What is innovation?
And how can companies be innovative?
Edoardo Pisciotta London - 27/05/2018
Innovation has always been a disruptive force in the market, something that all companies, regardless of industry and size, must reckon with. But what is exactly innovation? Academics cannot agree exactly on "what" is innovation, however we can define its main attributes. Innovation has to be novel, feasible, and useful for users and companies. Moreover, timing must be right, otherwise the product or service will not have a market and it will "fizzle". Some examples of failed innovation are the Amazon Fire Phone and the Facebook OS, two products that maybe the most tech-savvy readers remember. While definitely innovative, those two products never got the favour of the public and were quickly taken out of the market.
Traditionally, innovation is a concept associated with big corporations, however SMEs can also be good at innovation, with many successful stories. The UK has a culture of fostering and encouraging innovation among SMEs. The last UK SME Innovation Award gave us the opportunity to see many interesting companies. Among the many we cite Dearman ltd, an engineering company, that won a special award for inspirational innovation for its liquid nitrogen engine. This new engine increases efficiency and reduces emission and is now running on Sainsbury's refrigerated vehicles fleet. Another good example is Barrnon ltd, another engineering firm, which has developed its technology for durable trawling gear for fishermen into a new technique for removing nuclear waste.
Innovation increases the productivity of a firm allowing it to gain a bigger market share or even to become the dominant player in its industry. The two examples cited indicate that innovation can be of two types: incremental (doing what we already do in a better, more efficient way) or radical (doing something completely new, either a product or a service).
So, if we can describe innovation can we actually anticipate it? While there are some trends that can be identified, the simple answer is a no; we cannot anticipate innovation. Even those trends or product that seem to be on the edge of disrupting the market can fail or be shelved because of regulatory pressure or public concern (the most recent example is the Google Glass). So how can companies prepare to face the challenges that innovation brings? The short answer is: hedge. Companies need to invest in several projects and maintain strategic reserves to use in case a new, unforeseen, disruptive trend emerges. In other words, diversify your risk and be ready for the rainy days. At the end of the day, innovation can be "defeated" with not-so-innovative concept.