During uncertain times, entrepreneurs can find plenty of opportunities to innovate through technology. But they should also reinforce their commitment to providing value to customers.
Although it is evident that using new technologies to innovate is crucial to maintaining a competitive advantage, it is essential that, at the same time, these changes bring value to customers. It’s not enough to encourage innovation, you’ll also need to boost the value your business provides to be ahead of the competition.
What does it mean to innovate?
It is a commonplace for companies to confuse innovation with creating something new. This concept is not wrong, but it’s not specific enough. Innovation is critical to growth, but many companies fail when executing it. You should encourage people to look for new ways of doing things. But for innovation to be of any use, it has to create additional value for customers.
FOMO, or the Fear Of Missing Out, is a term commonly used to describe the hype that startups create around their fundraising processes. Still, it can also translate to trending technologies’ effect on business decisions.
Many startups or companies hop on trending technologies like blockchain without understanding how that decision will ultimately create customer value.
Instead, innovation often stems from a lot of unsexy work that targets day-to-day inefficiencies. Identifying bottlenecks and incorporating a continuous improvement mindset is what makes innovation really efficient. Changing things that don’t make sense will result in an improved experience for your customer.
What does it mean to create value for customers?
Innovation done well should always create value for customers. Moreover, it should create value both for your business and the customers you serve.
Technology can dramatically improve people’s lives, especially in Latin America. Edtechs, fintechs, logtechs, and other types of startups can promote social mobility in ways we’ve never seen before. And if your startup manages to change people’s lives, you’ll likely retain those clients. This is how creating additional value can also function as a critical tool for the business to survive.
When looking for ways to innovate, don’t take the technology you want to use as a starting point. Instead, start with a problem. And hopefully, it will be a problem you have yourself, so you’re 100% sure it exists. Worse than not innovating is investing money into a solution for a non-problem.
Innovation through technology has to make sense for your customers and your business model. Do not embed a product only because you want to make your storytelling sexier. Countless genuinely innovative products and services failed because no one was willing to pay for them.
In other words, technology will not solve the problem if people don’t use it. Avoid this by talking to your customers to understand their needs instead of pushing products onto them.
Also, to constantly create value for clients, you will have to iterate your services or products: as mentioned before, you’ll need a continuous improvement mindset. Conditions change, so your product-market fit will never be perfect, it has to be continuously updated.
A famous case of innovation gone terribly wrong is the Silicon Valley startup Juicero. This company had raised $120M from investors like Google Ventures and was even featured in the New York Times. The company sold juice boxes and a USD$400 press machine meant to be the only way to squeeze the juice out. The startup claimed the machine wielded four tons of force, but they were profoundly humiliated as Bloomberg News reported that a person could easily squeeze the juice only using their hands. In this case, a startup created a very costly solution for a problem that did not even exist in the first place.
There are no simple answers to which are the best ways to innovate through technology. It all comes down, though, to how much value you are creating. It’s easy to get swayed by the excitement of incorporating new technologies into your processes, but don’t innovate just for the sake of it.
When changes are placed correctly, digitally transforming existing products or services or creating new ones can be a huge value driver. Clarity and simplicity in approaching transformation processes will help a business stay aligned with the ultimate goal: creating long-lasting, life-changing value for its customers.