Why Innovation in Business Is Inevitable: Four Factors That Can not Be Ignored

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What will your company be like in 10 years if you stop finding new ways to improve production and operation processes, improve products and services? The answer is obvious - the company will die. However, it is important to understand what the impetus is for finding new solutions and creating new products.

1. Transformation of customer needs and preferences

The emergence of new goods and services offered in the market leads to a change in consumer preferences and habits, and creates new customer needs, which in turn leads to the emergence of new products and solutions (smartphones - power banks - wireless chargers). In addition to price differentiation, companies are increasingly paying attention to improving the functional, emotional and social characteristics of products, which leads to changing the value criteria across industries. There is a need to modify existing solutions to better meet the transformed customer’s needs (e.g. smart watches, built-in cameras, hybrid engines).

As a result, companies are updating and modifying their products, services and manufacturing methods, or creating new ones through changes in business processes and technologies, to at least stay within the existing market and, in some cases, expand their presence (online banking, smart real estate).

Companies that explore changes in customer preferences and focus their efforts on innovation development are able to not only retain and grow their customers but also be the first to enter new markets as leaders (pressure cookers, electric cars, online TV). The demand today is not equal to the demand of tomorrow - over time, customers become more demanding, and their needs will require new solutions.

2. Development of new technologies

The pace of development and implementation of new technologies will increase due to the convergence of technologies into new combinations and the cumulative nature of technological changes.

New technological solutions involve going beyond the established understanding and development of new customer needs as well as new production processes that can be satisfied only by new technologies.

In fact, the development of new technologies does not make it possible for companies that do not innovate to compete - such players lose their positions and have to leave the market for more innovative players.

The only way out of the current technological development of the modern world is to introduce innovations in the company's activities. Big Data, IoT, AI, renewable energy, drones, biotechnology, nanotechnology, 3D printers, robotics, etc. all show great potential for sustainable global technological development.

3. The emergence of new challenges and problems facing the business

The need for increased productivity, big data analysis, and the development of unique competitive business processes creates the conditions for the formation of internal challenges and problems, which solutions will allow the business to make a refreshing transition.

As technology evolves, it transforms the needs and preferences of customers which form a set of external challenges for companies and firms are tasked with analyzing the possibilities of going out of the way of slowing down and disappearing.

The question is the transition of companies to accelerate the implementation of innovative solutions to hold positions in the market, to create value to meet the needs of both customers and potential ones (so-called ‘noncustomers’), who through financial / logistics / value factors do not buy products of this category (Airbnb, Uber, Grammarly, Skype).

4. Creating unique competitive advantages in the market

In any area, a customer prefers one product over another. For a customer to buy this particular product, a company needs to offer something better and/or cheaper, because the customer makes the decision to buy the product based on a comparison of alternatives and their functional, emotional and social functions.

If a company owns a unique product, an alternative solution, or its product has unique advantages, customer choice will be obvious. The innovative solution always has unique advantages and helps to attract customers through the lack of choice between alternatives (Apple Watch and Apple Airpods, Tesla cars).

Dmytro Shestakov, 2019
Originally published on Liga.Business