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5 Ways to Innovate Your Business and Stay Ahead of the Competition

Dear Business Owner,

What readily comes to mind when people think about business innovation is product innovation. Contrary to this popular belief, business innovation goes way beyond just product innovation.


In this edition of the Wema Bank SME Newsletter, we will bring to you the different innovation that you can implement as a business owner to differentiate your company from its competitors and help it gain competitive advantage.


1. Product Innovation: Product innovation is the most obvious form of business innovation. It involves the development of a product or service that significantly improves existing products or services in the market. This improvement can be in the functionality's form, design, or look and feel.


For a while, it seemed like we had reached peak innovation in smartphone technology, as new smartphone models released by popular brands like Apple and Samsung did not differ significantly in functionality or design from their predecessors. That was until the Chinese company, Royole, in 2018, launched the first commercially available smartphone with a foldable screen, the Royole Flexpai.


The foldable smartphone technology is now considered a game-changer and the next big thing in the smartphone industry and other companies like Samsung and Huawei have since rolled out their own versions of the foldable smartphone.


2. Process Innovation: While product innovation deals with a tangible or intangible item, process innovation is systemic. It focuses on making meaningful improvements to internal operations, activities, tools, and techniques like production method, delivery method, equipment, and software to reduce cost or turnaround time and boost revenue. You can achieve process innovation through technology and digitalization, and its major aim is to improve efficiency and effectiveness in production and service delivery.


At the onset of the COVID-19 Pandemic, many Nigerians could no longer visit the branches of banks to perform transactions because of restrictions on movement. Those who did so had to queue up for several hours before being attended to.


To address this challenge and make banking more convenient for their customers, many Nigerian banks upgraded their banking apps and made it possible for their customers to perform almost all banking transactions with the use of a web or mobile app. Today, individuals and businesses can even open bank accounts and apply for loans online, without having to visit a branch or interface with any banker.


3. Marketing Innovation: Marketing innovation seeks to capture the imagination of a company's target customers, arouse their interest, and hold their attention well and long enough to motivate them to check out and buy its product or service.


In 1984, Nike – which was then a struggling, small US footwear manufacturing company – signed a deal with promising basketball rookie, Michael Jordan, to market its customized brand of athletic shoes, the Air Jordan. Back then, the NBA permitted players to only wear white shoes. However, Jordan went against this rule and whenever he was in the court, his red, black and white shoes stood out and were easily noticeable amidst the sea of uniform shoes that every other player was wearing.


As Jordan's fame and success increased, so did the popularity and sale of Nike's shoes. While Nike expected to only make $3 million in sales in the first four years of the deal, it ended up making $126 million in the first year alone. It has proven to be one of the shrewdest and most lucrative marketing partnerships in history. Jordan has since become a billionaire and the richest former athlete in the world and Nike has since become the largest footwear company in the world.


4. Technological Innovation: Technological innovation is the application of technology to boost the performance and efficiency of business processes, products, or services. It can involve the application of technology to erstwhile manual processes or the replacement of outdated equipment and software with significantly improved versions.


It is important to note that it is not every business innovation that involves technology. We can achieve some innovations without technology. Likewise, it is not all technological improvements that can be classified as innovation. Technological innovation can also overlap with other forms of innovation, such as product and process innovation. Hence, an innovation can be both a product innovation and a technological innovation.


Though not entirely new, virtual assistants and chatbots have recently gained widespread acceptance in the business world. Many organizations now deploy them to provide first-level responses to customer complaints and frequently asked questions, digitalizing large parts of the customer support process and reducing the need for human interface (and dedicated personnel) to high-level issues.


5. Business Model Innovation: In simple terms, a business model is a company's strategy for carrying out its business, creating and delivering value to its customers and making money. It involves everything from market segmentation to product development and from revenue model to partnerships.


For instance, Netflix enables users to stream thousands of movies and TV shows with an app for a monthly subscription fee. Similarly, Coca Cola sells soft drink concentrates and syrups to bottling companies around the world, who then add water and fizz and sell the bottled drinks to final consumers through a chain of distributors, wholesalers, and retailers.


Business model innovation is the most radical, challenging, and unpredictable form of innovation, because it involves changing or making noteworthy modifications to an existing business model. For Netflix, this may entail building cinemas where subscribers can physically go to watch movies instead of streaming them via an app. For Coca Cola, it may entail bottling its soft drink concentrates and syrups by itself, which will entail buying over all of its bottling company partners or building its own bottling factories from scratch.


You should only go the route of business model innovation if your existing business model is failing or if a different business model offers a much better prospect than your current business model.


Key Takeaways


Having gone through some of the major forms of innovation that you can implement in your business, it is important to point out that innovation should be a continuous activity and not a one-off event. One-off innovation can give you a temporary edge over your competitors, but it is only through continuous innovation that you can sustain that competitive advantage.


With so much information out there, getting intel on a competitor's innovation, is – sometimes – only a few clicks of a button or phone calls away, making it relatively easy for your competitors to figure out and replicate your innovation. Shifting demands of consumers can as well render an innovation obsolete.


You also shouldn't rely on one form of innovation. It is important that you continuously explore opportunities for innovation across all aspects of your business, from product development to operations and from marketing to service delivery. That way you will always be one step ahead of the competition and before your competitors can decipher your innovation, you have already moved on to the next one.


Chinedu Nnawetanma

Posted in SME Newsletter.