The successful exploitation of new ideas is crucial to a business being able to improve its processes, bring new and improved products and services to market, increase its efficiency and, most importantly, improve its profitability. Show
Marketplaces - whether local, regional, national or global - are becoming highly competitive. Competition has increased as a result of wider access to new technologies and the increased trading and knowledge-sharing opportunities offered by the Internet. This guide explains how you can make innovation a key business process and outlines the different approaches you can take. It gives you advice on planning for innovation and creating the right business environment to develop your ideas. It also outlines the help and support available to innovative businesses.
The business case for innovationIt is important to be clear about the difference between invention and innovation. Invention is a new idea. Innovation is the commercial application and successful exploitation of the idea. Fundamentally, innovation means introducing something new into your business. This could be:
Innovation can mean a single major breakthrough – e.g. a totally new product or service. However, it can also be a series of small, incremental changes. Whatever form it takes, innovation is a creative process. The ideas may come from:
Success comes from filtering those ideas, identifying those that the business will focus on and applying resources to exploit them. Introducing innovation can help you to:
Businesses that fail to innovate run the risk of:
Approaches to innovationInnovation in your business can mean introducing new or improved products, services or processes. Analyse the marketplace There's no point considering innovation in a vacuum. To move your business forward, study your marketplace and understand how innovation can add value to your customers. For more information on analysing your marketplace, see the page in this guide on planning innovation. Identify opportunities for innovation You can identify opportunities for innovation by adapting your product or service to the way your marketplace is changing. For example, if you're a specialist hamburger manufacturer, you might consider lowering the fat content in your burgers to appeal to the health-conscious consumer. You could also develop your business by identifying a completely new product. For example, you could start producing vegetarian as well as meat burgers. You could innovate by introducing new technology, techniques or working practices - perhaps using better processes to give a more consistent quality of product. If research shows people have less time to go to the stores, you could overhaul your distribution processes, offering customers a home-delivery service, possibly tied in with online and telephone ordering. If your main competitor's products have a reputation for being cheap and cheerful, rather than trying to undercut them on price you could innovate by revamping your marketing to emphasise the quality of your merchandise - and consider charging a premium for them. Planning innovationSome innovative ideas may just come to you out of the blue. However, you should ideally have:
Innovation will not only improve the chances of your business surviving, but also help it to thrive and drive increased profits. There are lots of practical ways of assessing whether your ideas have profit potential: Assess the competition Find out who your competitors are and where they operate. Use the Internet and advertising sources such as the Yellow Pages to find out about their products, prices and operating culture. This can give you an overview of their selling points, as well as any areas you might be able to exploit. For example, if the competition is focused on value for money, you might want to emphasise the quality of your product or service. Search for business listings nationwide on the YellowPages.ca or Canada411.ca websites. Study market or industry trends Awareness of the climate in which your business is operating will help you to plan. You can find a lot of information about your industry on the Internet. Business and trade magazines will also feature useful articles. Build a relationship with your customers It's not enough simply to know who your customer base is. You need to communicate effectively with them as well. Communication involves not only listening to their needs but also actively observing their behaviour around current products and services and generating ideas on how you can make improvements. Involve your suppliers and other business partners Pooling your resources with your suppliers or other business partners will help to produce and develop creative ideas. Potential partnerships can also be developed through business networking opportunities. Next, consider what taking a particular innovative step could mean for your business. Ask yourself:
Finally, you should include your vision in your business plan by:
Encourage innovation in your businessThere are many sources you can use to help generate new ideas for the business. Suppliers, business partners and business network contacts can all make valuable contributions to the creative process, as well as providing support and encouragement. Your employees are also a vital asset in generating innovative ideas. To get the most from them, you need to create an innovative environment and encourage creative thinking. Steps to promote innovation
Funding innovationThere are a number of ways you can fund your growth through innovation, either by using your own funds or tapping into external funding such as loans or equity finance. However, any route to external funding will need a high-quality business plan that describes your business and sets out detailed forecasts of where it's going. Businesses often turn to their banks for a line of credit or loans for additional finance, depending on their borrowing needs. If you're willing to relinquish some control of your business to external investors, you could consider using equity finance. The two main routes for this are investment from business angels and venture capital firms:
Government programs You may also wish to consider applying for a government program. This will only usually cover part of your project, but you will retain control of the shares in your business. Consult Programs - R&D and innovation. Other sources of help Small and medium-sized businesses can claim tax refunds and credits on appropriate research and development spending. Original document, Use innovation to grow your business, © Crown copyright 2009 Our information is provided free of charge and is intended to be helpful to a large range of UK-based (gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature the information cannot be taken as comprehensive and should never be used as a substitute for legal or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. As a result:
Is the process by which market innovation spreads?Diffusion is the process by which a new idea or new product is accepted by the market. The rate of diffusion is the speed with which the new idea spreads from one consumer to the next.
When developing a new product which is true of a new product development strategy?When developing new product, which is true of a new-product development strategy? It must be compatible with the objectives of the marketing department, the business unit, and the corporation.
What is the first step in adapting a product to a foreign market?An important first step in adapting a product to a foreign market is to determine the degree of newness as perceived by the intended market.
What are the two dimensions that help in defining the quality of a product of quality?There are two basic dimensions of quality: Performance quality measures to what extent a product or service meets the expectations of the customer. Conformance quality measures if processes are carried out the way they were intended to be carried out.
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