Business innovation is the process of making something new or improved that better serves a business. This can include a new product or service, a workflow improvement, or anything else that improves the business in a new way.
Here are some examples of business innovation, and a list of some of the most innovative countries in the world.
What Is Business Innovation?
At its most basic level, innovation is coming up with a new way to do things. When it comes to business innovation, those new ways of doing things are introduced with the goal of earning the business more money.
Beyond that basic definition, business innovation is a general concept that can apply to many different products, services, efforts, and policies. It can include new products that will better serve customers or a new program that will help employees better communicate about projects they're working on.
Any time you're trying to find new ways to improve a business, you're dabbling in business innovation.
In the business world, innovation is often used as a synonym for research and development (R&D). However, R&D is a fairly limited term that usually refers to the development of new products. Business innovation is a broader term that describes any type of innovation that occurs in a business context.
How Does Business Innovation Work?
The Organisation for Economic Co-operation and Development (OECD) outlines four ways that business innovation can manifest: product innovation, process innovation, marketing innovation, and organizational innovation.
Innovative businesses have new and exciting ideas that are more likely to attract venture capital investment.
Product innovation refers to new or significantly improved products. The innovation could include making the same product with better components or a new product that's more user-friendly.
Process innovation refers to new ways a business can deliver its product or service. This could include changes in techniques, equipment, or software.
Marketing innovation has to do with the way the product or service appears to customers. It includes new packaging or ad campaigns, but it also includes any price changes.
Organizational innovation refers to big picture changes that a business can undertake to improve performance. This could be an internal change to business practices or an external change to business relations with other entities.
Benefits of Business Innovation
In 2019, Northeastern University boiled down the benefits of business innovation to three key concepts:
Better growth: Without flexibility, you may be stifling the growth of your business. Businesses with sufficient capital may be able to buy up competitors and grow that way, but for many businesses, their growth will be limited to how much they can innovate and find new ways to attract customers and grow their market share.
More relevance: The digital age has ushered in an era of unprecedented growth and change. Some 90% of the world's total data was created in recent years, and hundreds of more websites spring up every minute. Those who can't keep up with the changes will likely fall to the wayside in this ever-evolving environment.
Helps to differentiate your business: Innovation means doing something differently than has been done before. Therefore, the more your business innovates, the more unique it becomes. Standing out from the pack helps ensure that your business can survive the new businesses flooding the market.
Tracking National Innovation
While business innovation takes place on an organizational level, several groups track total innovation across countries to compare national innovation.
One of these trackers is the Global Innovation Index, which is co-published by Cornell University, INSEAD, and the World Intellectual Property Organization. Metrics include business qualities such as R&D and capital investment, but they also include broader social measures of innovation like political environment and knowledge diffusion.
Here are the top 10 innovating countries, as measured by the Global Innovation Index in 2019:
- The U.S.
- United Kingdom
Of course, other organizations have different metrics for measuring national innovation. That's why it's helpful to compare the lists generated by a variety of organizations.
Here are the top 10 innovating countries, as determined in early 2020 by the Bloomberg Innovation Index:
- South Korea
- The U.S.
- Business innovation is the process of creating new or improved ways of doing business.
- Business innovation can take many different forms, from a new marketing tactic to an altered workflow, to a brand new product.
- The OECD defines four types of business innovation: product innovation, process innovation, marketing innovation, and organizational innovation.
- Groups commonly track national innovation as a way of measuring a country's overall economy, growth, and society.