What is Innovation?
The word “innovation” is derived from the Latin verb innovare, which means to renew. In essence, the word has retained its meaning up until today. Innovation means to improve or to replace something, for example, a process, a product, or a service. In the context of companies, however, the term needs a definition. In the complex context of business, a definition is needed.
Innovation
is a process by which a domain, a product, or a service is renewed and brought
up to date by applying new processes, introducing new techniques, or
establishing successful ideas to create new value.
Why is innovation
so important?
Organisations have several options to
increase their competitiveness: they can strive for price leadership or develop
a strategy of differentiation. In both cases, innovation is essential.
- Companies
that choose price leadership must secure their long-term competitiveness
by developing innovative, highly efficient processes. Process optimization
and continuous improvement in terms of costs are important for them.
- Companies
that strive for a differentiation strategy need innovation to develop
unique distinguishing features to their competitors.
- Many
start-ups launch their activities by developing an innovative product or
service.
Continuous
innovation is, therefore, crucial for all companies. The main difference is in
the focus of the innovation strategy, which varies considerably from company to
company.
“Although innovation has always been one of
the driving forces in competition and has always been a primary competitive
dimension, the numerous studies and publications of recent years show that the
speed of change is increasing.”
The Different Types of
Innovation
In the context
of businesses, there are different types of innovation.
- Process improvement and organisational innovation: The improvement of processes
through continuous
improvement and the development of new
solutions.
- Product development:
The development of innovative products or product features.
- Service innovation:
The creation and introduction of new services for customers and partners.
- Business Model Innovation:
The development of innovative business models and new revenue streams.
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