Innovation is different from an invention in that inventions fail to build markets and an invention is a completely new product. Customers do not want new products, they want solutions that offer new and superior benefits.
For example, Total Quality Management (TQM) and corporate re-engineering have saved time, money and defects to be taken out of a firm's operational processes. The result is a boost in company profits and earnings potential through offering superior customer service and making competitors products obsolete.
A successful innovation must meet four criteria:
Important - it must offer benefits that will be perceived as important by customers.
Unique - it must be perceived as unique since one that is not differentiated will inevitably fail.
Sustainable - these attributes of uniqueness and importance can be quickly copied by competitors and must, therefore, be sustainable.
Marketable - the company must have the capability to market a reliable and effective version of innovation, at a price the customer can afford and distribute it that it's easily available.
Over 90% of all new products are simply improvements on the older version. They are seen as new marketing concepts.
New old products - involve finding new uses for existing products
New markets - new types of customers for an existing group of products or services.
New ways of doing business - innovative approaches to delivering current products and services to customers and are one of the most successful sources of innovation today.
The benefits of innovation would be to survive since environmental change makes existing products and services obsolete. Innovation creates growth and enhances profit margins.
Innovative companies today are called 'third-generation competitors. The first generation competitors were based on cost advantages, the second on differentiation and the third on the benefits of a stream of innovative products as well as cost and high quality.
Third generation competitors have focused on speed by taking less time to bring their offerings to market. Intel is one such company since it uses an eighteen-month delivery cycle for its microprocessors and invests heavily in R&D to maintain its global leadership.
Imperial Car Rental is a good illustration of innovative sales and marketing. They saw a gap in service delivery in the South African corporate car market. They laid down the groundwork for growth and took this segment as their focus. Structures were set in place, products devised and advertising campaigns were geared around the chosen market.
Today Imperial's main market segment remains the local corporate market specifically the business traveller. Europcar, which is owned by Imperial, specializes in the international market and Tempest, also owned by Imperial focuses on the local leisure and price-sensitive markets.
Only by continuously updating these products, adding new ones and broadening their ranges can companies hope to retain market leadership and the profit performance required by stakeholders.
