5 Advantages of New Business Development
Successfully opening up an unknown market with a new invention involves enormous risk. In view of the disruption that almost every industry has to face, New Business Development is establishing itself as an interesting alternative for generating new sales. Read this blog post to find out more about the advantages of this type of innovation.
When it comes to innovation, there is something new in play that has not previously existed in this form. But no matter whether it's a new service, a product, business model or market innovation - at least one aspect is known about inventions and used to the company. Usually it is the market: companies develop new products in order to address the same or similar customers. In a business model innovation, the companies try to generate sales in a new way. For example, the sporting goods trade is increasingly successful in renting sports equipment rather than just selling it. However, the customer base and the market are the same. With a market innovation, the company tries to enter a new industry. However, with an already existing product, an existing technology or at least a competence that it adapts to the requirements of the new industry.
The company breaks completely new ground in New Business Development
If a company dares to penetrate a previously unknown market with a completely new invention, it is called New Business Development. This type of innovation has the highest degree of novelty of all. Everything is new for the company: the product or the service, the corresponding processes, the business model, the market and its customers. It is almost superfluous to mention that this path to new sources of revenue is associated with a very high risk. However, it is not impossible to follow this path. In view of the aforementioned disruption, which has already gripped many industries and will probably change them completely in the coming years, New Business Development is becoming increasingly attractive.
If a total loss is accepted, the risk can be assessed
This type of innovation is particularly suitable for companies that can rely on stable sources of turnover for at least a few years. Because of their strong position, these organizations can afford to fail with new business development. If a total loss is expected in advance, then the risk can logically also be assessed. And it is not completely pointless to land a flop - as long as the company learns from its mistakes.
These 5 advantages can be expected for New Business Development
Admittedly, the first advantage will probably not stand up to any cost-benefit calculation. But there are five more that make New Business Development a serious alternative for all other types of innovation:
1) The growth industry is freely selectable and cannibalism is therefore excluded
If a company with something new wants to generate sales in a new industry, then it can choose the market that promises the most growth rates. Without having to negatively influence their ancestral business in any way or even cannibalize themselves. Admittedly, the development of an industry can never be predicted with certainty beforehand. But with the right approach, a promising market can be discovered whose development can be estimated to a certain extent.
Example: Infineon goes up in the air
An example: The German chip manufacturer Infineon discovered the drones sector some time ago. The company considers this market to be very promising because the application possibilities for the very small models are already enormous and development is still in its infancy. Small aircraft, for example, open up completely new perspectives and possibilities for agriculture. The electrically powered flying objects can, of course, not only produce pictures and videos and playfully put their user in the role of a pilot. Even today, drones can transport and deliver goods. As a result, drones will probably also be able to transport people. Drones are, so to speak, the entry-level drug for electrically powered aviation. Although this is difficult to implement, it is bitterly necessary that we all have it now: The International Civil Aviation Organization (ICAO) calculates that the share of aviation in global CO2 emissions could quadruple by 2040.
Infineon is working with drones because they represent the entry into a very promising new market for the near future. For this adventure, Infineon has already found a partner who knows all about risks: Red Bull. Together with the drinks manufacturer known for its sponsorship of extreme athletes, Infineon wants to develop the drone business and attract young talents as employees: The video, in which a wakeboarder can be pulled through a wildly romantic river course in Slovenia by an Infineon drone, has already been embarrassed by more than ten thousand hits - a considerable number for a company video. By the way, the drone visible in the clip is the first finished product of the group's Emerging Application Lab. Infineon's creative laboratory, in which students and experts work together to find new applications for computer chips, will be the first of its kind.
2) New Business Development helps a company get to know itself better
The number of potential negative and positive surprises in a new business development project is large. Therefore, no company should be surprised by itself. Before a company with an invention becomes active on an unknown market, it should know all about itself. It is not enough to know one's own technological skills. Technical know-how should not be overestimated in such a project, as it is relatively easy for a company to acquire or acquire it through partnerships or investments in start-ups, for example. It is more important to have an answer to the question "Who am I". Values, corporate DNA and corporate culture are the criteria that make a new business development project a failure or a success.
3) When potential customers are analyzed, the existing ones come back into focus
A company that wants to be successful with New Business Development has to take a very close look at the target market and the customers. The company needs to discover needs or problems that employ a group of people large enough to make a profit with a solution. New Business Development makes it necessary to think and act from the customer's perspective. This high degree of customer orientation, which a company in New Business Development has to deal with, is not something it is used to from its core industry: Many companies believe that they know exactly the market in which they have been earning good money for many years. That this is not the case is shown by the high number of inventions that do not become innovations but flops. A new business development project can therefore lead to more focus on the customers with whom a company generates its sales. This effect strengthens the core business.
4) A new business unit serves as a laboratory for your own corporate culture
It is neither sensible nor usual to fill a unit that is to promote new business with only long-term employees. Just as Infineon does in its Emerging Application Lab, external experts or partners also work in such an organizational unit. A new corporate culture is established automatically. Because external forces are used to other ways of working and are usually unwilling to submit to the culture of the mother ship. This type of cooperation can be very strenuous and always carries the risk of failure. At the same time, the employees represented in the new business unit come into contact with a new way of working together or project management such as Scrum. They then try to apply these newly acquired competences and experiences in their traditional field. A New Business Development project can also enrich the culture of an entire company. As far as this is concerned, large corporations can still learn a lot from external forces.
5) The doors open for new partnerships
No company can lead a new business development completely on its own to success. As already mentioned above, it is already necessary in the early stages to involve external specialists or partners specialized in innovation methods such as LEAD Innovation. On the one hand, in order to be dependent on one's own perspective in such a high-risk undertaking, and on the other hand, in order to map the search for and finding of possibilities in a structured and comprehensible process. LEAD Innovation also has a network spanning many industries. On the one hand, this simplifies the search for needs and problems for which no solutions yet exist. This also makes it much easier to find partners with whom the new market can then be opened up together. Because New Business Development alone is not possible, such a project can also serve to accustom an entire company to partnering. It is well known that this competence is becoming more and more important in the face of increasingly short-term, faster and more complex markets.
Conclusio: 5 Advantages of New Business Development
New business development is not for the faint hearted. But if a company knows beforehand what it's getting into and is so well positioned to cope with a total loss, it can only win with this type of innovation. Not only through the invention, which then brings the company sales on top. But also through many experiences and partnerships, which enrich the traditional business field and the own corporate culture.
Born in Vienna. Since 2018 "Certified Service Design Thinker" he has been pursuing his passion as Innovation Manager at LEAD Innovation.