Diversification and Innovation - The Hot Topics of Successful Businesses
What do successful businesses have in common, regardless of the field they're in? That's right, the plan to expand. It's only natural, really. Each company starts with an idea and develops it until reaching a desirable result. Then it runs into two, both viable, options. They can either focus on innovation - and come up with solutions to existing problems before their competitors. Or they can focus on diversification - to introduce new products and services and use the brand image as their advantage.
Why Should We Invest in Innovation?
1. Innovation helps your business grow. If we understand growth through increasing profit, successful innovation enables you to add value to your business and increase your earnings — if you don't innovate well, your business will stagnate.
2. Innovation is there to keep you ahead of the competition. With globalisation and a rapidly changing market, the number of competing businesses is constantly rising. Innovative thinking can help you anticipate the changes in the market and keep up with customer needs. If your business doesn't innovate, you'll watch other companies bring new ideas to the marketplace, and you'll have to scramble to keep up.
3. Innovation helps you get the most out of new technologies. Technology is evolving faster than ever before, which means that there may be new, more efficient technologies to make better products, offer your services, market your business, or track your performance with analytics. By taking advantage of those new technologies for process innovation, you'll be ready to optimise your business and gain a competitive advantage in the market.
Benefits of Diversifying
Mapping your capital through various investments is usually done to avoid relying on a single investment for all your returns. The key advantage of diversification is that it helps minimise the danger of losing money from your investment portfolio.
1. Minimising risk of loss – Investing in more than one project helps you have a safety net – if one investment ends poorly, other investments may perform better at the same time.
2. Preserving capital – not all investors want to accumulate assets constantly; some close to retirement have goals oriented towards preservation of capital, and diversification can help protect your savings.
3. Return on Investments – sometimes investments don't always perform as expected, so diversifying helps you reduce significant losses by investing in many things.
Is Innovating Risky?
There are no bulletproof options when innovating. However, sometimes the biggest risk can be not taking a risk at all. So, what is risky about innovating?
1. Lots of investing: Latest technology, employees, significant changes in your business's identity—innovation can be a costly undertaking. During the innovation process, you've got to believe the prices weighed against the potential profits and make the simplest decision.
2. Scheduling: Innovation takes time, and the time you spend innovating is time that you're not using to focus on your current products, marketing, and sales. Implementing your innovations at the right time is of crucial importance. Failing to implement them quickly and efficiently, you can risk failing to meet your quotas and falling behind on your schedule—losing profits and the trust of your customers and investors.
3. Instability: Innovative idea generation is interesting by itself, but if businesses are constantly making huge innovations, they may never find a stable identity or market—and it will be hard for customers, investors, and employees to stay up with their changes. It's all about innovation management; a stable business identity is vital for generating profits, so it's vital that you choose your innovations carefully and deliberately, instead of just saying yes to each new thing that comes along.
Our International Business Excellence Awards '22 celebrate both innovation and diversification in business, which is why there are categories promoting it. You can apply for the awards here!