As a result of the impact of technological advancement and globalization, almost every area in the world is becoming easier to reach. For every new day, there is a new technology and an innovation that drives us further into the digital world. This is the most important time for businesses to set themselves apart in the highly competitive world of business today by including innovative products in their product range. According to Thomas Edison, “There are ways to do it better, look for them." It is essential for companies and businesses throughout the world to become more involved in the development and research of their products. Nowadays, the importance of product innovation cannot be overemphasized.
The desire for higher business revenue. The profit equation is made up of the revenue term and the cost, both on the same side. The revenue term is the most overlooked term, however, with just a little understanding, it is evident that an increase in revenue will result in a higher profit. With a downward progression of costs and a further decline in the opportunities to reduce them, organizations can adopt the strategy of increasing sales. Marketing innovations are important here and you are required to put in the maximum effort to increase the sales of your products. New revenue is gotten from new products, services bring in new revenue too. Innovation is lucrative.
As difficult and distressing as it may seem, for companies to pull through a discontinuity, they have to experience the unpleasant reality that they might have to radically modify their identity, strategies, and services. Simply put, they must experience an evolution.
In addition to introducing a completely different perspective, innovations also produce much better results compared to ordinary business ventures. Research done in the US discovered that there was a total return rate of 56% for about 17 successful innovations developed in the 70s, in contrast to the average return on investment of 16% for all US business in the last 30 years. It is my opinion that 16% is quite high for the average return rate for new projects. What is the projected return rate for projects to be approved in your organization? So, is innovation not going to be beneficial to your organization?
A more constant flow of innovation
For some companies, there is either an overabundance or a shortage. They are either making profit from the new products created from new ideas, or they anticipate the arrival of new ideas. Or they pump funds into operations that are currently running with no tangible new output, perhaps they are making an extreme cost reduction, such that the profits recorded are negligible. Therefore, through the provision of a steady influx of ideas, innovation and its calculated systematic management can counterbalance the spikes and depressions.
To take advantage of an opportunity
Usually, unexpected events, particularly the disappointing ones, are the source of innovations. For instance, in the oil sector, it is now normal for oil companies to transition into oil and gas companies. Why? This is as a result of the fact that gas is usually more abundant than oil. After the unexpected events and disappointment of numerous gas exploration, oil companies became aware that this could just be a business opportunity. With copious quantities of a natural resource that is regarded as the less profitable one, it is to be expected that most innovations in the oil sector became centered on using the copious natural resource that was widely available.
Cost-cutting is not enough anymore
Revenue - cost = profit. From the profit equation, it is apparent that there must be effective cost management or even cost reduction to produce an increase in profit. This is the most evident method of increasing profit. Many companies have been deploying this strategy: using technology, by re-engineering and through downsizing. Although a lot of organizations in the U.S. are proficient at wringing out every possible efficiency from their companies and work processes, they have minimized their costs to the barest minimum, yet, their businesses are still stunted. These methods are not complete enough, they only help you remain in action, thus, remain in business.
Organizations that utilize and act on their astuteness have an edge over competitors. They are major contenders. They succeed over those companies that are deceived by the false security, they have a compelling, dependable economic performance and the typical business insight that keeps them on course. The war ends as soon as it starts and there is hardly any time to recoup and fight back. This is an established fact, not a hypothesis.
Progression of human well-being
This might be the least mentioned purpose for innovation; however, it is probably the most significant outcome achieved by innovation. New businesses are created by innovation. Due to this, and concurrently, new jobs are created by the new business. For apparent reasons, new jobs produce personal income, thus, create the necessary financial means for the accomplishment of the personal wellbeing of people.