Innovation is a word often bounced around the business world. From advertisements to CVs this buzzword is everywhere. This being said understanding what innovation actually means to business is very important concept. Innovations change the landscapes of both the public and private spheres. In business terms it can be defined as taking an invention and commercialising it. This invention does not have to be physical product or item but could be process invention such as the factory line. Therefore, in order to succeed, companies need acquire the right people that are equipped to manage innovations. Mario Kafourors a lecture at Manchester University and a previous fellow at the University of Leeds has written extensive literature on innovation. The basis of his work concludes that companies who innovate regularly enhance their competitive advantages globally, while those who stick to their traditional methods of revenue creation normally become stagnant.
Innovations are split into either radical or incremental in nature. Innovations can change or destroy a business processes, product or strategy. For instance, the smartphone has had a profound effect on us as people when interacting socially or when trying to find out what the Kardashian’s are up to… However, it has also radically changed the business of telecommunication with companies like Nokia or Motorola falling short to the new comers of Samsung and Apple. Radical innovations make old functions or products obsolete just as smart phones made landline and older mobile phones out dated. For example, the constant changing of components from each new generation of smartphone perfectly highlights incremental innovations. Incremental innovations are thus gradual change of a product or processes.
Innovation can also refer to how a company increases its knowledge base and how it undertakes radical or incremental innovations. When conducting research and development companies operate under open or closed innovation. In other words, does the company rely on ideas or knowledge from external or internal sources when pursuing new innovations to increase their competitive advantage? There is no correct formula for this, the key is to not to rely exclusively on one or the other as the saying goes; ‘don’t put all your eggs in one basket’.
Innovation is clearly extremely relevant to business. Now what are the next radical innovations that are coming to fruition and have the potential to change businesses everywhere? Many look at Artificial Intelligence and Blockchain as the innovations of the future. One search on the Financial Times will find hundreds of articles on both these subjects but both of these are still on the periphery of businesses and have not been completely embraced at corporate level. They however, seem poised to disrupt traditional businesses from finance to supply-line management. Research on these subjects is highly sort after, and thus provides opportunities for students who investigate them stand out when applying for jobs. So, the next time you hear the word being used in flippant comments it may be worth thinking why it’s there.