Demystifying Innovation and why it's important for your career and company.

Innovation is a word that is thrown around a lot these days. It's used as a noun, a verb, and an adjective. But what does it really mean? And why is it so important?

Innovation is often misunderstood and confused with other concepts like creativity, invention, improvement, and optimization. While these ideas are related to innovation, they are not the same thing.

What innovation is not

• Innovation is used to describe creativity. Creativity is a part of innovation, yes, but it’s not the same as innovation. Creativity is about making new connections and imagining new possibilities and solutions.
• Or you hear people equating innovation with invention, but that’s also inaccurate. Invention is about creating something entirely new. Which is only one part of innovation.
• You’ll often hear people say innovation when they only mean digitization, and they’re not the same at all. Digitisation is about moving existing processes or products from analog to digital.
• Innovation is used to describe optimization, but that’s not right either. Optimization is improving on something pre-existing.
• Finally, Improvement is another term that is mistaken for innovation, but it's not the same either. Improvement is simply fixing something that’s broken.

What innovation is

So, let’s talk about what innovation is. To be truly innovative, it needs to have three components.

1. It needs to be a new idea or a new source of value or revenue
2. It needs to deliver value (usually to both the user, and the business)
3. It needs to be executed well and the value brought to life.

If it has these three things, it’s innovation. If it doesn’t, then you are most likely trying to improve, optimize, and innovate. And that’s ok, because once you’re able to recognise exactly what you're aiming for, you can match up the right approach to achieve it.

Understanding whether you are trying to improve, optimize, or innovate is crucial because each of these goals requires different tools and methods. Once you know what you're aiming for, you can align your approach accordingly.

Why is innovation so important?

So now that you know what innovation is, let’s talk about why it’s so popular. Why is it on everybody’s radar? Why are organizations large and small striving to innovate? Why are people who have innovation experience more valued and sought after?

There are lots of different reasons, but we’ve curated the top six reasons to innovate:

Keep your existing audience, customer or user base.

When you innovate, you build loyal users and customers. If you are optimizing or improving to make things better, then it is just treading water. Unless you continue to add value, you will lose users to competitions or alternatives - who are innovating and adding new value for your users. This is how the app we mentioned earlier, Zero, built its loyal following

Growth

Of course with innovation, not only do you build a loyal user base, but you substantially grow that user base. This is the most common and simple reason to innovate. For example, Paypal came up with an innovative way to grow their product early on. They were able to massively grow when they pioneered the referral model that is ubiquitous today. But it was a completely new and unheard-of idea at the time. The fact that you could invite a friend to Paypal and they’d get free money was wild to people. Dropbox did a similar thing by giving you free additional storage for inviting a friend. These were ideas that were new, brought value to people, and were executed well - and that’s why they’re called innovations.

You De-risk dependency on a single source of income. 

When an organization becomes reliant on one source of income, like one product or customer segment - that’s quite risky. If anything happens to that source of revenue like: regulation changes, market changes, or a better/faster/stronger competitor, the single source of revenue is at risk. When you add additional revenue streams, you greatly reduce your risk. Take the example of Uber, which expanded from ridesharing to food delivery. It was a brilliant idea that allowed them to leverage their existing network of drivers who were sat around waiting for people to order a ride.

Massive productivity and efficiency gains

When you innovate, your innovations will often have byproducts that you can leverage in other areas and save a ton of time and effort. For example, Amazon leveraged their innovative technical infrastructure which they had built to run their own stores, and they started selling access to their servers. And now the Amazon Web Services division or AWS is one of the most profitable businesses in the world.

• Innovation is exciting. The process of innovating can provide you with opportunities to work on new and interesting things. Innovating will give you some of the most genuinely exciting experiences, rewarding moments, and work highlights.
• Leveling up your career. By creating something new and valuable, your career is bound to skyrocket.

Despite the importance of innovation, many individuals and organizations struggle to innovate. This is often due to the presence of what we call "the enemies of innovation," which are factors that hinder collaboration, productivity, and valuable work.

In order to overcome these obstacles, it is essential to identify and address the enemies of innovation. Look out for our article on how to defeat these enemies and foster a culture of innovation.

In conclusion, innovation is not just a buzzword. It is a vital concept that can drive growth, improve efficiency, and create value for both individuals and organizations. By understanding what innovation is, why it is important, and how to overcome barriers to innovation, individuals and businesses can unlock their full potential and achieve remarkable results.