Product or service innovation
Startups versus Business
Episode 2 – Product or service innovation
Continuing from the blog post regarding the characteristics of a Startup versus a small to medium business, here is a reminder of the summary of the key characteristics that differentiate a Startup from a Business. Of relevance for this blog I’d like to explore product or service innovation. I’m not one for reinventing what is already written, but I am one for keeping it simple. As we explore each of the key characteristics in future blogs, my aim is to break it down to explain what is means, why it is relevant and how it differs for a Startup versus a Business.
So let’s start with some definitions to make sure we are all on the same page.
For simplicity, I refer to the Cambridge Dictionary.
- A product = something that is made to be sold, usually something that is produced by an industrial process
- A service = a government system or private organization that is responsible for a particular type of activity, or for providing a particular thing that people need
- Innovation = a new idea or method, or the use of new ideas and methods
If I were to compare product and service innovation – I would say that product innovation enhances the physical appearance and functionality. Whereas service innovation is a non-physical means of providing value to customers that can lead to improved performance.
Why is it important to consider product or service innovation?
There are three key reasons for why product or service innovation is important:
- It ensures relevance in your established market
- It develops new market opportunities for growth
- It creates competitive advantage
A good snapshot of product innovation can be found in this blog by Diana Porumboiu. If you are a successful existing business and don’t think you need to consider product innovation, then consider this article.
For service oriented businesses, innovation is just as important, as indicated in this article found on MIT ID Innovation.
We’ve determined that product or service innovation is important for both Startups and Businesses. So how do Startups and Businesses need to think differently about product or service innovation?
I believe it comes down to the timelines. A Startup needs to conduct their research and find that “new” or “improved” product or service before launching it into the market. Therefore, speed to market is important and building that prototype to test and learn is also a key to success for Startups.
Whereas a small to medium business can introduce an existing product or service into the market at any stage. Because the product or service is not new and is already offered elsewhere by someone else, the key to success will be understanding demand versus supply and the additional value that can be delivered to the market from your business.
What are the three key take-aways?
- Startups focus on NEW or IMPROVED products or services to market(s).
- Businesses focus on providing an existing product or service to a market(s) where the demand exceeds supply.
- Innovation is important for both Startups and Businesses because without it, you will find it more difficult to stay relevant for your market.
In summary, regardless of whether you are looking to introduce a new product/service as a Startup or setting up a business where the product/service already exists in market, in order to survive in the long run, innovation plays a key role for both.
Feel free to connect with me to have a chat about your idea.
Stay tuned for episode 3 where I will explore the topic of marketshare.