Investing in innovation makes good business sense
Posted 7 years ago on · Permalink
By Debbie McKee Demczyk
Innovation is an often-used word in business these days, but what is innovation? According to the Conference Board of Canada, innovation is a process that results in economic or social value through the creation of new or improved products, services, processes, strategies or capabilities. It’s what happens when new ideas are commercialized. In some ways, being innovative means looking into the future with creativity and imagination and doing it faster than your competitors.
So, why all the fuss about innovation? In a recent Conference Board report on Canada’s innovation performance, Canada ranked 13th among 16 peer countries. That means Canada does not depend on innovation as much as other countries as a proportion of its overall economic activity. As a result, Canadian companies often lag on new technology development and adoption.
Yes, innovation is crucial for a strong economy. Consider the increasingly short lifecycles that innovative products enjoy. For example, for the last several years, new releases of smartphones with the latest technological advances have caused many of us to replace our old phones as a matter of course, and likely more often than ever before. In this type of environment, companies that are slower to adopt new technologies face the consequences of not keeping up and soon become irrelevant. Think about Kodak, which was first to invent the digital camera. It chose not to commercialize the technology to safeguard its photographic film business, which it eventually lost. Successful companies adapt to a new and changing marketplace and new customer demands. In other words, they innovate.
Forbes magazine recently reported that the average lifespan of a successful S&P 500 company was 67 years in the 1920s. In today’s economic climate, the average lifespan is now 15 years. Investment in innovation has become a necessity for survival. Developing new products and services for new markets takes a commitment, whether it is reflected in a management style, nurturing a creative and innovative culture for employees, or allowing time and freedom to experiment. At Durham College, we work with many small companies that have made that commitment and are working hard to innovate and develop new products that will meet a market demand.
The Conference Board’s Centre for Business Innovation recently conducted a survey of businesses and discovered that 25 per cent of respondents cited finances as their number one innovation challenge. The good news, for companies and for Canada’s innovation performance, is that Canada has a good track record for government investment in research and development to support businesses. Many programs exist at both the federal and provincial level to support growth-oriented innovative companies in advancing their business goals and serving new markets through collaboration with colleges and universities. With a small investment of cash and time, the returns can be significant.
Debbie McKee Demczyk is director, Research Services and Innovation at Durham College.