Innovation is widely known as a value which is worth pursuing or even a corporate cure-all. However it is important to be aware of the many innovation advantages and disadvantages.
Any successful innovation holds a special mystique as the drivers of change as well as progress in our society. However, innovation is also costly, difficult and disruptive. Before pushing for innovation mindlessly at all the times and in all spheres, it is worth considering both the costs as well as the benefits of innovations so that the innovators can be placed strategically in the organization.
Technological advancement occurs continuously and businesses usually feel the need to implement the latest change so as to keep up with the competition. In business, technological innovation can be of various forms, including computerization and mechanization of necessary systems as well as processes. For small business owners, technological innovation can provide a number of essential benefits as well as possible disadvantages.
Internal Innovation Advantages
Apart from the obvious advantages of an increased efficiency, technological progress or social contributions, the effect of a skillful innovator on the culture of a company can be monumental. Innovators that have a good understanding of the way you can inspire and train others can begin to cultivate a corporate mindset which will fosters personal ownership, contribution as well as creativity.
Although, innovation for its own sake may be costly and also confusing but whenever skillful idea are added, it can redefine a business, an industry or even a society as a whole.
The benefit of innovation for brand marketing effort is so clear, for instance Volvo, established a reputation for being an innovator of automobile safety, a message which has reiterated their effective marketing campaign for decades.
Netflix was transformed into one of the biggest companies in the world within a short period of time as a result of innovation. Before reaching this peak, Netflix embarked on a strategy which is called “reverse engineering Hollywood.” This involves the collection of a large stockpile of data on the emerging trends and marketing directly so as to satisfy the needs of the customers and also build their own brand.
Virgin America which is one of the American airline companies has been operating since 2007. The travel industry is one of the demanding and challenging industries and because of this, they introduced innovation so as to be ahead of their customers. The company went ahead to introduce a focus program which comprises of 30 frequent flyers as well as customers that give feedbacks and also generate ideas on how the service of the airline can be improved. The focus group will then be given a rewards and discount.
One direct impact of the customer’s feedback was the development of an in-flight social network which enable the customers to connect during flight. This innovation helps them to beat competitors and gain their market share.
Internal Innovation Disadvantages
The most obvious disadvantage which is being created by innovation occurs within their personal organizations or departments. The search for new solutions would require experimentation, failure and, thus, high cost of uncertain returns.
In addition to that, innovation disrupts the existing patterns and can also result to a significant dip in the productivity and morale as workers adjust to the innovation. If the new idea will truly be a long term improvement, this may be worthwhile, but constant innovation for its own sake may keep a company from finding its feet in the appropriate place.
External Innovation Disadvantages
Innovation can also cause disruption to the outside world, changing the approach of running a business can break down existing relationships with the suppliers, business partners or the customers. Too much change over a short duration can result to a loss of credibility or consistency, especially if the nature as well as purpose of the innovation is communicated poorly.
The innovation may likewise result to a big problem if they insist on the value of an idea the rest of the company refuses to implement. The consequences can also range from time-washing arguments to fundamentally destabilizing the company.
External Innovation Advantages
In addition to that, innovators that are skillful can leave competitors in the dust by entirely redefining the market. This can either be by creating a new product and services, adding efficiency to the existing processes or even the creation of whole new markets, innovation likewise have the potential to radically enhance the effectiveness as well as profitability of their companies.
In addition to that, a highly visible and inspiring innovator such as Steve Jobs can become a symbol of the company and personally boost the recognition of brand as well as customer loyalty by delivering exceptional improvement consistently.
Market Expansion Advantages
Innovative technology can give advantages to help small and big companies to compete on a global stage. Innovations such as the internet, for example, would allow a sole proprietor to offer her products or services to potential customers around the world through the use of a website.
Such companies can also provide a detailed product description as well as photograph of her products so as to provide prospects with all the information that is needed to make an informed buying decision. Social media vehicles such as Twitter and Facebook would also allow her to network with others who may have an interest in her business, without the need for face-to-face interaction.
Cutting Costs Advantages
Innovations can also help various business owners to minimize their cost during the course of operating their business. With the use of automation, a small manufacturer can also reduce his dependence on human beings to perform some of the necessary production processes. As a result, the business can reduce employee expenses such as salary, turnover and obtain significant advantages.
Technology can also give advantages to streamline the process of production, eliminating costly waste. Implementing a “lean” manufacturing process such as Six Sigma, offers the opportunity to meet the demand of customers at a faster rate.
For instance, HTC Sweden, a global flooring system company whose diamond grinding machines turn ordinary concrete floors into luminous work surfaces has used “digital prototyping” to cut the product development costs by 97%. The previous method which involves building physical models of new products cost about $500,000 per prototype and some products require five of the models.
Now, with the digital prototype, HTC is able to create a computer-based workflow where the computer design, engineering, manufacturing as well as procurement teams are connected by a single model. This innovative model stimulates the complete product, and gives HTC engineers the ability to design, visualize and also simulate their product digitally thereby cutting their cost.
Employee Concerns Advantages
While innovation technology may reduce the dependence on a workforce, there are disadvantages that the employees could lose their job in the process. In the case of a small business owner, this may implies that she needs to make a difficult choice between increasing profits and letting go of a long-time employees.
Even if the implication of innovation does not lead to the loss of job, some of the employee may have disadvantages to adapt to the change which has occurred. In addition to that, there may be a learning curve whenever the change is being instituted and this would result to a reduction in the production in the short duration.
Upfront Costs Advantages
While the new technologies which are used would result in savings in the long run, it may likewise come along with an upfront expense. A small business owner may not have adequate resources to buy a state-of-the art computer system or a new set of machinery, or may need to borrow the money to do so if it is highly required.
If the new set of machine which is purchased does not increase the production or reduce the expenses over the long haul, it could result to a crippling effect on the long term viability of the operation.
What do you think are other advantages of disadvantages of innovation that should be considered?
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