ways to decrease their own carbon footprint or choosing to use the products and services of a company who is known for its green innovation. These are opportunities for companies to move towards processes that pollute less, towards alternative and sustainable fuels, towards business practices that are less oil-dependent and even cheaper! Consider how government policies made public transport in India move swiftly towards CNG or compressed natural gas in favour of petrol or diesel fuelled vehicles. Many companies were quick to innovate to accommodate this change. Those that did so on time reaped rich benefits. Others followed later to find that a significant portion of the market pie was cornered by the early birds.
In conclusion, one has to remember that change is the only constant in this world. Not only is it inevitable; change is natural and desirable as well. Without innovation, how would your ideal customer’s face light up in delight that you thought of giving them something they always wanted? Without innovation how could you possibly keep pace with the dynamic, mercurial, constantly evolving market that you seek to operate in!