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5 Reasons Why Businesses Need to Innovate

Jen Nguyen avatar

Jen Nguyen

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5 Reasons Why Businesses Need to Innovate

Innovation is Now A Necessity

Innovation isn’t just about business. It affects individuals across all sectors of an economy; startups, corporates, governments, households all the way down to the individual.

In the corporate space, innovation is the process by which a product, a service, or a domain is renewed. This is often accomplished by introducing new techniques, applying new functions, or establishing successful ideas to create more value.

We are living in an ever changing world, where technology is speeding up, here are 5 reasons why businesses should aim to innovate.

Doing something entirely new may seem risky. But the alternative is way worse.

1. Stay ahead of potential disruption

Disruption is an imminent reality that no business can ignore. The disruption rate is escalating across every industry, thanks to increased computing power and a pandemic whose total effects are yet to be fully established. Today, more startups are being registered with the potential to overthrow incumbents across industries.

To excel in this new world, organizations must strive to stay ahead of the disruption curve. While not an easy task, businesses must focus on innovating and delivering exceptional experiences for their customers.

Innovation provides an opportunity for companies to strengthen customer relationships, ensure competitiveness, maintain relevance and grow. A simple solution for legacy companies is to partner with startups or buy technology to stay ahead of the curb.

2. Talent Attraction and Retention

According to a survey by Accenture, only 19% of college graduates in the US say they are interested in working for a big company. Meanwhile, 44% of college graduates prefer to work for a startup or a small company.

This is because young people often find big companies slow in the sense that these companies aren’t committed to their employees' interests, ideas, or talents.

These findings are a wake-up call for all businesses. They emphasize the need for constant innovation not only as a recipe for high earnings but also as a crucial component for attracting new and retaining existing talent.

3. Brand Perception

We’ve all been there! You once purchased a product not because you understood how it works but because you felt it was cool or because it’s from a particular company. You are not alone.

A lot more people admit to buying products based on brand perception and more so based on the innovativeness behind the product.

For most consumers, it’s imperative that the company they buy from is innovative. To them, innovation is a vital aspect in the purchase decision, especially because it enhances self-image, i.e., makes them look innovative and stand out from others.

I would even go so far as to say, the majority of individuals are willing to pay more for a product they consider is innovative.

4. Keep up to date with regulatory and compliance changes

Innovation is highly dependent on the leniency of regulations. In the past, increasing the cost and regulations around developing new innovation and inventions has discouraged many from trying to fit outside the norm.

More recently after recognising the linkage between the two, regulators have started adjusting the restrictions and costs as means of encouraging innovation while still ensuring appropriate governance.

While this is beneficial for startups and innovative businesses, large legacy companies must innovate to keep up with the changes in regulations.

Take open banking as an example, the requirements now aim to improve information sharing while protecting consumer data rights. This allows for greater freedom to innovate in the banking sector while ensuring the security of individuals’ information. But legacy systems weren’t built with that capability, they must innovate to meet the changing regulatory requirements.

5. Overall Organization Success

Innovations make existing business processes faster, cheaper and more sustainable. The changes increase an organization’s overall success and make it easier for an organization to adapt to industrial shifts with agility and with less risk. Innovation provides an edge for success by boosting growth, sustainability, and profitability.

Everyone and everything evolves to stay ahead, stay current and survive in the ever changing environment. How is your organisation innovating?

Jen Nguyen avatar

Jen Nguyen

Consultant at EY & FinTech Program Manager @ Startupbootcamp Australia