Business and Management- Why business Organization Seek Innovation (Essay Sample)

Four Critical Factors That Drive Innovation in an Enterprise
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Four Critical Factors That Drive Innovation in an Enterprise
The unpredictable nature of today's business climate has driven many enterprises to turn to innovation to disrupt their market niches. A recent Harvard business review reports how the failure to innovate has led to the downfall of 52% of Fortune 500 companies and risks ending another 75% of S&P firms in the next half-decade (Rafi, 2020). This shows that innovation impacts productivity, growth rate, and profitability, making it crucial for businesses trying to compete in global markets. Unlike in the past, when productivity and product quality were heralded as the leading drivers of business performance, enterprises today rely on innovation to competitively position themselves in the market, fortify relations with customers through product differentiation, enrich employee relationships and minimize waste and running costs.
Innovation and Competitive Advantage
Innovation has been applauded as a powerful instrument for improving the competitive advantage of a company. Every firm wants to outshine its competition and lead the pack in its respective industry. According to Dabić et al. (2019), an organization's business performance is tied to its capacity to create new value, which can be achieved through innovation. This is why most firms invest considerable resources to foster continuous learning in their R&D projects because they are usually the origins of new products and services (Dabić et al., 2019). With new products on the market, a company can break away from its competitors by attracting more clients using the value of the new product or service. Consequently, the company gains a better competitive edge, hence a larger market share.
Innovation and Customer Relations
Enterprises employ innovation to enhance consumer relationships by enabling product differentiation. People will always be drawn to innovative products that are different from the ones saturated in the market. Failure to constantly offer clients, especially Gen Z and Millennials, stimulating products and services that cater to their changing needs can drive them to competitors (Rafi, 2020). However, if the organization innovates continuously to match the changing needs of its clientele, its customers will inevitably appreciate its efforts to offer them additional value. In addition, some consumers tie their loyalty to the quality of experience they perceive from a company, which can be enhanced through innovation (Woo et al., 2021). Therefore, when done right, innovation can help secure customer loyalty because of the resultant customer satisfaction.
Innovation and Employee Relations
Innovation also serves as a strong motivator for improving employee relations, and consequently, performance in an organization. Almost any employee is naturally motivated to join an enterprise that adopts a winning culture and excels in its market niche. Therefore, enterprises that embrace and nurture an innovative culture enjoy more productive workers and reduce their turnover rates (Yamin, 2020). Moreover, having a contented staff guarantees the enterprise a workforce willing to suggest practical ideas geared towards improving its internal processes or increasing efficiency in various sectors (Yamin, 2020). Therefore, innovating does not only impact competitiveness but also leads to a productive workforce.
Innovation as a Strategy to Reduce Costs and Waste
Innovation significantly improves operating efficiency by minimizing wastage and cutting running costs. Typically, innovation has always been associated with creating new products and services; however, people forget that it may also involve improving vital aspects of the organization, such as production and business processes. For example, devising strategies to eliminate wastage can help lower production costs (Genc et al., 2019). Similarly, standardizing the supply chain can reduce resource waste and increase turnaround time (Genc et al., 2019). Thus, leveraging innovation can effectively simplify different organizational processes, resulting in less wastage and reduced running costs.
In conclusion, four reasons support an enterprise's need for innovation: enhancing competitiveness, fostering better customer relations, improving employee productivity, and minim