"Business has only two basic functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs."
Innovation in marketing is also essential. Therefore business has only one basic function - innovation. Innovation is the basis of all competitive advantage: the means by which organizations anticipate and fill customer needs and the method by which organizations utilize people and technology.
Innovation either endows resources with a new capacity to create wealth or creates a new resource. In an organization, resources are capital, people, knowledge, facilities & equipment, and strategic relationships.
Innovation is the process of implementing new ideas, of turning creative concepts into realities. Innovation can manifest itself as new, different or improved:
Innovation can cause change or it can exploit change; systematic innovation which exploits change is generally the most effective.
Systematic, purposeful innovation will create an effective and efficient organization. Systematic, purposeful innovation begins by identifying the changes occurring in a market. This is followed by understanding the opportunities and threats that will result from these changes, developing a strategy to take advantage of the opportunity and avoiding or minimizing threats, assessing the organization's capability to implement the strategy, and developing an organization which can effectively and efficiently innovate.
If this systematic, purposeful innovation process is followed, the organization will benefit by becoming market driven. It will do what is appropriate for the market and it will anticipate the market. As a result, the organization will become more effective and efficient. Society will benefit because the organizations within it that create wealth, create jobs and meet societal needs will be more sharply focused on the proper targets.
The purpose of business is innovation, which, when properly focused, creates wealth as defined in the broadest sense. The creation of wealth benefits all.
Paul Schumann & Donna Prestwood