Why is innovation important, and how is it changing?
Innovation is important because it helps a business deliver a product/service that is perceived as more valuable to the customers compared to the product/service of a competing business. Therefore, innovation in this sense might help the company increase it’s sales (and profits). However some things have changed in the last 20 years.
The internet and the access to the global market (less trade barriers) has drastically that changed the way companies operate
Businesses have a better access to knowledge and skills and are no longer, or at least not as strongly as in the past, constrained by their geography. However, the fact that the internet is widely used today makes it easier for buyers (whether it’s the consumer or another business) to compare products/services before purchasing them. And they also have higher requirements and expectations because they know if certain company can’t offer them want they want, they might find another one. Customers do no longer just want a product. They want a service, an experience.
Innovation is more important today because customers are more fickle, therefore, harder to retain.
Growth is important to companies and innovation enhances growth. However, this may require investment capital, that most companies don’t have. Furthermore, “the competition for growth capital is becoming tougher” due to the fact that firms compete internationally also for finance. An innovative company has more chances to attract investors.
Today more than never, innovation is important for a company if it wants to keep up with the environment in which it’s operating because “life cycles are continually declining.” Early 2000s, Nokia was a leader in the mobile telephony industry but with the arrival of the iPhone, things changed. Nokia didn’t really innovate and/or try to move towards smartphone technology, which was fatal for the company.
Why do you think Dell was successful when other companies trying the same model failed?
What made Dell successful was the way it sold, manufactured and delivered its products (direct sale, made-to-order). It think companies that tried that model and failed was first of all because Dell had a first-mover advantage which meant customers knew Dell for that model and not the other companies. And probably locked in suppliers and partners. Plus, computer companies didn’t see the opportunity at the right time (they kept doing business the old-fashioned way, the way that they “knew”).
Awesome post!
I like your idea of highlighting your important points. It makes me easier to remember those points that you emphasized. You did a great job on explaining why innovation is important in details and use examples to help readers to understand your ideas.
I completely agree that entrepreneurs are challenged in a way they were not in the past because of the internet. I feel that new businesses can loose their “being new” attraction very quickly, therefore business need to focus on keeping their customers loyal by giving them a feeling of attachment to the business and thats what Dell did with their company.
great post!
I agree with both and the example of nokia is perfect to explain the question!
I agree with all previous comments. And I am especially impressed by you applying the business model contents to explain Dell’s success. That’s what I planned to have you discussed after we talked about Chapter 3. Anyway,very impressive post! Excellent job!
With a background in customer service I completely agree that customers are more fickle and harder to retain, which is why innovation in todays day and age has never been more important in regards to holding onto a customer.