Innovation is very important for both individuals and companies, this allows society to move forward. It aims to discover and find facilities to improve the world and make people’s lives easier.

On this website, we will discuss how innovation works, how you can have innovative thinking to help you change the world and how to apply it so that your company or business idea can bring new things to the world and you can succeed.

the importance of innovation in business

What is innovation in simple words?

Innovation is an idea that has become a reality. For the company, it is a product, a process or a business concept, or a combination that has been activated in the market and has brought new revenues and growth to the organisation.

Innovation is a process that brings new things, it refers to modifying existing elements in order to improve them, although it is also possible to introduce new elements.

On the other hand, in a narrower sense, ideas can be innovative only when they are implemented as new products, services or processes and successfully applied and established in the market through diffusion.

One form of innovation includes improving the management of the company through new processes, the use of technology, automation, improving quality and defining new ways of satisfying customers. These are just a few ideas about what innovation can be and what it can achieve and help companies to grow and improve their competitiveness.

In economics, the term was introduced by Joseph Schumpeter in his book Innovation and Creative Destruction, where he defined it as «the creation of new functions of production». Economic and social change occurs when factors of production are combined in a new way. He argues that the key to economic growth is invention and innovation, and that it is entrepreneurs who create these changes. Innovation is the key to business development and economic growth, and countries that invest more in research and innovation achieve greater prosperity. In this sense, the Spanish dictionary defines innovation as «the creation or change of a product and its placing on the market».

The term innovation is also used in the humanities and culture. The search for new knowledge, solutions and methods through research implies curiosity and the pleasure of renewal. In this context, the concepts of avant-garde and creativity are relevant.

Innovation and creative destruction

What is the best definition of innovation?

«Innovation» is the creation, development or use of a new product, process or service to increase efficiency, effectiveness or competitive advantage.

Innovation can occur in a variety of domains, such as social, business, organisational and technological. In terms of innovation, it is of paramount importance.

  • Process and product innovation: In this case, the aim of innovation is to improve an existing product so that some area of the process is equally innovative and achieves the desired result. An example would be the manufacture of a product with packaging to extend its shelf life.
  • Organisational innovation Innovation can occur not only in the improvement or creation of products that revolutionise the market, but also in the organisation of the company itself. This can be achieved by planning the organisation itself, its mission, its internal and external relations. Implementation mechanisms and work bases, including implementation innovations. Examples: new software to support business management, new forms of customer contact through applications, personalised e-mails.
  • Commercial innovation The ability to promote a successful product and keep the brand alive is key. Companies can work on packaging and product design innovations that have an unusual and positive impact on consumers, on in-store positioning, where creativity and consumer behaviour research are an important support and innovation. Or in introducing innovative promotions that break away from the norm and capture the attention of potential consumers. For example: devising eye-catching displays, colour combinations, scents, lighting, etc. to attract people’s attention.
  • Technological innovations. If we can innovate socially, commercially and organisationally, we can also innovate technologically, adding value to our products and delivering innovative results through our production processes, machines and tools. For example, using artificial intelligence to develop and improve existing products.

What is the real meaning of innovation?

Innovation is really something new, a great idea or a… Innovation usually starts with something that you struggle with yourself. Something you personally want to change, because you need to change it. This is the essence of innovation.

Innovation is change with novelty. The word comes from the Latin innovatĭo, -ōnis, from innovo, -are ‘to make new’, ‘to renew’, and is composed of in- ‘in’ and novus ‘new’.

Innovation is often associated with the idea of progress and the search for new ways of using previous knowledge to improve what already exists, to solve a problem or to advance an activity.

Innovation is a continuous activity over time that affects many different areas of human development.

Other terms that have a similar meaning and can be used synonymously are progress, invention, reform and renewal.

What are the 4 types of innovation?

Of those companies that succeed, most go through one (or several) types of innovation:

  1. Incremental innovation: Incremental innovation is defined as the activity of introducing improvements to a concept to add value to an existing product. It is carried out in a variety of ways by companies and governments producing goods and services.
  2. Product, service or technology innovation: is the introduction of a new or significantly improved product (goods or services) on the market (product innovation) or the introduction of a new or significantly improved process within a company (process innovation). Innovation is based on the results of new technological developments, new combinations of existing technologies or the use of additional knowledge acquired by the company.
  3. Business model innovation Business model innovation is defined as the way in which an organisation creates and delivers value to its customers. Therefore, innovation cannot come only from process or product improvements. It involves significant changes in the set of factors and relationships between them that are involved in creating value for customers and generating revenue.
  4. Innovation in start-ups: Business innovation consists of improving a company’s performance by changing its business model, processes, organisation, products and marketing to improve its efficiency and market position.

Where does innovation fit into your organisation?