Innovation
Business: BTEC Level 3 National Extended Diploma, topic 1.3.8
Innovation
Businesses are under pressure to innovate. Innovation can be approached in two ways: product innovation and process innovation.
Innovation
- Innovation is the development of a new idea which leads to the production of a new product or service which can be sold.
- For example, Dyson developed the world’s first bag-less vacuum because of its innovative approach to business.
Pressures for innovation
- Social changes may increase the demand for innovative and advanced products to replace current products.
- Competition may increase a business’ focus on innovation as competitors seek to develop new products and services which will attract customers.
Product innovation
- Product innovation involves the development of new products which will be offered for sale to customers.
- For example, the development of new camera technology which improves the iPhone is an example of product innovation.
Process innovation
- Process innovation involves improving the process of manufacturing or offering a product or service for sale to customers to add value, decrease costs or improve efficiency.
- For example, the development of a new factory production line which improves the production of cars is process innovation.
Advantages of innovation
- Innovation allows businesses to improve the products in its portfolio which can increase market share, sales revenue, and profit.
- Innovation allows a business to improve its processes which can increase efficiency and therefore competitiveness.
- Innovation allows businesses to develop a unique selling point which can improve competitiveness and customer loyalty.
Test yourself on Innovation
Which of the following are advantages of innovation?