Ever wonder why companies like Google, Amazon continue to launch new products and business models. These companies focus on innovation as part of their culture. Here are the top 5 reasons why these successful companies focus on innovation.
Read Business Insiders post on “Companies must Innovate or Die”. Talks about how Apple and 3M used innovation to change the fate of their companies.
Customer Needs Keep Changing
Any Product Manager would tell you that the work load increases after successful launch of a product. First few weeks after the release, they spend time gathering data on customers’ reaction to the release. Once they finish gathering and analyzing data, the customers feature requests start coming in. Product managers implement the most sought after features, leaving others for future releases.
There are ideas the customers are not sharing with you and those ideas are a bigger threat to your business. Your product might have made their life easy, but there are other ways to make it easier. Unfortunately, customer don’t know about it till another company puts a solution in front of them that does a better job.
Staying on top of changing customer needs is important to successful companies. They invest in understanding their customers and innovate to satisfy future needs of the customers.
Competition is Aggressive
Your biggest competitive threat is not from a company that is known to you. But it is from a startup somewhere in this world, working on a disruptive solution. These competitors are hungry to grow and know that delivering best-in-class customer experience is the way to win.
Successful companies hate getting surprised by these innovative companies, hence they turn their focus to their own innovations. If their innovation is successful, they would continue to have the competitive advantage. If their innovations do not succeed, then they know how much to pay to acquire the successful startups and how to integrate them into the company. For example, Google keeps innovating and building new products. Some of their products are successful (like Gmail, Chrome, Android) and some are not (like Google Glass). Because they have innovated, they recognize good acquisition opportunities when they see it. Like their recent acquisition of Softcard technologies patent and Nest.
Read HBR article on “The Innovation Strategy Big Companies Should Pursue”. This blog shares how startups are winning by innovating, but big companies can do the same.
Innovation Drives Future Growth
Companies that believe that they have perpetual revenues from their current business model are dreaming. I have managed products that are 10 – 15 years old, with minimal investment into modernizing the products. They had steady revenues and market share. But this was because the market was small and it did not attract newer innovations, or the customers were not comfortable with change. Any company holding on these markets is not experiencing growth.
Innovation is the growth driver. It adds newer business models and products that drive bigger share of the overall revenues in the future. Sustaining innovation ensures that current products/solutions continue to meet the customer demands and continue to drive revenue growth in the future.
Never Easy to Catch Up
A company does not innovate for years, then it realizes that it is far behind its competitors. So it hires an innovation team with a task to make the company catch up with the competition. The fact is it is never easy to catch up once the company stops innovating. No matter how much effort and resources you put in, the competitor always would have an advantage over your company.
Moreover, the company culture does not support innovation anymore, and this is not easy to change. Hence the innovation teams spends years changing the culture and catching up with competition. When they believe that they have reached a milestone, they realize that the competition is further along.
Being an innovative leader is always better than being a distant follower.
Stakeholders Desire it
Executives of the company owe future growth to their employees, investors, shareholders and the community. Growth ensures economic well-being of everyone involved with the company. Innovation provides such growth over the long run and hence key stakeholders of the company want it. Successful companies recognize this and invest in innovation.
Does your company invest enough into innovation? Does your company have the right innovation culture? These are the questions you should ask and see if your company is ready to be successful.