The Importance of Innovation in Business

ASSESSMENT 1

Introduction

The essay will provide an understanding of the concept of innovation and its importance in a business. It will also discuss the benefits of innovation in Amazon and Intel. The essay will also analyse the way innovation helps a company in gaining a competitive advantage. It will also shed some light on the negative side of innovation.

Discussion

Innovation is about the procedure that includes developing or introducing new products or services (Kahn, 2018). The presence of innovation in an organisation is necessary to maintain the flow of new ideas and the growth of a firm. It helps in the growth of creativity in the workplace which results in the improvement of a company's performance. Innovation helps a company to penetrate a market and assists them in increasing their connections. This provides a firm with great opportunities to expand themselves. The application of germane innovative ideas can help a company gain a competitive advantage and expand itself in a market effectively. According to Luamba et al. (2021), business innovation is important for the promotion of the procedures of commercialisation, transportation, and production. The application of innovation in business results in decreasing time consumption and improving productivity. On the other hand, Wierzbicki and Nowodzi?ski (2019), state that the implementation of innovation in a business can cause technological as well as cost risks. These risks can cause serious harm to the financial condition of a company.

The usage of innovation in a business allows the introduction of the idea of creating or developing services or products. According to Henderson (2017), innovative ideas should resolve a specific need and be reproducible but not too costly. Innovation can be accomplished by an organisation by producing or developing a product that affects society. There are various benefits of the implementation of innovation in business as it provides opportunities to enhance performance and increase revenue growth. As opined by Bhasin (2019), the utilisation of innovation in a business can provide them with a competitive advantage, loyal consumers, increased brand value, unique selling proposition, creative edge, and more. Research and development are becoming a big part of almost every company as this is providing a competitive advantage to a firm. For example, Intel has planned on investing 33 billion euros to enhance its supply chain and improve its products (intel.com, 2022). This has helped the company in creating advanced technologies and digital devices. Expenditure in R&D results in increasing innovation in a firm which results in the improvement of organizational performance.

The demand of consumers keeps changing and it is challenging for a business to keep up with the changes (forbes.com, 2019). Innovation in a business helps in fulfilling the need by tailoring and creating products and services according to the preferences of the consumers. This helps a company to gain the trust of the customers which assists in increasing the brand image. Increasing globalisation is resulting in high competitiveness which is leading companies in adopting the usage of innovation (Machado and Davim, 2020). Innovation helps an entrepreneur to create a successful business by developing new segments of the market by disrupting the existing ones (Jarmai, 2020). For example, Amazon has been able to remain the leading eCommerce business through the implementation of innovation. Jeff Bezos focuses on innovation which helps the entrepreneur in leading the global eCommerce industry with 13% of the world market share (Coppola, 2021). This indicates that the effective utilisation of innovation in a company increases revenue. The entrepreneur uses customer-led innovation which allows them to increase consumer loyalty (Tucker, 2018). Amazon also utilises data-driven technologies that assist the firm in tailoring its working system and providing consumers with personalised service.

Innovation can boost the market position of a company by differentiating itself from its competitors. Usage of technology helps in gathering the data and information regarding the preferences of the consumers which increases the ability of the company to improve their services and goods. This provides a business with great opportunities to lead the market by gaining a competitive advantage (Udriyah et al., 2019). Innovation provides various dimensions to an entrepreneur such as process, product, and market. These innovations provide a business with a competitive advantage which consists of low-cost leadership, differentiation, and innovation. All these factors help in enhancing the performance of a business effectively.

Conclusion

To conclude, the implementation of innovation provides a company with a competitive advantage. It helps a company in increasing its performance by identifying consumer and market trends. The presence of innovative ideas and technology helps a firm in fulfilling the demands of the consumers by modifying their goods and services according to the preferences of the customers.

Reference list

Bhasin, H., 2019 What is the Importance of Innovation to an Organization? [Online] Available at: https://www.marketing91.com/importance-of-innovation/ [Accessed 7 April 2022]

Coppola, D., 2021 E-commerce market share of leading e-retailers worldwide in 2020, based on GMV [Online] Available at: https://www.statista.com/statistics/664814/global-e-commerce-market-share/# [Accessed 7 April 2022]

forbes.com, 2019 3 Steps For Keeping Up With The Ever-Changing Needs Of Customers [Online] Available at: https://www.forbes.com/sites/smartsheet/2019/02/15/3-steps-for-keeping-up-with-the-ever-changing-needs-of-customers/?sh=3b62065276e4 [Accessed 7 April 2022]

Henderson, T., 2017 Why Innovation Is Crucial To Your Organization's Long-Term Success [Online] Available at: https://www.forbes.com/sites/forbescoachescouncil/2017/05/08/why-innovation-is-crucial-to-your-organizations-long-term-success/?sh=23267b430986 [Accessed 7 April 2022]

intel.com, 2022 Intel Announces Initial Investment of Over €33 Billion for R&D and Manufacturing in EU [Online] Available at: https://www.intel.com/content/www/us/en/newsroom/news/eu-news-2022-release.html#gs.wqi3c2 [Accessed 7 April 2022]

Jarmai, K., 2020. Responsible innovation: business opportunities and strategies for implementation (p. 97). Springer Nature.

Kahn, K.B., 2018. Understanding innovation. Business Horizons, 61(3), pp.453-460.

Luamba, D.S., Blye, M.L., Mwema, I.E.M., Williams, I.A., James, K. and Chagadama, J., 2021. The Benefits of Innovation for Small Businesses. International Journal of Business and Management Research, 9(4), pp.425-432.

Machado, C. and Davim, J.P. eds., 2020. Entrepreneurship and organizational innovation. Springer International Publishing.

Tucker, R., 2018 How Does Amazon Do It? Five Critical Factors That Explain Amazon's Incredible Success [Online] Available at: https://www.forbes.com/sites/robertbtucker/2018/11/01/how-does-amazon-do-it-five-critical-factors-that-explain-amazons-incredible-success/?sh=2565475c41b9 [Accessed 7 April 2022]

Udriyah, U., Tham, J. and Azam, S., 2019. The effects of market orientation and innovation on competitive advantage and business performance of textile SMEs. Management Science Letters, 9(9), pp.1419-1428.

Wierzbicki, M. and Nowodzi?ski, P., 2019. Imitation and innovation in business environment. Production Engineering Archives, 22.