The Role of Innovation and Enterprise – Innovation
According to global company McKinsey, innovation is defined as the ability to conceive, develop, deliver and scale new products, services, processes and business models for customers.
Innovation is therefore about new ideas. It is a creative process that involves:
Product or service development
Businesses are constantly developing new products or services to keep customers interested and respond to customer needs and competitors’ activities.
New ways of increasing business efficiency or improving profitability
While developing a product or service is an obvious way to improve a company’s performance, it is also possible to improve a company’s performance by improving efficiency. For example, a company can invest in developing new machinery in order to produce more quickly or with less waste.
Successfully exploiting a new idea
Innovative ideas are key to meeting customer needs. As the world changes, customer needs and desires change and businesses must respond. Think back to module 1 where we mentioned Lion Laboratories in Barry. Lion Laboratories is a global business that has developed around the owner’s innovative idea for breathalysers. They now sell all over the world.
Adding value to products, services, or markets to differentiate the business from the competitors.
Every business seeks to add value to its product or service. Differentiating from the competition makes it more likely that your business will be successful. You can add value by developing convenience, branding, quality, design and a unique selling point.
An example of adding value based on convenience is packs of pre-prepared vegetables or fruit in supermarkets. Buying pre-prepared fruit is more expensive than buying whole fruit and vegetables, but it is more convenient for busy people or people who want to eat at work, who as a result are willing to pay more for the product.
The brand adds value. This is an important technique in the clothing market for example, as the goods are actually fairly similar. However people are willing to pay more to get the ‘right’ name on their clothes.
Businesses can add value by ensuring the quality of their goods and selling them at a premium. An extended warranty or even a lifetime warranty can be added.
The Tŷ Nant Water bottle is an example of adding value by design. Since one type of sparkling water is very similar to other types of sparkling water, the only way water companies can appeal to people is through their branding and design. Tŷ Nant Water is sold in attractive blue glass bottles that are completely different from the competition. More recently they have designed another bottle for their new brand TAU. The company says:With its chic minimalist black and white labels, TAU was specifically designed for outlets where colour may not be appropriate, but quality and style remain essential.
The unique selling point can add value. In the example above, the unique selling point is the bottle.
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Can you think of more examples of adding value?