When a company introduces a new product or service, there is a lot of excitement. Unfortunately, not only does this innovation get the attention of the potential customer, it also gets the attention of the competition. And it probably won't be long until the competition either copies the innovation or goes it one better.
The good news is that innovation can separate your company from the competition and provide new revenue opportunities. A new product design or service offering can cause a stir in the market. However, most innovations have limited lives in which they provide a competitive advantage. Consider a decade ago when golf club manufacturer Callaway introduced its new titanium driver.
For nearly three full years, the driver gave Callaway a competitive advantage in the industry. But as competition heated up, other manufacturers introduced their own innovative drivers, removing Callaway's competitive advantage. Today, that advantage can be as short as a single year. No matter how long the advantage, innovation is imperative to success. It is comprised of a four-step process.
* Introduction. It is here your company has its greatest advantage. You attract new customers, solidify existing customers and often achieve premium pricing for your product or service.
* Growth and maturity. This incorporates two stages. As more competitors copy the innovation and you expand its use, your business loses more of its advantage. The market, therefore, moves the innovation closer to being the standard. Customers see less and less differentiation, and prices tend to equalize.
* Required. There is very little, if any, advantage here. The market considers the innovation standard. What was once a new innovation is now required if a company wants to stay in the market.
Today, in order to grow and remain competitive, companies can no longer consider innovation an option. But innovation cannot be a one-time event. To be effective and continue to provide advantages that your company desires and requires, innovation must be part of your corporate culture and a cornerstone in your growth strategy.
Joel Strom (firstname.lastname@example.org) is the founder of Joel Strom Associates. His firm works with closely held businesses and their ownership, helping them set and achieve their growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.