April 22, 2021

Using Innovation to create Company value

Innovation is and will always be a trend, however, few have been able to turn this concept into successful business practice, innovation starts within your culture.

In recent years the concept of Innovation has been present in all kinds of conferences and articles on business, it is a subject of study in universities and a subject of discussion within companies.

Innovation is and will always be a trend, however, few have been able to turn this concept into successful business practice. It is no news to anyone that companies today face brutal competition, and that the business environment is increasingly changing. In this context, entrepreneurs must constantly seek innovative strategies, not only to achieve a competitive advantage but in most cases to survive the fierce battle that takes place every day in their respective markets.

There are many reasons that push a company to innovate, they need to compete for market sharing, against the new businesses that are created every day and to expand their business territory. There is also globalization, which exposes every businessman to face competitors from anywhere in the world, often with more competitive prices and comparable quality. Another factor that forces companies to innovate is technology since with it you can establish more efficient processes and operating models.

Technological innovation is very important since, due to Moore's law, technological development accelerates the creation of new developments, thus shortening the cycles of technological renewal and obsolescence. Other important factors that push companies to innovate are the same dreams and goals that owners or entrepreneurs have, and of course the most important factor: the needs of customers. We have to recognize that the client today is much more demanding and is much more prepared than before in our field of specialty, he knows our product well, and that of our competitors because he has access to a lot of information instantly.

innovation value

For this reason, today customers are impatient and unforgiving. They are willing to change suppliers if we do not have the capacity to fully meet their demands. The days of the captive market are in the history books. Today the customers only have to go to the Internet and in minutes they are able to find a new supplier that will be ready to take orders.

Entrepreneurs must then be willing to innovate if they want to see that their companies reach the growth and profitability goals they seek. But innovating is not easy because many times we do not understand or we confuse what it means to innovate, and the reasons why we should do it. For example, it is common to consider an investment in technology as an innovation, and this is a mistake. Technology alone is not innovation if it is not accompanied by a redesign of the business value offering.

To begin with, the company must prepare “mentally” to innovate to create value in the company, and this implies a very important cultural change that is rarely taken into account. Given that innovation involves sometimes very great sacrifices, we must first be willing to break paradigms that may be deeply rooted in the conduct and daily actions of staff. These paradigms were surely positive in the past, and at the time they allowed the company to establish standards of action that in some way have worked for it over time. But paradigms become a drag on the company if they are blindly followed or used as a pretext to prevent the assimilation of new, more efficient practices.

innovation value

The first requirement to innovate in the company is cultural

The company must not only accept changes but also promote them, despite the implicit risks. You must accept the possibility of making mistakes, and the need not punish them, but to use them as necessary elements for learning and maturity. This cultural change must originate from the heads of the organization and must permeate at all levels, in such a way that employees have the certainty that they can contribute and propose improvements, and that these will be taken into account by the board. An organization that punishes mistakes, that fears mistakes, or stops proposals for improvement, will never be able to enter into a true innovation process.

Once we have identified the reason why we must innovate, and we have accepted the need for change in the culture of the company, comes the most important part of the process: What aspects of the company are the ones that will be subject to the innovation?

It is logical to think that if a change is not aimed at improving financial statements, it does not make any sense to do so. For this reason, we must think in terms of the value that the proposed innovation will bring to the company, not because of the change itself, but because of the increase in profits expected of it, mainly in the medium or long term.

Case Study from Arkusnexus

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