By Peter Kamande
In the recent years, competition from all types of businesses has drastically increased. This is highly motivated by reduced barriers of entry for small businesses, globalization, and high level of unemployment, especially in the developing countries among other aspects. As a result, businesses have been forced to innovate to remain competitive both in the short and long-term. It is important noting that unlike in the past where businesses would survive with little or no innovation, recently, it has become the only way in which a business can survive.
In Kenya, the government and other stakeholders are doing everything to ensure that business innovation is highly encouraged as one of the ways to fight against unemployment. For example, the setting up of youth funds and the creation of platforms such as the iHub are some but few of the examples.
What is Innovation?
Innovation can be regarded as ‘the means by which the entrepreneur creates new wealth producing resources or endows existing resources with enhanced potential for creating wealth’. From this definition, it is clear that innovation is the way in which firms seek to acquire a competitive edge while raising their capability to generate wealth in the marketplace.
It is worth noting that, although every business has its goals and priorities as well as sector-specific issues that require balancing at all the times, failure to innovate may result in non-optimal operations, thus losing to the rivals. The section below will look at the important reasons why innovation in business is a key factor of survival in the 21st-century market place.
Benefits of Innovation in Businesses
One of the major benefits of innovation is the ability of a business, whether small or big, to respond to trends and competition. As indicated above, businesses that fail to innovate are at a great risk of facing stiff competition from other firms. Therefore, through innovation, businesses can discover the existing opportunities or those opportunities that have the likelihood of emerging in the foreseeable future.
For instance, in Kenya, mobile money transfer has been one of the best innovations that have taken place in the current time. Through this platform, one can easily transfer money from one place to the other with ease, thus helping to achieve the set national and international goals such as the Sustainable Development Goals (SDGs). In general, successful firms are those who not only have the ability to respond to the current organizational and customer needs but also anticipate possible future trends.
The other advantage of innovation is the ability of a business to develop unique selling points. This is based on the fact that consumers often view innovation as an issue adding value to a firm or its products. If innovation is employed adequately, it offers a business a competitive advantage especially in areas where the market is shifting rapidly or saturated. For example, in Kenya, there has been stiff competition in the banking sector as these firms aim to reach to the millions of unbanked Kenyans. Similarly, competition and innovation among the mobile phone companies have also helped in increasing financial inclusion.
As indicted earlier, innovation is not all about designing and selling new products or services, but also focusing on the prevailing business practices and processes. This way, innovation increases efficiency in a business such as through waste minimization, thus increasing profits. Further, constant innovation is key to attracting and retaining the best members of staffs, and this is critical in enhancing the long-term performance as well as the health of a business.
Factors Hindering innovation in businesses
Preventing employees’ participation in day to day activities of a business is one of the main factors hindering innovation. It is important for managers and business leaders to realize that they are mainly catalyst towards innovation as the real job lies on the employees themselves. Based on this, there is the need for the management to challenge the employees to come up with a workable solution to problems facing the business as this is the only way they can innovate.
Innovation is greatly hampered when companies are not ready for any mistakes to occur within its operations. For instance, some businesses may not like to cater for the costs that arise when products produced as a result of innovation fail to hit the market. However, companies that are persistent end up being winners at the long term.
By and large, it is evident that innovation is key to ensuring the survival of any business. Through innovation, companies can be able to enhance product differentiation, thus come up with unique selling points as well as respond to trends and competition. Despite the numerous factors hindering innovation, there is the need to encourage innovation as this is the only way to ensure business success in the twenty first century.
Mr. Kamande is a professional research writer. Email: firstname.lastname@example.org