The ability to innovate is the key to long-term corporate success. Without innovation, companies will not survive in the long term. This is also clearly shown by an analysis of the S&P 500 Index, which shows an enormous reduction in the length of stay of listed companies.
While in 1960 the average service life of a company was around 60 years, today it is only around 18 years. The replacement of old companies by new, fast-growing start-ups is constantly on the increase. Why innovation management should be implemented and actively operated in every company against this background is explained in this article.
1. Securing a sustainable competitive advantage
In order to secure a sustainable competitive advantage, companies must be creative and develop new ideas "out of the box". Innovative spirit and strategically oriented innovation management ensure the competitiveness of SMEs and large corporations in the medium and even long term. Above all, innovative employees are an enormously valuable resource in this respect. Successful companies do not see innovation as a by-product, but implement innovative thinking in their organization and in this way use the potential of their employees.
2. Fast reaction to changing conditions
Companies are facing great challenges as a result of ever faster change. Governments are changing, new laws are being passed, what was previously illegal can suddenly become legal or vice versa. In addition, there are constantly new technology standards, more demanding customers and trends that can pop up relatively quickly. A few years ago, for example, the environmental trend focused on a few areas; today, everything has to be environmentally friendly, ecologically sustainable or organic. In order to adapt quickly to these changes, innovation is a must. Companies involved in innovation and innovation management are able to react quickly and will continue to be successful in the future.
3. Market growth and differentiation
A direct threat to a company is posed by new market participants entering with a new business model or the same business model or product or service at a lower price. The company must then differentiate itself through innovation in order to stand out from the competition on the existing market. Even small product innovations can protect against imitation and be used as levers for market growth and differentiation. Very high differentiation is achieved with business model innovations.
4. Development of new markets and target groups
Innovations make it possible to enter a new market and open up new target groups. With a market innovation, for example, you can penetrate new industries by transferring technologies used in the company to new fields of application (for example: passenger transport and meal delivery). However, it is often necessary to adapt not only the technology, marketing or service, but also the products and the business model to the requirements of the new industry. A market innovation then quickly becomes New Business Development.
5. Efficiency increase and cost reduction in the company
Innovation can lead to a reduction in production costs. Process innovations, for example, can sustainably and significantly increase a company's effectiveness and efficiency. Using the example of the Voith Group, we demonstrated how a new process could be developed using the Lead User Method, which saved up to 50 percent energy compared to the old method.
6. Added value for society
Innovations often also create added value for society. Particularly in the medical field, smart technologies offer new forms of treatment and an enormous facilitation for home care. Reducing the consumption of resources by companies and private individuals through innovative technologies is another example of social added value - be it resource-saving packaging or sustainable solutions in the textile industry.
Conclusion: Innovation as the engine of a company
Innovation is the only way to generate a sustainable competitive advantage and market success. Innovation secures tomorrow's revenue, lowers costs, and differentiates companies from the market. However, a good business model that only provides a brief market advantage and disappears after a year is not the right approach - even if many companies act in this way. In order to create a market advantage over the entire duration of the company, professionally implemented innovation management is indispensable.
