Innovation: significance for businesses

When was the last time you did something for the first time? The viability of your business depends entirely on your ability to adapt: your flexibility. The keyword is ‘innovation’, and this article tells you everything there is to know about innovation: how it can pay off for you and what pitfalls to avoid.

What is innovation?

Innovation is about creating new products, services, and/or business processes. You may even be involved in innovation already, because innovation usually involves something new, a minor improvement for your business. People often think that innovation is only for large companies, or that it necessarily involves an invention. Our example of a bakery below shows that this is not the case. 


A baker who has come up with a new type of bread is supplying a new product. Has he started using a new type of grain in existing bread? In this case, it qualifies as a novel product. In both cases, this involves product innovation in his business. 

This bakery owner is also engaged in the innovation of services and processes. For example, he has started delivering bread to his customers’ homes. This qualifies as a new service for him. He also decided to improve his production process: his production lists are no longer handwritten, but are rather displayed on a screen. This means the bakery’s employees can clearly see what, how much and for whom it is producing. These innovations help the bakery increase its sales and save time, and work processes become a lot easier. 

Why be innovative? 

You innovate in order to adapt your business to the changing world, for example because your customers expect you to provide a growing number of services online, or because the market is changing on account of government rules or an economic crisis. Innovating under your own steam is often better than innovating because it is a matter of urgency. 

Not innovating is essentially not an option: before you know it, you will not be able to keep up with the competition. Or the existence of your business might be on the line. Take the example of video stores. Whereas every small town used to have one, they have all but disappeared, simply because they clung to a business model that was past its sell-by date. 


  • Growth – for example, in business size, but also financial – thanks to increased sales and lower costs. You sell a new product, which boosts your sales. Alternatively, you might sell an existing product in a new market. You might have lower costs, for example through digitalisation or by using less expensive materials to manufacture your product. 

  • Competitive advantage: with increasingly better products and services, you can continue to set yourself apart from your competitors. You get a larger piece of the pie. For example, Mr. Fill, by improving their smart wastebaskets (in Dutch), contributes to cleaner cities in a growing number of countries. 

  • Higher productivity: by introducing smarter processes and procedures in your business, everything goes more efficiently and more easily. For example, TryLikes was able to develop their idea into a product in just three weeks’ time. 


Innovating also means failing and learning from your mistakes. While some business owners achieve success, others struggle with teething problems. It is all part and parcel of starting a business. Here are some examples of pitfalls in innovation and the related checklist of questions to help you avoid them. 

  • You estimate the amount of time, money, and effort needed to achieve successful innovation. Do you have a plan in place, including clear targets? Do you set aside enough time and money for innovation? Do you know how you fund innovation (in Dutch) and what kinds of innovation grants are available? 

  • Innovation means change. In the worst-case scenario, your employees are not ready for change in your business. Do you involve them in your innovation plans from the outset? Do you incorporate their ideas into your plans? 

  • Your new product or service fails to catch on (or at least barely makes a dent). Are you aware enough (for example, through market research) what your customers want? Are they willing to pay for these products? 

2 types of innovation 

Those who innovate usually do not come up with some groundbreaking innovation, but rather implement a series of gradual improvements. This is referred to as ‘incremental innovation’. This form of innovation is common in many businesses. The costs and risk tend to be limited. One example is a hair salon that offers clients the option to schedule appointments on their website using an online calendar or smartphone app. 

Sudden and rapid innovation is known as radical (or ‘disruptive’) innovation. We are all familiar with examples such as the smartphone, mobile internet, social media, and streaming services such as Spotify and Netflix. Examples of previous radical innovations include the printing press, the car, and the aeroplane. 

We are also seeing radical innovation on a smaller scale. For example, if a salon owner decides to make extra efforts to improve her clients’ appearance. She might open a new branch, which also provides cosmetic surgery services. This involves an investment in a completely different line of business. Whether this major change actually leads to success is still unclear at the time of innovation. 

Opportunities for innovation 

Where should you start innovating? You can discover opportunities for innovation yourself. It helps to adopt a methodical approach to this process. You can start by taking a critical look at these 4 business units (PMTO) and determine what (and how) you would like to innovate: 

Product and service 

Explore where you might be able to innovate or enhance the offer to your customers, for example by offering a new or innovative product. In your product development, you should also consider protection of items such as your product design or technology. 

Your offer can also be enhanced or renewed through a new service. What additional service do customers expect from you? You could, for example, provide a maintenance service for your product or introduce a home-delivery service. If you are already a service provider: by also providing your service online, you not only lower the threshold for regular customers, but also reach new ones. 

Market and marketing 

You deliver your product or provide your service to your customers. Explore ways of extending your clientele or reaching new target markets. For example, is your product also suitable for the international market

You can also come up with new and innovative ways to approach and reach your customers. Your customers’ needs are constantly changing and evolving and vary depending on the target market. For example, if your product is targeted at young people, it is very likely that you manage your contacts with them through social media

Technology and IT 

Materials, equipment, and technologies are tools for developing and supplying your product or service. By introducing innovations, you can make your product smarter, more attractive, or cheaper. For example, PHYSEE has designed a smart window that converts sunlight into energy by installing sensors in the window and applying special coating to the window. 

Digitalisation, internet, and IT systems provide plenty of opportunities for innovation. One example is an estate agency that offers virtual house viewings through a livestream on its website. Then there is a company called Technotape, which uses digital print technology (in Dutch) to display images on mugs and other items. 

Organisation and process 

You can also find innovation in less tangible areas, including business operations, and organisational culture and processes. In other words: how you do things in your business to supply your product or provide your service to customers, for example how to develop your own knowledge and skills and those of your colleagues, or how to use your employees’ talent. 

Innovation of business processes, often through the use of digital systems, is a way to reduce the number of mistakes and to introduce smarter and more efficient work processes. Examples of this include digital invoices or the use of a CRM system for customer management, or working or collaborating smarter online and have access at all times to your files and applications by working in the cloud more often. 

Responding to trends 

The latest trends and developments can also help you find inspiration for innovative new ideas. Latch on to an existing trend, if possible. Make it manageable by coming up with a practical application within your business environment. The main thing is that you add value for your customer. 

An important trend is digitalisation, which refers to converting products or services to digital formats. This both increases productivity and makes processes more efficient, including digital meetings, driven mostly by the homeworking trend. 

Sustainability is another trend and deals with solutions that are less harmful to the environment. By improving sustainability, you prevent waste and reduce the environmental impact of your business. One example of improved sustainability is switching to electric vehicles or producing alternative, ‘greener’ packaging for your products. 

Take a critical look at your business processes; there are no doubt areas where you can benefit from digitalisation or improved sustainability. Be sure to also view the video in which Bjorn Stolte explains how to address innovation in your business (in Dutch).