What is the Fundamental Premise for Innovation in Business?

By Jinsui Y.

Nowadays, product Innovation is regarded as a one of the essential way which can make sustainable growth in economy. However, could all the product innovation receive satisfactory outcome? It is said that close to 90% new product are marketplace flop. What cause that shocking result? What is the fundamental premise for innovation in business?

For instance, Google Wallet is a creative idea ahead of its time, but it makes they Google company loss at least 300 million dollars because it involves digitizing cards, and the card cost a big fee for the card company to participating, so they do not want to join in it. Although the idea of Google Wallet sounds amazing, some of the structural factors impending its successful are hard to overcome. We could see that if Google Company could do a proper risk assessment and cost calculation before the investment of this innovation, they may avoid from this huge loss.

However, there are also some successful innovations in business. P&G did a successful work in it. In order to expanding Gillette to India. It takes more than 2000 hours for P&G observing consumer shaving, and the constrains they faced when they were shaving. Then, they designed a product to meet there unique requirement. First, the cost for the product it less than 50 US cents, so, most of the Indian can accept the price. Also, it is a special technology on it, so, if you dig it in a cup of water the hair follicles easily come off because they found most people in India aren’t shaving with running water. Therefore, this product sells pretty well in India.

From the above example, we can summarize that there are two important points for product innovation. They first well-known point is that the new product must be creative and special. However, it’s far from enough because the main goal for business is profits. Therefore, the cost should to be proper that they buyer willing to pay for it, while, the seller can not only cover they cost but also make a profits from it. In that case, understanding the need of consumer, assessing the risk, and collecting data become very significant before product innovation for a company. These works are all responsible to marketing. Therefore, marketing is the fundamental premise for innovation in business.

References:

Bruce, Brown. & Scott, Anthony. Business Review. How P&G Tripled Its Innovation Success Rate. June 2012. Web. 5 Feb. 2016.

Image from:
Ross, Urken. Google Wallet's of Immigartion Google Wallet's Newes Innovation: A Plastic Mobile Wallet Credit Card. Digital image. http://www.dailyfinance.com/2012/11/08/google-wallets-newest-innovation-a-plastic-card/08 Nov. 2012. Web. 5 Feb. 2016.
P&G. Digital image. http://us.pg.com/our_brands. Web. 5 Feb. 2016.