From tech start-ups to established corporations, businesses of all sizes can benefit from innovation. As the UK currently sits fourth in the ‘Global Innovation Index’, it is clear that CEOs across the country recognise the importance of innovation as a critical driver of growth and success. However, for all the benefits, innovation can be one of the hardest aspects of a business to get right.  

Let’s look more in-depth at some of the reasons why innovation is essential for business success.

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1. Innovation Drives Growth

A survey in 2018 by McKinsey showed that 84% of CEOs believed innovation was important to their growth strategy, and it’s easy to see why this could still be as high over half a decade on.

Growth rarely occurs without a sustained strategy; Creating a robust programme of innovation allows businesses the opportunity to brainstorm growth opportunities, from increasing existing spend per customer to exploring new revenue channels.

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2. Innovation Improves Customer Experience

Innovation can also help companies enhance the experience they deliver for their clients or customers, by introducing new and improved products and services that meet their changing needs and preferences.  

A 2022 study by Salesforce found that nearly 90% of customers believe that the experience a company provides is just as important as its products and services. By continuously innovating and improving their offerings, businesses can create a loyal customer base and gain a competitive advantage.

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3. Innovation Boosts Employee Engagement

With most businesses keen to improve employee retention, innovation can also boost their relationship with their staff by giving them a voice in innovation; providing opportunities for creativity, learning, and professional development.  

According to a 2018 study by PwC, 79% of millennial employees believe that innovation is essential for business growth and success. An updated survey in 2022, also found that 60% of employees felt they could be innovative in their role.

By embracing a culture of innovation, businesses can put themselves in the strongest position to attract and retain top talent, increase employee satisfaction, and boost productivity.

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4. Innovation Helps Companies Adapt To Change

A strong innovation programme can give businesses the agility to adapt to changes in their target markets, new technology, and consumer preferences.  

A recent Forbes article stated that since 2000, over 50% of Fortune 500 companies have either ‘gone bankrupt, been acquired, or ceased to exist because they were too slow to adapt to the evolving market conditions’, including new trends and advances in technology. By continually innovating and experimenting, businesses can remain competitive and resilient to unexpected changes.

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5. Innovation Increases Profitability

Innovation can deliver increased profitability, both by creating new revenue streams and reducing costs. Additionally, innovation can help businesses to develop new products and services that can deliver better margins.  

IBM’s ‘Open the door to open innovation’ report found that ‘organisations that embrace open innovation have a 59% higher rate of revenue growth compared to those that don’t.’  

It’s clear that innovation is critical for business success… the stats speak for themselves. By prioritising innovation, and creating a culture of experimentation and creativity, businesses can stay ahead, adapt to market conditions, and thrive in today’s rapidly changing business environment.

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