5 Types of Business Innovation Startups Can’t Afford To Ignore
What do companies like Apple, IBM and Amazon have in common?
Besides a ridiculously high valuation.
If you guessed, “business innovation,” then you’d be right.
These three juggernauts broke the status quo. And they’re bold enough to deliver revolutionary changes that benefit both themselves and the consumer.
Without that relentless pursuit for unique ideas, they wouldn’t be worth what they are today.
And remember, they were all startups at one point just like you.
So, with this resource, you’ll read about:
- What business innovation is and why you should care about it when you’re scaling your startup.
- 5 types of business innovation that you need to explore further.
- How investing in innovative technology and ideas will bring great value to your startup.
Ready to get started? Let’s go …
Why Should You Care About Business Innovation?
Some companies stick to the same, old practices year after year.
You might feel safe sticking to a routine. And your sales might even be steady.
But that won’t allow you to scale quickly (like you want to, right?).
That’s why you should always be keeping up to date with the latest and greatest trends in your industry and using those insights to provide a better product or service. Or you can find new ways to make your startup run more efficiently.
Business innovation requires patience and financial investment.
Understandably, that sounds intimidating to some people. Maybe even to you.
But the reality is, you must innovate.
If you don’t, your competitors will, and you’ll be left with the inferior brand.
As consumer preferences change and technology progresses, your business can’t afford not to adapt.
Because consumers (including your existing customers) have no problem ditching a brand in favor of another. Just ask Kodak, who didn’t believe in the hype of digital cameras and filed for bankruptcy in 2012.
At the heart of business innovation is differentiation. After all, you’re trying to find a way to stand out from your competitors and gain an edge.
But innovation doesn’t always have to be on a macro scale.
If you have limited resources, you can still think of innovative ideas that differentiate from what you’ve traditionally been doing.
As a general rule, you’re looking for ways to transform the way you conduct business. And in the process, you’ll make life easier for yourself and your team while increasing sales.
69% of businesses report sales growth as a benefit of innovation, as reported by PWC.
How COVID Has Enhanced Innovation
The COVID-19 pandemic has shown us how important business innovation is.
According to Boston Consulting Group, 75% of companies reported innovation as a top-three priority in 2021.
A lot of companies have been forced to make some changes during the pandemic.
For example, Starbucks integrated the curbside pickup feature into its mobile app in order to meet consumer needs.
Other companies adopted new ways for consumers to interact with products that are traditionally tested out in-store.
Moreover, millions of companies were left with deciding how to transition to a remote work setting.
But with that innovative mindset that so many business leaders have, most companies have made it through to the other side.
Although technology is intertwined with innovation so often, the truth is that innovation starts with the mind.
And as you’ll read soon, not all types of innovation have to involve technology.
People-powered innovation starts with stakeholders, such as employees and business partners.
Okay, now that you’ve got the rundown on business innovation, let’s look at the first type you can explore.
Types of Business Innovation for Startups #1: Business Model Innovation
Business model innovation refers to a company completely changing its offering in a way that meets market demands better.
With this type of business innovation, a company seeks a new way for consumers to perceive the brand in comparison to its competitors.
Since technology is advancing so quickly, we see a lot of companies shifting accordingly.
And the companies that don’t innovate their business model will fail.
Take Blockbuster as a cautionary tale.
It’s core business model was to allow customers to rent physical movies, video games and music CDs from the store for a period of time.
In 1994, Blockbuster was worth $8.4 billion, according to Drift.
But by 2000, its valuation was just $50 million. And bankruptcy came to fruition by 2010.
So what happened?
Well, Netflix happened.
Netflix changed the rental industry with its monthly-subscription pricing model.
It was much more convenient for customers than driving to the store.
At one point before Netflix really took off, Blockbuster rejected Netflix founders Reed Hastings and Marc Randolph’s offer to be acquired.
And Blockbuster management actually tried the streaming business model before Netflix, but a deal gone wrong with Enron crippled the project.
Needless to say, Blockbuster must’ve been kicking themselves all these years.
On the flip side, Netflix innovated its business model to be more consumer-friendly.
And Netflix put more faith in the mass adoption of on-demand video.
In the end, Netflix won, and Blockbuster lost.
As of December 2021, Netflix is valued at $259.67 billion, as per CompaniesMarketCap.com.
Types of Business Innovation for Startups #2: Management Innovation
You can think of management innovation as the ability for all your projects to run more efficiently.
In other words, leaders find a way to make their organization more productive and competitive.
And this type of business innovation can take shape in any department, ranging from an assembly line to a staffing process and everything in between.
To be considered innovative, the new management practices must depart from traditional strategies.
According to Gallup, managers account for at least 70% of the variance in employee engagement. So when you have the right managers in place, you’ll see employees become more productive and passionate about their work.
And when companies can double the rate of engaged employees, they see 147% higher earnings per share.
AutoGrow is a good example of management innovation. At the time of this article being published, we’re in the process of starting to hire developers from different time zones so that we can deliver a 24-hour delivery window for clients projects.
Each developer, from a different time zone, will work 8 hours. And the next developer will take over.
Now this is something we’ve never tried before and isn’t a common practice.
But we believe it’ll help us get more done in a shorter time span.
Types of Business Innovation for Startups #3: Technological Innovation
Technological innovation can sometimes go hand-in-hand with other types of business innovation.
Because if you can develop or embrace a new technology that allows you to offer a better product or service (like Netflix), then you’ll fundamentally change your organization’s core value proposition.
And the benefits of technological innovation to your startup can include any of the following:
- Shorter production cycle times
- Reduced costs
- More advanced products or service features
- Making existing customers more loyal
- Attracting new consumers
- Acquiring and communicating information more effectively
According to Accenture, leading companies that adopt the technological type of innovation grow 5 times faster than their competitors (also known as “laggards”).
These days, artificial intelligence is incredibly important to modern business. If you haven’t read our article AI Marketing: 21 Tools Your Company Can Use Today yet, then it’s worth giving it a go.
As reported by Statista, the AI industry is expected to be worth $126 billion by 2025. By the way, that’s a 263% increase.
So, as no surprise, the world’s richest man, Elon Musk, is behind the innovative company called OpenAI.
You see, this tool can understand language the way humans do. With that, you can feed it inputs and it’ll provide highly relevant outputs.
As an example, a blogger can ask an OpenAI-basd tool to write the copy for a specific topic. From there, the tool will pull accurate information from the internet and interpret the information the same way the blogger would. There’s no plagiarizing.
Because of its value across a wide range of business operations, a lot of other companies use the OpenAI API to deliver their own types of innovative AI solutions.
Other than conversational copy, some other uses for OpenAI are:
- Summarizing meeting notes
- Outlining essays
- Creating reviews
- Developing interview questions
- Idea generation
Types of Business Innovation for Startups #4: Design Innovation
Design innovation can fall under many different arenas.
For a physical product, you build this type of business innovation through things like aesthetics, simplicity and reliability.
Think of how Apple revolutionized cell phones with a touch screen.
In one neat package, a consumer had access to a telephone, the internet and media players.
Or think of how the Pacific Northwest National Laboratory develops lithium-based batteries that can last longer than traditional batteries.
And if this sounds a lot like technological innovation, then that’s because designs are inherently dependent on technological breakthroughs.
Just think of design innovation as an extension of technological innovation.
But design innovation isn’t limited to just products. You can also think of new ways for your startup to deliver a better user experience for consumers on the web or mobile apps.
For example, the company, Button, allows brands to integrate with one another.
Instead of your traditional paid advertising campaign, Button allows brands to display a call-to-action button on the apps and websites of related companies for users to click on. And the company hosting the “button” gets a small slice of the sales pie if someone converts.
It’s a win-win for both companies.
And it’s also a clear contrast to the way mobile advertising usually works.
According to Button, customers see, on average, 30% more return on paid marketing spend using its PostTap feature.
Types of Business Innovation for Startups #5: Strategy Innovation
Are you willing to take big risks for a big gain?
Because in order to survive the market, you need to have guts.
No risk, no reward.
This is where strategy innovation can be your friend.
For this type of business innovation, you need to map out how you plan on making power moves for your startup. You always need to be one step ahead.
Say that you plan on scaling really fast within the next year.
Some questions you’d need to answer are:
- Will you hire more employees or invest in new technology to make your current workers more productive? Can you think of another solution to accommodate more demand?
- Should you target one geographical region but not another?
- How will you raise more capital for this expansion?
- Does your organizational social structure need to be revised?
This is your time to shine.
It’s where leadership skills launch startups into a new realm of market size.
And strategy innovation can be critical for established businesses too that are struggling with revenue goals.
As an example, look at British Airways in the 1980s.
In 1983, the carrier airliner was deemed “a national disgrace — the world’s least profitable airline” by the Financial Times.
But three years later, British Airways was the most profitable airline in the world and had the best customer service among trans-Atlantic routes.
Chairman Sir John King accomplished this feat with strategic innovation within the company.
Among the notable changes within the three years it took to change public perception were:
- Eliminating 22,000 jobs
- Reducing costs
- Making foreign marketing deals
- Appointing a new CEO
- Refining the executive compensation stream
- Adding an effective employee appraisal program
- Investing more in employee training
For British Airways, these changes made the company unrecognizable from its former self — in a good way.
But it took courage and company-wide collaboration to realize Sir John King’s vision.
After the company’s incredible success, it went private, which helped its profits even further for some time until the Gulf War plummeted its sales in the early 1990s.
If your startup is going to stay relevant, then you’ll need to put the thinking cap on and innovate.
Because if you don’t, you can say goodbye to your customers.
After reading these 5 types of business innovation, you have several options when it comes to transforming the way you operate.
To recap, those innovations include:
- Business model innovation
- Management innovation
- Technological innovation
- Design innovation
- Strategy innovation
Not only will you retain your existing customers with your innovative endeavors, you’ll start attracting new ones too. And before you know it, you’ll have investors making pitches to you instead of the other way around.
So that’s a wrap. Thank you for taking the time to read this latest post.
Before you leave, let me ask you …
Do you have experience with any of these 5 types of business innovation?
Let me know in the comments below.
Keep AutoGrowin’, stay focused.