The Pros and Cons of Innovation: Is it Worth It for Your Company?

Anyway, it isn't all sunshine and roses all the time. There are several pros and cons of innovation that companies should consider before deciding whether an innovation initiative is right for them. In the article below, rready will explore the pros and cons of innovation. Then, we'll cover a few strategies that can help companies make the most of it.

What Are the Pros and Cons of Innovation?

Before we discuss the tangible pros and cons of innovation, allow us to explain the standard for measurement. In this context, we're examining the pros and cons of innovation in a business setting. Innovation programs are implemented to create value. Accordingly, the pros we'll discuss are directly linked to value creation, whether for the company, consumers, or the communities they belong to. Many of the cons of innovation are unintended results of that value creation, rather than just "cons." The following few sections will clarify each of these and provide concrete examples. 

How Is Innovation Bad?

Innovation, in itself, is not inherently bad because it simply seeks to create value. When discussing the pros and cons of innovation, it's essential to acknowledge that many of the cons are merely side effects of the pros. After all, there is no action without an equal and opposite reaction. Below are three significant examples.

1. Creative Destruction

Economist Joseph Schumpeter was among the first to point out the necessity for companies to innovate. He also acknowledged that as companies innovate, other companies may become obsolete. Thus, he coined the term creative destruction, defining it as a "process of industrial mutation that continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." (1942, Capitalism, Socialism and Democracy).

2. The Cost of Innovation

Innovation initiatives require a lot of time and resources. The patenting and prototyping process alone can take years. Without an efficient research and development (R&D) department, this timeline can drag out even longer. There is no guaranteed return on investment, although there are several ways to mitigate the risks.  

3. Unintentional Consequences

No new product or service comes without the cost of labor, manufacturing, and distribution. For example, suppose a company has invented a new way to source oil. It promises to bring more money to the community through jobs and allow the company to operate at a much lower cost. This new method also results in more frequent oil spills and poorer air quality in the area of operations. Since the innovation is relatively new, the pay for operational workers is below the industry average. In this case, the innovation has indeed created value, but the cost is detrimental to people's health and well-being and the planet. Sustainability in innovation is crucial to avoid scenarios like this one.

What Are the Advantages of Innovation?

It's always better to hear the bad news first. Now, let's lighten the mood! Innovation isn't just beneficial for companies. It's essential. Remember when we talked about creative destruction a moment ago? I'll let you in on a bit of a secret—companies that innovate and adapt don't fall prey to creative destruction. Think about how Netflix rose to the challenge to defeat Blockbuster by moving to a streaming service. 

It revolutionized the way we consume content! They weren't simply competing with Blockbuster's offerings. Instead, they were coming up with novel ways to deliver value to their customers. People are happier because it's easier to access their favorite media, and the elimination of paper products used for mail-in subscriptions made the environment happy too. Although Netflix blew Blockbuster away regarding content, their snack section was unparalleled on any given Friday night in the 90s. Anyway, innovation isn't about competition—it's about novelty and utility. The competitive edge your company gains in the market is just a positive outcome of that value creation.  

Reducing the Negative Effects of Innovation

Innovation, at its core, is meant to improve the situation at hand. Although the pros and cons of innovation will always exist alongside one another, the way we innovate has the power to influence which one trumps the other. Every company has a responsibility when it comes to innovation. That responsibility is to ensure the means (and product) of innovation is sustainable.  

Innovation Management

Innovation management (also known as idea management) helps keep companies organized and aligned with their business goals. On a higher level, innovation services that are mindful of ESG standards and sustainability can help businesses align with their values too. We'll talk a bit more about that in the section below. First, let's define innovation management. Companies face three management options when launching an innovation initiative:

• Use internal resources - In the early stages of a company’s innovation program, they may allocate some of their existing internal resources to innovation. For example, a company may open a new Slack channel dedicated to an upcoming innovation project. There, organization members can track its progress and collaborate. Since one of the core principles of innovation is decentralization, this method is unsustainable. The more people involved in innovation, the more ideas there will be. They must be organized and secured, whether they're validated and moved through the innovation pipeline or sidelined for future application.  
• Use an innovation management solution - Innovation management solutions vary starkly from one another. Some solutions may focus on consultations or high-level innovation management advice. Others are more comprehensive, providing coaching in addition to project management technology, like a software platform. At rready, we offer clients looking to launch a new innovation program the KICKBOX. It’s an innovation management solution that comes complete with methodology, technology, and tangible incentives to engage employees. 
• Use a combination of internal resources and innovation services - Many companies can benefit from a combination of both the options above. Every company is different, and so will be their goals and the amount of resources they have to dedicate to innovation. Great innovation management services should fill in the gaps by supporting your existing resources and providing only what you need to succeed. For example, a company that has built its own platform for project management wouldn't need another software service provider. But they do need the coaching to help define innovation processes and encourage intrapreneurship amongst employees. Technology is a tool, not an end-all solution. Make sure the innovation management service provider you choose can tailor a solution that fits your company’s individual needs. 

Sustainability in Innovation

Innovation has brought new ways of thinking and working towards a more sustainable manner. Sustainability in innovation has a few meanings. Most prominently, it refers to responsible innovation—being mindful of your business processes' impact on people and the environment. On the other hand, sustainability in innovation relates also to the conservation of your company's resources—making sure your innovation program can continue to create value for the long term. Thankfully, making an effort toward one will typically positively influence the other. Aligning your company with environmental, social, governance (ESG) standards is an excellent place to start. As mentioned above, you can also partner with innovation management solutions like rready that weave sustainability into their products and services.

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