Why Businesses Must Invest in Innovation Capital for a Winning Strategy over the Long-Term?

Business’s attitude to innovation plays an essential role in driving long-term business success. The merger of multiple assets, factors, and capitals drive innovations that are vital for building a healthy business future.

Innovation capital is simply an assemblage of multiple development-promoting factors that encourages organizations’ to achieve innovative results. This has benefits exceeding beyond imagination and allows businesses to expand their business network and leverage the positives of innovation to gain a competitive edge.

In other words, it is an intangible capital designed to help businesses win resources to bring novel ideas into the limelight. Resembling the political capital, it is built with a major focus on three innovation-specific aspects, Human Capital, Social Capital, and Reputation Capital.

However, it is still not clear why businesses need to invest in innovation capital and how it can help in building a long-term winning strategy?

Why Every Business Needs an Exclusive Winning Strategy?

A successful business strategy focuses on the organization’s working plan required to achieve its vision, optimize financial performance, and prioritizing objectives. It’s a reflection of a firm’s unique business model and sheds light on its vulnerabilities, strengths, opportunities, and resources. As every business requires a unique business model, they must also adopt an exclusive winning strategy.

Corporate strategies built on the foundation of exclusivity help businesses follow the shortest route to success as every business is as individualized as its owner. Following a business strategy tailored to some other business’s strengths and vulnerabilities is never the best option as it can hardly ever transition into your unique winning strategy.

The Role of Innovation Capital in Driving Business Success

Today’s businesses are driven by advancements in technology, and how businesses interact and operate with stakeholders and consumers is changing rapidly. There’s a growing need for businesses to be agile and identify new opportunities with the aid of innovation. Businesses who underinvest in innovation and research & development (R&D) only relish short-term gains and lack the resources needed to drive long-term business success.

Innovation capital provides businesses with the edge needed to survive in the ever-competitive corporate world. Yet, according to the BDC survey of 4,000 Canadian entrepreneurs, only a quarter of mid-sized and small businesses are inclined towards investing in innovation. Here are three ways innovation capital help businesses achieve long-term business success:

  1.  Build a Competitive Edge and Improve Market Position

The best way to anticipate market changes is to innovate and capitalize on emerging opportunities. Businesses who react with the paradigm shifts seize to gain a competitive edge over businesses who use innovation capital to foster innovation even before the enforced need to change. There are multiple ways to drive innovation and the best is to conduct market trend analysis and begin listening to the consumers.

  • Enhance Employee Relations

Employee relations are key to business success and a healthy workspace environment can boost productivity better than any other corporate strategy. Investing in innovation capital helps develop a sense of social responsibility among employees and encourage them to be more productive. Businesses who invest in innovation capital share a tendency to work in collaboration with employees to identify ongoing trends and opportunities to innovate.

  • Cut Down Business Waste and Expenditures

Innovation helps businesses position themselves in a better way with more focus on long-term goals rather than short-term gains. There’s a direct link between innovation and business operational efficiency as the businesses who practice innovations are better built to tackle production bottlenecks, order processing complexities, and employee & machinery idle time.

How Innovation Capital Can Create Business Value?

Businesses that have innovative leaders keen on investing in innovation capital can multiply business value at the rate of knots. This is exemplified by the endeavors of business leaders such as Howard Schultz and Elon Musk. In the year 2001, Howard Schultz helped Starbucks raise the business’s innovation premium to 50% which fell drastically with his departure and dropped down to 11% in 2008. Howard came back in power in 2009 and again helped innovation drive the business premium to 49%. Its real impact on business value is evident by the fact the Starbucks’ stock underwent a massive nosedive and fell more than 10% when Howard Schultz stepped down from the position of Starbucks’ CEO.

The same philosophy can be used to understand the impact of innovation capital on business value with the examples of Elon Musk’s Tesla. Musk’s innovative approach to technology has helped drive above $1 billion in revenue in the past and it’s evident if Elon Musk plans to leave this executive position, the entire Tesla’s business model will face severe adversities. This is how innovation drives business success by creating better business value and fostering a trend of continuous improvement.


  1. https://www.wired.com/insights/2014/04/innovation-capital-inspire-entrepreneurship-creativity-business/
  2. https://www.infoentrepreneurs.org/en/guides/use-innovation-to-grow-your-business/
  3. https://www.bdc.ca/en/articles-tools/business-strategy-planning/innovate/pages/4-ways-innovation-can-help-your-business.aspx
  4. https://www.forbes.com/sites/nathanfurrjeffdyer/2018/09/04/innovation-capital-the-secret-ingredient-behind-the-worlds-most-innovative-leaders/#3e6c11665fd3
  5. https://www.business-case-analysis.com/business-strategy.html
  6. https://www.forbes.com/sites/larrymyler/2015/08/22/your-strategy-should-be-as-unique-as-your-business/#236056d2736b
  7. https://blog.hypeinnovation.com/why-organizations-need-innovation-capital