Amid mounting geopolitical tensions and a global economic slowdown, innovation may be key for businesses to unlock enhanced profitability – or, even, continued viability.
How can businesses better embrace innovation to remain competitive and reap the tangible benefits for their bottom line?
- Shift culture
Innovation requires curiosity, adaptability and an eagerness for change – traits that serve a business well more broadly, such as agility in response to sudden market shocks and embracing new customer requests/sales opportunities. Additionally, fostering innovation promotes enhanced productivity and idea retention. Hence building an innovative workplace culture can be a lucrative long-term investment.
Good recruitment practices are part of the equation, but so too are the implementation of processes that foster creative thinking, empower staff to generate and voice ideas, facilitate open communication between employees and management, deliver tools for measuring success or failure of trials, and pre-determine project ownership. - Innovate products and services
Developing new products or services is probably what most people consider innovation to be.
The aim is to deliver something new and cutting-edge, opening up entirely new revenue streams, or significantly improving existing goods or services in order to command higher prices and potentially steal market share.
In times of crisis, innovation can even determine ongoing viability – such as the businesses that pivoted operations during the pandemic. Existing customers are an ideal and inexpensive test ground for trialling new innovations, especially where those innovations are based on their feedback and input. - Disrupt from within
Sometimes a new way of approaching existing operations can deliver cost savings or revenue inflows. Trials of a four-day work week in the UK are a great example of innovating how we work, not just what we deliver – hinting at substantial productivity gains.
Everything from new ways to invoice clients that promote prompt payments (like adding a ‘pay now’ function to invoices) to changed marketing tactics (such as baby retailers shifting their advertising time to coincide with 2 am feeds) can deliver material gains – provided a business is willing to trial something new and effectively scrutinise its findings. - Innovate pricing
Pricing should never be set and forget: innovating pricing structures may drive sales growth by diversifying the sales base and solidifying customer loyalty.
One need only look at the likes of Twitter and Meta, owner of Facebook and Instagram, trialling subscription services as evidence of this approach at work. Or the pay-what-you-want movement in the hospitality sector, which often generated higher revenues than the fixed-price standard in addition to the resulting publicity and marketing exposure.
Pricing is also one of the few operational aspects under the complete control of a business, making it a safer target for innovation. - Leverage financial incentives
All levels of government typically offer support for innovation, through an array of grants, incentives and tax breaks. Other incentives are offered, particularly for small businesses and start-ups, by industry associations, major banks, start-up accelerators and more.
Some offer early cash injections to meet associated financial costs; others apply retrospectively in the form of reimbursements or tax offsets. Either way, these incentives can substantially offset the financial costs associated with research and development, overcoming the most common barrier to innovation.
Commit to the cause
Innovation is effectively calculated risk-taking – testing something different and quantifiably measuring the outcomes. It is done with the hope of big rewards, but even failures deliver important lessons – which can be used for future endeavours or implemented elsewhere across the business.
Uncertain economic climates mean that innovation budgets are typically the first to go. But what happens if you don’t follow the herd and maintain – or even expand – your innovation endeavours? You’ll be further ahead of competitors once conditions improve and have a stronger balance sheet with which to hit the ground running.
