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.
The importance of continuous innovation for companies
Companies that continuously develop new ideas and innovations have a clear competitive advantage. Well-functioning innovation management enables companies to respond quickly to changing market conditions and to design their products, services, processes or business models more efficiently. New products and services can help to open up new markets and target groups and promote market growth.
However, implementing innovations requires resources such as time, money and commitment at all levels of the company. Companies must therefore ensure that they have a clear innovation strategy and use innovation methods (design thinking, lead user:inside method, etc.) and open innovation as a management approach to drive the innovation process. With continuous innovation, not only the company itself benefits, but also society through improved products or services as well as positive environmental or social impacts.
6 positive effects of innovations
- Securing a sustainable competitive advantage
One advantage of continuous innovation management is securing a sustainable competitive advantage. Companies that continuously develop new products and services and optimize their processes have a clear advantage over the competition. Because while other companies rest on their laurels or only half-heartedly implement new ideas, these innovative companies focus on the continuous development of their products and methods. This not only enables them to better understand the market and respond more quickly to changing conditions, but also to tap new resources and better serve customer needs. One example of this is the open innovation concept: by collaborating with external partners such as start-ups or universities, innovative ideas can be identified and implemented more quickly. Last but not least, employees also benefit from such an innovation process: They can work more creatively, develop themselves further and thus contribute to a more effective implementation of innovations. In short, continuous innovation is an essential factor for long-term corporate security in disruptive times.
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. - 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.
Innovation management is a crucial factor here. There are methods and processes that enable ideas to be developed and implemented quickly. Through open innovation processes (open innovation), for example, innovation teams gain speed, which increases the responsiveness of the organization. - 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.
By constantly developing new products, ideas and methods, companies can improve their position in the market and win new customers. Innovations can also be used to target niche markets or specific target groups. Resources should be used in a targeted manner - both financially and in terms of personnel - to ensure that innovations are implemented effectively. - 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. - 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. By using new methods and processes, resources can be used more effectively, which leads to a reduction in costs. In addition, new products and developments can help to optimize internal processes and thus save time and money. Incorporating feedback from the market into the innovation process can also help to bring products to market more quickly and thus achieve greater profitability.
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.
Innovations not only produce new products, but also optimize existing processes - an important factor for any company that wants to be successful in the long term. - Added value for society
The final positive effect of innovation is the added value for society. When companies develop new products, methods, processes or business models, they can help solve societal challenges and bring about positive changes in the world. An example is more environmentally friendly technologies that help reduce emissions and combat climate change. But there are also numerous opportunities for innovative ideas in the social sector: Companies can, for example, develop new products and services to enable older people to live a self-determined life or provide disadvantaged groups with access to education and jobs. By implementing new innovations, the company thus not only contributes to its own success, but also makes a valuable contribution to improving society as a whole.
Conclusion: Long-term corporate security in disruptive times
Innovation management is an important component for every successful company. The continuous development of new ideas and innovations offers numerous advantages, such as securing a sustainable competitive advantage and responding quickly to changing market conditions. By using effective innovation methods and a structured innovation process, innovation teams can develop new products and processes to optimize resources and reduce costs. Opening up new markets and differentiating oneself from the competition are also important benefits of an innovative corporate strategy. The goal should always be to create added value for society and thus make a positive contribution to shaping the future. In disruptive times, it is particularly important to be positioned for the long term and to continue to develop in order to be able to operate successfully in the market in the future.
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.
