What Is Business Innovation? (With Types And Examples)

By Indeed Editorial Team

Published 1 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Companies often rely on business innovation to help reduce expenditures, develop new processes and increase their appeal to consumers. As a supervisor, manager or analyst, you might help a company develop new business innovations to increase its market share and customer base. Understanding what business innovation is and its importance can help you determine how you can implement new strategies to improve a company. In this article, we answer the question 'What is business innovation?' list different types of innovation and provide examples to help you understand this concept.

What Is Business Innovation?

The answer to 'What is business innovation?' is that it refers to the way a business pioneers a process, product or service in an industry, typically improving upon or completely redesigning the service or product. This can include creating new, more useful or feature-rich products or services, discovering a new material or process or creating better systems for business organisation and function.

Innovation can occur out of need or because a business wants to differentiate itself from its competitors, thereby creating a more niche market for its products and services. Innovation may help a business earn more revenue, grow its customer base and earn industry accolades.

Related: 5 Continuous Improvement Examples (And How To Incorporate)

Why Is Business Innovation Important?

Business innovation is important because it can help a business grow and further establish itself as a prime competitor in an industry. It can also encourage the production of new and better products. Innovation can improve working conditions and safety measures in some industries, like construction or manufacturing. For example, if a manufacturing company creates a new, safer production method for extracting raw iron ore, the methods might become standard practice in the industry. Innovation often influences legislation and safety regulations, creating better environments for employees and greater accountability for businesses.

Types Of Business Innovation

There are many types of business innovations that can help a company improve its competitive position in the market. Here are some innovations to consider when trying to help a company improve its appeal:

Product innovation

This is when a company develops a new product that is adjacent to its existing product line. This can help it increase its product offerings and expand its market share. For example, a company that manufacturers large kitchen appliances, like refrigerators or stovetops, might start producing small kitchen appliances, like microwaves or coffee makers. The company already has a customer base that purchases its large appliances and using this loyalty, it can increase its appeal to customers with its new small appliances.

Related: What Is A Product Line? (With Examples And Benefits)

Process innovation

Process innovation can help a company improves its productivity by designing processes that are simpler and more efficient. This might involve consolidating processes or implementing technology to automate tasks. Enhancing company processes can also help reduce labour or production-related expenditures and human error. Some examples of process innovations include using robots to assemble consumer products and using automated payment services to complete sales transactions.

Related: Top Business Analyst Tools For Improving Efficiency

Business model innovation

This type of innovation involves a company changing its business model to appeal to its customers in a new way. Changing or updating its business model can help a company increase its appeal and take advantage of changing customer needs. An example of this type of innovation is when e-commerce made its first appearance in the business space. Technology companies capitalised on this new business model by using digital infrastructure to offer e-commerce transactions.

Delivery innovation

Delivery innovation changes how a company interacts with its customers to increase its appeal or make interactions more efficient. This can help enhance the customer experience, which can have a positive effect on sales and customer satisfaction. An example of delivery innovation might include offering online purchasing services, virtual appointment scheduling or online chat services. It might also involve prioritising customer service over profits. Prioritising customer service can have a positive effect on consumer loyalty and sales revenue.

Related: Customer Satisfaction: How To Measure And Tips For Improvement

Technological innovation

Technological innovation is when a business creates a new kind of technology or improves or expands on existing technology. Technological innovations can increase company sales, influence brand loyalty and differentiate a business from its competitors. For example, consider technology companies that helped pioneer the use of home computers, creating product lines that evolved through the years and depended on innovation to meet changing customer needs. Technological innovation can also help a company improve its workplace or processes, creating better, more efficient work environments.

Marketing or sales innovation

Marketing or sales innovation is when a business pioneers how it markets its products and services. Since marketing is crucial to business operations, the marketing sector of a business is typically always innovating. Finding new ways to gain customers, leads and sales can be a great way for a business to earn extra revenue. For example, a company might create a new marketing technique using artificial intelligence that analyses a customer's purchase behaviours before showing them ads. This can help the company reach the right customers and produce relevant ads that might influence a purchase decision.

Network innovation

Network innovation is when a business changes, improves or creates a new method for networking and collaboration. Companies might look for specific partners or customers, creating the need for new or improved networking methods. For example, a company might decide to create a new career website to attract the kind of applicants it requires for certain positions. Changing the way people interact can help a business create more relationships, establish new professional connections and expand its available list of job candidates and contractors.

Business Innovation Examples

Here are some examples that illustrate how companies can use business innovation to help you better understand the concept:

Product innovation example

Here is an example showing how a company may innovate its product design:

Tennent Manufacturing currently makes customisable water bottles of different sizes. The company wants to expand its market position by creating a product line adjacent to custom water bottles. After conducting market research, the company decides to add a new product line of custom coffee mugs to increase its appeal.

Process innovation example

This process shows how a company may use innovation to refine its processes:

Crane & Jenkins supplies computer circuit boards to another company. It currently makes circuit boards by manually soldering different components onto the circuit board. To increase efficiency, the organisation decides to add robots onto the production line to solder some components. This helps improve productivity and reduce product defects.

Business model innovation example

This example shows how a company may innovate its business model:

RJ Smith Pharmaceuticals is a pharmaceutical company dedicated to researching cancer treatment methods. The company produces a new medication that reduces the symptoms associated with cancer treatment. The company modifies its business model to monopolize its position as the provider of this new medication to cancer patients, which helps to improve customer loyalty and trust.

Delivery innovation example

Here is an example of innovation relating to delivery:

A company currently only offers its services in person to provide financial support and advice for customers. It wants to expand its delivery to enhance customer satisfaction and increase its consumer base. It offers virtual appointments and chats features to expand its ability to deliver services in multiple formats.

Technology innovation example

This example shows how a company can use innovation to improve its technology:

OceanRiver Technologies is an information technology company that delivers custom software solutions to its customers. After investing in research and development, the company develops a new technology to help customers effectively manage their services. This new technology helps the company increase sales by 20% and enhance customer satisfaction by 12%.

Marketing or sales innovation example

Here is an example involving innovation in marketing:

A company uses traditional marketing methods, such as printed advertisements and mailed flyers, to advertise its services to customers in the local area. To increase its brand awareness, the company decides to rework its marketing strategies to include digital marketing methods. By including email marketing and digital advertisements in its marketing campaigns, the company experiences a 43% increase in sales.

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