The 3 main types of product innovation and how they can help build a sustainable business
According to a recent study, 61% of companies now use open innovation compared with 34% using traditional R&D because it involves partnering with other companies, speeding up the innovation process.
In a fast-paced and highly competitive environment, constant innovation is key to maintaining a significant market share and, consequently, to long-term success. By creating a competitive advantage based on innovation, organisations don’t have to fear new competitors or the impact of momentary trends; they have a robust business framework that fosters sustainable growth.
However, innovation can come in many shapes and forms. While many associate innovations with revolutionary products that have marked a shift in the way we use technologies, there are, in fact, several types of innovation. Before we dive into some of the most important product innovations, let’s clarify the main types of innovations your company can start working on next quarter.
Profitable types of innovation
Innovation is seen in 3 principal areas of a business. First, the service offering of the company. Second, how the business operates behind the scenes. And third, through customer experience. Development in each of these areas, directly or indirectly, improves the organisation’s standing in the eyes of potential customers, fostering longevity and sustainable growth.
Refining the offering and product performance
This is what comes to mind first when considering product innovation. What can the business offer to better serve its target market? However, it is pretty challenging to execute well. It can take years of research and trial and error to develop products that will attract a loyal customer base. With technological advancements updating rapidly, technology-based changes to offerings can be limited to making a short-term impact.
Often customer feedback sparks the best ideas for taking product offerings to the next level and creating a unique product that cannot easily be replicated.
How a company works behind the scenes is essential to how it can serve its customers. While the sales team and customer service representatives work directly with customers, actions taken at all levels of an organisation have a ripple effect. Structure and company culture is key to success, especially in embracing innovation.
The business set-up should enhance each employee’s ability to do their job and enable the creative problem solving required for innovation.
Customer experience and reputation
To build a powerful reputation, businesses need to create a customer experience worth talking about. What can be done differently to enhance customer interaction? Whether improving ease of use or results gained, understanding the priorities of the target market, and reflecting that in the customer experience moves the business forward.
This type of innovation can feel the riskiest because it is trialled directly with customers, so any mistakes are made in the public eye but so are any successes.
Considering how all these types of innovation can work together creates new opportunities, and supports the company in making a significant impact.
Examples of successful product innovation
Product innovation has been and continues to be used by market-dominating companies to secure their success and create longevity. These are just a few examples of legacy-building innovation.
Offer innovation at Apple
Apple has created one of the most loyal fan bases a technology company has ever seen. How? It’s not a single buy business. Apple becomes part of its customer’s lifestyle by offering products that work together, creating a seamless experience. If someone has an iPhone, they’ll likely choose a MacBook for their laptop and an iPad for their tablet. Compatibility has created loyalty.
Google’s 80/20 organisational innovation
Many businesses struggle with finding the balance between maintaining what they already offer and finding the capacity to work on innovation. Google found a profitable solution. They implemented a rule that allowed employees to work on side projects 20% of the time. This allowed them to develop products like Gmail and Google News as side projects through people-driven innovation. Successful innovation doesn’t always require restructuring or new teams but optimising current talent and resources.
A unique customer experience with Amazon
Delivery from online stores has come a long way. Amazon became a forerunner and maintained its status in the online shopping world because it saw delivery as a critical element of the customer experience. Providing free expedited shipping for their Prime Customers improved their customer experience in a way that no one else was offering. Amazon built a reputation as the online shop to buy from if you need your items quickly. They outperformed the competition in an influential part of the customer journey.
Product innovation creates profitable opportunities for businesses willing to invest in long-term success. Market-dominating change can occur in product offerings and what is being sold to customers. It can be taken behind the scenes, configuring company operations to achieve the best results possible. It can extend to customer experience, creating an advantage that can’t easily be outdone.
Where will you focus your innovation efforts next?