Examining Innovation from an Industry Perspective

In the competitive business environment of today, innovation is essential for survival. But how other businesses in your industry define innovation may differ from how your company defines it. For instance, IT corporations place a strong emphasis on external innovation, such as developing cutting-edge products that boost the value of the business. However, businesses in the manufacturing sector frequently concentrate on internal innovation, such as finding innovative approaches to producing high-quality goods at a lower cost.

The COVID-19 epidemic has made it more urgent than ever for enterprises to concentrate on both internal and external innovations. Here's a simple breakdown of how internal and external innovation differ from one another.

Internal innovation

• Create efficiency
• Improve quality
• Reduce costs
• Increase profits

External innovation

• Better develop products
• Meet customer needs
• Increase market share
• Grow revenue

While different industries require different focuses on internal versus external innovation, the skills needed to drive innovation are the same across industries. Developing a culture that supports innovation should be a universal priority. Let’s take a closer look at how different industries have been approaching innovation in recent years — and what we can expect to see in the future.  

Innovation in manufacturing: Is change here to stay?

Over the past few years, manufacturing companies innovated at world-class levels to get products to their customers. In response to the historic challenges of the COVID-19 pandemic, PwC reported that manufacturing companies showed surprising levels of creativity to overcome supply chain disruptions, workforce reductions, and many other challenges.

But this level of innovation isn’t expected to continue. Forrester predicts that manufacturing companies will regress to pre-COVID-19 levels of innovation. According to Paul Miller at Forrester, “It’s just easier to slip back into old ways of working, siloed thinking, and a command-and-control culture — easier but not better. Rigid hierarchies, ossified processes, and an iron grip are the antithesis of the flexible and adaptive organizations that will successfully navigate tomorrow’s challenges.”

At least for a period of time, manufacturing companies experienced the positive effects of breaking down silos and solving big problems with innovation and creativity. Organizations that continue to emphasize creativity, develop the necessary skills, and extend their focus to external, growth-minded innovation will be the ones to beat in the coming years.  

Innovation in financial services: Startups disrupt the status quo

Specialist providers are challenging large banks with products that lower costs for their customers without a noticeable drop in the level of service. In recent years, financial services companies have upped their innovation game to be more responsive to consumer needs by developing groundbreaking digital products. This has shaken the grip on the market for big banks and reduced their value.  

The reaction from the larger, more established financial services companies has been to offer their own innovative digital solutions. With this, they’ve been able to attract new customers with solutions that address a broader audience. The jury is still out on who will win the pocketbooks of this growing market, but this demonstrates how extreme external innovation can affect an entire market.

The challenge remains to enable employees to acquire the right skills while creating an ongoing culture of innovation. The opportunity is there. The disruption in the market and subsequent innovation opens up a previously untapped market to offer consumers more choices and more innovative products. Learn more about the workplace trends that matter most for financial services here.  

Unlock innovation on your team

While we’ve looked at the impact of innovation on two industries, it’s easy to see how companies in any industry can benefit from fresh thinking and new approaches to existing problems. In fact, the most innovative companies in the world delivered 3% higher returns to shareholders than other large and mid-cap companies from 2005 to 2020.  

Innovation doesn’t simply happen by chance. It takes a concerted effort to train your employees and create a work environment that embraces innovation.

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