Entrepreneurial organizations’ primary focus is efficiency. This is achieved by how well they convert their capital, materials, and human resources in relation to their output. In business, how well inputs are used to achieve output is measured about how much the company can save while producing the highest output in terms of quality and quantity. An organization’s output may be measured in terms of revenue, services, and products, among other parameters. To achieve efficiency in their operations, entrepreneurial organizations apply innovation in their day-to-day operations. The four main reasons these organizations pursue innovation include gaining a competitive advantage, meeting consumer demands, promoting sustainability and resilience, and attracting and retaining talent.
Since competition in the business environment is growing, entrepreneurial organizations seek innovation to gain a competitive advantage over their peers in the same market. Through innovation, they can develop unique goods and services, which, in turn, sets them apart from their competitors. With uniqueness in products and services, a business focuses on meeting specific customer needs, thus attracting more customers and increasing revenue and profits.
Innovation also improves a business’s ability to meet its consumers’ demands. With innovation, companies can develop higher-quality goods and services. Entrepreneurial organizations always look for innovative ways to improve their products. Higher quality goods and services can be priced higher and still attract more buyers. This leads to higher revenue and higher profit margins for the business.
Additionally, fast growing companies also seek innovation in order to supply their continuously growing consumer bases. When the demand for a particular product increases, the product has more consumers. To effectively supply their growing markets, entrepreneurial organizations invest in innovative ways of production.
Companies also use innovation to promote resilience and sustainability. For a business to thrive through economic downturns, it must embrace innovation. Highly innovative companies can minimize production costs to keep the business afloat during economic downturns. Moreover, since consumer buying behavior keeps changing from time to time, entrepreneurial organizations embrace innovation to alter their products and services to suit their clients’ tastes. To continue thriving in the ever-changing business environments, forward-thinking organizations must pursue innovation in their daily operations.
Entrepreneurial organizations also pursue innovation to attract and retain talent. A company that embraces innovation creates a highly competitive and results-oriented environment, leading to higher levels of job satisfaction. This, in turn, leads to higher retention of the best talent in the organization. Also, a pool of highly talented and innovative employees is likely more productive than a team of average employees. Such talented teams attract other talented people into the organization.
In conclusion, the benefits of embracing innovation in producing goods and services outweigh the costs. Innovation offers many more benefits to businesses than the four discussed in this paper. Friedman (1970) argues that the only social responsibility of a business is to maximize profits. The dynamics of the business environment keep changing, and embracing innovation and technology has proven to be a reliable tool for sustaining an organization.