Many articles these days talk about reasons why companies should consider innovation as a core discipline. A quick Google search on “why innovate” produces 23,600,000 results. There is a plethora of opinions regarding innovation and why it is important. Competition is usually one of the reasons but not the only one, especially when looking how the world will be in the near future. Innovation becomes a critical survival skill when looking at predictions for how we will live, work, and communicate as early as 2020.
Successful innovation involves a level of prediction. Successful businesses not only respond to their current customer or organizational needs, but also anticipate future trends and develop an idea, product, service, process or tools that allows them to meet future demand rapidly and effectively. Being aware of opportunities that exist now, or that are likely to emerge in the future can assist in focusing an innovation program. Six categories of predictions emerge that, if come true, provide great opportunities and motivation companies to innovate, especially existing small and mid size companies.
As mentioned before, competition is a typical reason for encouraging innovation in business. Predictions for competition in the future come from the pressure of new and existing competitors, as well as the changing market due to globalization.
Competitors are getting smarter, faster, and hitting the market with new and exciting products more rapidly. Innovation cycles are becoming shorter. New products and services are being released at ever increasing speeds. This is placing additional burdens on existing organizations to keep up, either by matching product features or attempting to leap frog over competitors.
Additional competition is also coming from below in the form of startups. The hurdles for startups are shrinking. Access to startup capital has never been easier, technology is also easier and cheaper to get, use, or build. And, of course, new ideas seem limitless.
It is predicted that mergers and acquisitions will continue over the next few years1. Larger companies with combined resources will place pressure on their smaller competitors to keep up. Couple this with the continuing rise of startups, existing small and mid sized companies who are stuck in the middle are going to feel the pinch from above and below.
One approach for dealing with competitors is to mimic and copy what the competitors are doing. Focusing on what “they” are doing instead of aiming beyond the competition places a limit on the potential for success. Another approach in dealing with competition is to launch products that disrupt the market. Winning companies strive to be the ones to emulate, not to follow others. This can only be done through creativity and implementing innovative ideas, that is to say, through innovation, and to do it quickly and repeatedly.
Besides good products and services, organizations need innovative processes and management that can drive down costs, improve productivity, increase quality, raise employee engagement and increase customer satisfaction and loyalty. Being first to market with something new, or developing a new approach for operations, can provide a significant advantage.
Not that long ago, competitors were local or national, for the most part. Today, things are different. The world is shrinking due to globalization2, 9. Companies, big and small, are all around the world and have global access. National boundaries are falling away where business customers are concerned. A company based in India has access to your customers that are in your own backyard. Fortunately, it works in reverse as well.
As an example, it is predicted that India will continue to grow due to its large, young population, vast middle class consumers, a large, educated, English speaking IT industry and stable government. Not only fueled by local consumers, India’s growth will be fueled by consumers from around the world. Add to the mix other economically developing areas such as China, Latin America and regions of Africa, and the pressure to get customers is going to quickly increase.
To thrive in tomorrow’s rapidly changing and global environment, companies have no option but to launch innovation programs to attract new customers, and open new markets. The changing world market is an opportunity for those who innovate and take advantage of it.
Increasing Consumer Expectations
With social media and the continuing advancement of technology, marketing will become increasingly personalized for each customer3, 10. This will require new ways to market, advertise products and services, as well as gain and retain customers. The modern consumer is more informed and, thanks to globalization, has more options available to them.
Consumer expectation is also high and will continue to be so3. They will not accept mediocre or obsolete products or services. They don’t have to. They have options. Consumers are looking for products that will improve their lives. They want companies to solve their problems and to make their lives easier. As a result, customer expectations are and will continue to drive innovation.
The theme now and in the near future is that companies have to innovate, regardless of their industry, and make it core to their business strategy. If not, they risk becoming irrelevant to consumers.
Startups, small and mid size companies are becoming more technologically sophisticated4. Until the past few years, large companies had an IT advantage over their smaller rivals. Some still give large companies an advantage when it comes to the use of Big Data5, 6, 7, 10. However, as hardware, software and mobile technologies have become cheaper and easier to deploy, small and mid size companies have similar if not better technologies than the big boys. Startups are often launching with or driving the new technologies. Technology driven innovation is becoming the norm.
Another prediction is current social media channels we take for granted today, such as Facebook, LinkedIn, or Twitter, to name a few, will disappear and be replaced with a yet faster, cooler experience3. Imagine, no Facebook or Twitter, but something better. Opportunities abound for those willing to take a chance in the new social environment.
3D Printing is hitting critical mass7. Many are predicting 3D Printing will continue to impact many industries. Manufacturing will evolve as a result of 3D Printing. In addition, the ability to produce quick and inexpensive prototypes, or design and produce parts that were not possible in the past due to fabrication limitations will open up new arenas for innovation and competition.
Using new technologies in a new way and developing new technologies through innovation will be essential to meet the challenge due to the change in technology. Fight technology with technology. If a company is not using technology to the fullest and its competitors are, the organization’s lifespan may be limited. In addition, preparation is needed for technology that cannot even be imagined yet, as well as a strategy to leverage it to an advantage. Or better yet, go invent the new bigger, better mousetrap and lead the new wave of technology.
Changing Workforce Demographics
Changing workforce demographics have been on the horizon for some time9, 10. Challenges will come with the changes and with the challenges come opportunities for those organizations willing to think “outside the box.”
A more diverse workforce is upon us. The diversity of race, ethnicity, age, nationality and gender in the West will continue. The challenge of recruiting and engaging these various groups are large but the payoffs will be significant for those employers who figure out how to do it. Companies who can attract, engage, and maintain diversity can leverage their workforce for a broader exchange of ideas and knowledge10. This assumes they can get innovative in their approach towards Human Resources, workspace and workday design.
In addition, a talent shortage is approaching as well. As the Baby Boomers continue to retire there just is not enough people to fill the resulting vacuum8, 9. This shortage not only puts pressure on all companies to get inventive in attracting talent, but also in developing training, mentoring and development programs so they can build their own talent and leaders. Small and mid size companies have an advantage in that they typically can move faster than larger organizations. Improving business practices, processes and HR will play a key roll in who gets, develops and retains the talent in the future.
Another trend appearing more frequently in literature is the shift to more corporate social responsibility11. The new approach includes profit, people and planet. The increased focus on social responsibility that benefits the community not only changes how consumers will select their products and services but also changes internal operations, strategy, goals and talent recruitment. This is a new challenge for businesses that may not have considered social responsibility in the past. Addressing the new challenges will require innovative solutions.
Changing How We Work
The workforce is becoming more social and more mobile3, 10. All indications are that this trend will continue. The use of social media technologies is part of today’s business culture. More tools are coming to facilitate learning, communication and collaboration. Younger workers and consumers are not only skilled at using these tools but are expecting them. The result of all this enhanced social interaction is that the value of relationships is beginning to replace the value of transactions. This is leading to new business models and new worker engagement.
Moving forward, work-life balance will evolve into work-life integration8, 10. Technology is making it easier for mobile working, telecommuting and flexible schedules. This places pressure on employers to provide tools and change their corporate culture in order to attract and retain the talent they desire. Also, since the line between work and life is blurring, the threat of employee burnout increases. Companies will have to deal with these pressures to maintain a talented workforce. In the near future, even corporate culture will be a challenge prime for innovative solutions.
To be successful in this increasingly competitive and fast changing business environment, small and mid sized companies will need to outperform others at business strategy, product and service development, talent attraction and retention, flexible and efficient operations, and effective use of technology. Every organization has its own priorities, goals, and issues to balance. Innovative approaches to tomorrow’s challenges are a differentiator between those companies that lead and those who chase. Innovation is quickly becoming a survival skill. Working towards tomorrow today is imperative. Closing the doors will eventually come to those who neglect to do so.
1 “The 2016 Fortune Crystal Ball”, Fotune.com, Fortune Editors, 12/01/2015
2 ”5 Forecasts and 7 Predictions For 2010-2020 That Shape Innovation And Economic Growth”, Bloomberg Business, Bruce Nussbaum, 12/29/2009
3 ”10 Bold PR and Marketing Predictions for the Year 2020”, Inc.com, Steve Cody, 04/16/2015
4 “Business and Technology Predictions for the Year 2020”, Panorama Consulting Solutions, Eric Kimberling, 02/25/2015
5 “Can you imagine whole industries being wiped out?”, InnovationExcellence.com, Paul Hobcraft, 01/04/2016
6 “Five Business Trends To Watch In 2016—No Matter How Or Where You Work”, FastCompany.com, Faisal Hoque, 12/21/2015
7 “7 Top Tech Trends Impacting Innovators in 2016”, InnovationExcellence.com, Chuck Brooks, 12/26/2015
8 “10 Workplace Trends You’ll See In 2016”, Forbes.com, Dan Schwabel, 11/01/2015
9 “Futurework, Trends and Challenges for Work in the 21st Century”, United States Department of Labor, dol.com, Robert I. Lerman
Stefanie R. Schmidt, 08/1999
10 “Top 10 Workplace Trends For 2016”, EHSToday.com, Sandy Smith, 12/18/2015
11 “Mind the Gaps, The 2015 Deloitte Millennial Survey – Executive Summary”, Deloitte, 10/2015