Innovation in Competitive Business Environment


This paper describes a few types of innovation that can provide a competitive edge for a company. Also, it covers successful examples of innovative companies and discusses the use of Six Sigma as a tool to implement innovative techniques into the business process.

Innovation has always been one of the main methods for achieving a competitive edge in the business sector. A company can innovate using a multitude of ways along with techniques to implement innovations.

Types of Business Innovation

In recent years, many new startups have been established, and some have become seriously competitive organizations in their sector. Many of those organizations are focused on technological breakthroughs or implementing new functionality with existing technology. Competition is fierce among these companies. To stand out, many of them use innovation by design. Young companies that focus on design-driven innovation try to provide not only an aesthetically pleasing product but one that can improve the lives of the customers. While focusing on this method, startups often reject traditional strategies and try new methods of development, either through new technology or their business approach. This creativity in management is almost essential for a startup because this type of company has a high risk of failing and going out of business during its first year of operation. A design-driven company must abandon its customer-centric focus and try to get a wider perspective on the market. Researchers within the company have to pay attention to trends in art, popular media, competitors, suppliers, and other factors to help the company acquire information that could be used to create innovative products and services (Moroni, Arruda & Araujo, 2015).

Surprisingly, competition can lead to cooperation between companies to find mutually beneficial business innovations. The rising costs of research and development (R&D) and associated risks are common problems for a company in any industry. To lower these costs, competing companies can choose to cooperate to bring radical innovations to the market. This unusual tactic is sometimes called coopetition, a combination of cooperation and competition. This type of innovation can lower the risk of failure during R&D, but it can also bring new risks for the company, like opportunism and information leakage between companies. On the other hand, it provides a much wider variety of strategies. Coopetition is most valuable in technologically turbulent fields. Although studies show that it supports only incremental innovation in the field of technology, it has great potential to create radical innovations in the business models of both companies, thereby giving them more of a competitive edge. Incremental technological innovation can increase the chances of innovation in business models due to the change in firm-specific value appropriation (Ritala & Sainio, 2013).

Another way of gaining a competitive edge is innovation in pricing. This form of innovation is rarely used because companies often consider it a win-lose relationship with the customers. The seemingly small 5% of companies that tend to employ such an innovation strategy find it to be both financially lucrative and popular with the customers. It is also one of the less-researched tactics, covered by fewer academic studies over the years than other areas of interest, but those studies have shown positive results. A study from 2014 even outlines 20 different ways a pricing innovation strategy can be implemented for different types of companies around the world. These include market segmentation that involves offering different packages of the product to provide more choices for the consumer, segmentation based on the needs of the customer, and pricing to expand the market, as well as many other unique and potentially effective solutions. One of the more appealing factors of innovation in pricing strategy is that the practice can be lucrative even without technological or product innovations. This factor saves the company from taking high risks in R&D and spending large amounts of resources on research (Hinterhuber & Liozu, 2014).

Innovation often focuses on economic factors. In recent years, however, a need for consideration of environmental and social factors has become apparent, and a new type of innovation has been created: environmentally sustainable product innovation. This form of innovation urges managers to focus on descriptive models and emergent strategies that are devised to increase the growth of the organization through practices with a low impact on the environment. Environmental issues not only can be detrimental to the quality of life but can also limit the growth of a company. Therefore, sustainable innovation can be an essential tactic for such businesses. Products developed with this kind of innovation in mind can have long-term benefits that are not seen under the standard ways of measuring success dynamics. Therefore, a new set of success factors has been developed. Four factors were selected: market, law and regulation knowledge; inter-functional collaboration; innovation-oriented learning; and R&D investments in environmentally sustainable technology. A company that can make use of all four factors is sure to create a valuable and environmentally sustainable product (Medeiros, Ribeiro, & Cortimiglia, 2014).

Examples of Innovative Approaches

Many companies use these kinds of innovations. Reliance and effectiveness of technological innovation can be seen in such tech companies as Apple and Google. The introduction of the Apple iPhone in 2007 revolutionized the way people use their phones, and with the second generation of the device, they were able to create a new marketplace for software that enhanced the features of the product while at the same time providing additional revenue from sales on the App Store marketplace. The creation of this technology was a high-risk move for the company, but it happened to be very successful, and the company has not stopped relying on technological innovation since that time (Jun & Sung Park, 2013). Google, on the other hand, focused more on software and internet technologies. After the success of its search engine in 2003, Google focused on creating more internet services for various fields that covered the search for scholarly articles, books, and other items. After the introduction of the Apple iPhone, Google decided to enter the cellphone market; but to distinguish themselves from the competition, as well as save on R&D costs, they opted for a software solution that would be licensed to other manufacturers. This led to the success and proliferation of its Android platform (Gawer & Cusumano, 2013).

One of the more impressive examples of coopetition is the formation of the Thermal Insulation Association of Southern Africa. This association was created out of multiple thermal isolation companies that operated in South Africa. Their combined efforts led to the legislation of energy efficiency in the design of new buildings. This opened up new options for thermal insulation technologies and made insulation more affordable to the public (Odeku, 2014).

General Electric serves as a good example of how pricing innovation can become a competitive edge for a company. For decades, General Electric sold aircraft engines to airlines at a low cost but always used expensive maintenance contracts as a way to generate revenue. This tactic led to low customer satisfaction levels and other issues for the company. To solve these issues, a new pricing strategy was developed. It was given the name “Power by the Hour.” Instead of relying on maintenance contracts, GE sells the right to use jet planes that include spare parts and maintenance. Customers have to pay only when they use the products, and in the case of airliners, this means that they pay only when they earn money. Not only does this create a more cost-efficient option for the customers but it also ensures that GE has a clear incentive to keep the engines in the best possible shape (Smith, 2013).

Six Sigma as a Tool for Streamlining the Business Process

Six Sigma is a set of tools created to improve the business process of a company. Its goal is to identify and remove the causes of defects, as well as to streamline the business and manufacturing process. Innovation is essential for a company, but it has to be implemented with minimum issues. This result can be achieved with the implementation of the Six Sigma techniques, creating a team within the organization that utilizes empirical and statistical methods to reduce process cycle time, costs, and pollution, as well as increase revenue. Six Sigma has a focus on quantifiable results, verifiable data, and reliance on active support and management (Pyzdek & Keller, 2014).


Innovation is crucial for the development of a competitive edge. For example, Apple uses technology to create unique products, while GE has created new pricing models. To make the most out of innovation, programs like Six Sigma should be used for streamlining the work process. This is how a company can use innovation to gain an edge on the competition.


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Smith, D. (2013). Power-by-the-hour: The role of technology in reshaping business strategy at Rolls-Royce. Technology Analysis & Strategic Management, 25(8), 987-1007. Web.

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