INNOVATION is an essential ingredient for survival in today’s tough business environment but you need to be clear about the difference between invention and innovation. Innovation means making practical use of ideas to help you improve productivity and reduce costs.

Innovation can mean a single major breakthrough — for example a totally new product or service — or a series of smaller changes. This could include improving or changing ways of working to increase efficiency and productivity or extending the range or quality of existing products and services.

Innovation is a creative process so the ideas can come from both inside and outside the business. Listen to your staff, customers and suppliers and look at reports and research that cover your market. This could help you develop entirely new or improved products and services that will help you meet rapidly changing customer demands or needs.

Being innovative adds value to your products or services. This will differentiate your business from competitors and increase the perceived value to the customers and markets. Successful innovation is filtering the ideas so you identify those you want to focus on and then provide the resources needed to exploit them.

Businesses that fail to innovate are most likely to suffer falling productivity and efficiency, they also risk losing market share to competitors, reducing margins and profit and, worst of all, going out of business.

For more information visit www.businesslink.gov.uk/nw/innovation.