By Gladys Ngugi

Change is the new constant.  Presently, we are in an era that is characterized by rapid changes in the business environment which are fueled by technological advancements, shifting markets, and customer demands.  Therefore, businesses in all sectors need to be agile and adaptable, willing to evolve their business strategies to meet changing market conditions.

Simply put, innovation from a business perspective refers to the introduction of new ideas, products, or services that result in significant improvements in the operations and bottom line of a business.  The strategy is the plan of action that brings to effect the innovation. 

The ability of a business to take advantage of innovation and to implement it through carefully designed strategies will increase its competitiveness both locally and on a global scale.  In this article, we evaluate four main types of innovation and provide examples of companies that implemented them, and as a result, curved a niche for themselves in their respective industries with resounding success. 

Incremental innovation involves making minor improvements to add or sustain the value of existing products, services, and processes.  It can range from adding a new feature to an existing product or it can be more complex, for example developing a line extension.  Among its characteristics is that it harnesses existing technology and an existing business model so it is often easier to execute and is low risk.  In addition, it requires a shorter time to implement and lower costs.

A company that has adopted incremental innovation is the Coca-Cola Company which manufactures, sells, and markets beverage concentrates, syrups and finished beverages.  The Coca-Cola Company has consistently introduced new flavors into the market hence expanding its product line and serving a wider customer base.  The recent flavours in the market entail Coca-Cola spiced, coffee mocha and zero sugar which are packaged in an attractive modern design. 

Radical innovation involves the development of entirely new products, services, processes, or business models that significantly transform the existing market.  The innovation requires the incorporation of cutting-edge technology with an innovative business model to provide something that has never been done before.  It represents a higher-risk, higher-return pursuit, it is complex to implement, and its costs are high.  Completing a radical innovation is relatively rare but it is extremely lucrative when pulled off successfully.

Tesla is an automobile company that adopted radical innovation and revolutionized the automotive industry.  Tesla introduced electric cars, in an automotive market that was monopolized by petrol-fueled cars hence radically altering the dynamics.  Telsa’s objective is to make a new mass-market electric car model by mid-2025.  Its success has been attributed to its ability to anticipate market trends, invest heavily in research and development, and challenge traditional notions of what a car can be.  Its electric cars offer high performance, have innovative technology, rely on renewable energy sources, and produce zero emissions, making them a cleaner, more sustainable option for transportation.

Disruptive innovation creates a new market or value network that displaces an existing market or value network and consequently, disrupts established market-leading firms, products, or services.  A disruptive innovation allows a whole new population of consumers at the bottom of the market access to a product or service that was historically out of reach.  Amongst the characteristics of disruptive innovation is that it is technology-driven or enabled, it offers products or services at lower prices, and it introduces new customers to the market. 

Netflix is an example of a disruptive innovator.  Initially, it operated strictly as a mail-order service company, delivering DVDs to its subscribers.  However, Netflix began using technology which allowed it to shift to streaming video content over the internet.  As a result, it became appealing to a wide range of customers, it offered a wider selection of content with an all-you-can-watch, on-demand, low-price, high-quality, and highly convenient approach.  By doing this, it altered the status quo of the entertainment mass media industry.

Architectural innovation occurs when a business expands existing technology into a new market.  Its characteristics entail lower risks compared to the other types of innovation, as the business has already tested the technology and knows it works.  It aids in market expansion and if effected well it can create a competitive advantage for the business.  However, since the business is venturing into a new market, there is a need for extra research and marketing investment into the new market.

An example of architectural innovation is Uber which is commonly used for providing ride-hailing services.  Uber expanded into the food delivery market using Uber Eats which is an online food ordering and delivery platform launched by Uber in 2014.  Courier methods of delivery of meals vary, using cars, scooters, bikes, or on foot.

Considering the above, it is evident that where a business understands and adopts innovation and sets strategies to implement it, it can unleash global competitiveness, enlarge its products/services portfolio, increase profitability, increase its market share, improve efficiency, enhance customer experience, and stay ahead of its competitors.

On the downside, where a business fails to uptake innovative strategies or fails to inject fresh ideas into the business, there is a very high risk that it will fall behind its competitors.  Ultimately, this will lead to reduced profitability, lower customer satisfaction, lost market share, and inefficient operations.  Without integrating new ideas, products or services, the business will become stagnant and eventually the business may shut down.  Overall, the importance of business innovation cannot be ignored or overlooked because failure to innovate will sooner or later lead to the demise of a business.

A challenge to innovate knocks at the door of every business in Kenya.  If a business accepts to innovate, it will lead to a path of uncharted territories that can unleash global competitiveness and curve a distinction from its competitors.  A business can enhance its innovative capability by realizing that failure will be part of the innovation process and strategies developed may require amendment from time to time.  In addition, the business will need to leverage technology and empower its employees.  Will Kenyan businesses accept the challenge?  Only the future will tell. 

The writer is an Assistant Manager at Viva Africa Consulting LLP.