In our meetings with clients there’s frequently confusion about what innovation actually means. In this blog I wanted to explore two particular dimensions of innovation that we think are worth going into in more detail, namely scope and ambition/impact.
Most people think of innovation as being all about products or services, but it is about much more than that. One of our favourite books on the topic is Ten Types of Innovation. This brilliantly well researched book demonstrates how innovation can occur in almost any area of a business from brand to service to profit models. Many of the most successful organisations combine multiple types to build a sustainable competitive advantage.
Consider the example of Threadless, a company which started off crowdsourcing T-shirt designs from independent artists (now does a whole range of other products). Potential buyers vote on designs and the ones with the highest votes are put into production & sold to the voters. Threadless makes products people want them to make. Many types of innovation exist here – crowdsourcing, automation, online communities, buyer/seller values alignment.
Components across an entire business model can be a source of innovation. It’s not just about products and services – and shouldn’t be, as these can be the easiest aspects to copy.
Ambition and impact
Contrary to popular belief, innovation does not have to be all about radical or so called disruptive products, services or business models. We see three levels of innovation:
Known – these will typically occur within the scope of existing products or services. A great example here is Lunchables – individual Oscar Mayer kids food products are bundled into one package to make life easier for parents and fun for kids’
Adjacent – companies reframe their offering and look at satisfying a more comprehensive set of customer needs or jobs. Harley Davidson have done a great job of building loyalty by tapping into the need to connect and share among focussed communities of enthusiasts.
Game changing – as this suggests, here you are literally changing the rules. For example, instead of selling aircraft engines, Rolls Royce shifted to selling ‘power by the hour’ for many customers. This shift from products to services is known as servitisation – it’s not the only way to change the game but has gained momentum over the last few years.
In these fast moving and uncertain times, established organisations need to manage a portfolio of all three of these types of innovations in order to guarantee a future. The 3 types fall into 3 different implementation time horizons of short, medium and longer term respectively. A classic McKinsey article explains the rationale and value of the Three Horizons Framework.
At The Innovation Practice we work with organisations across the full scope and ambition of innovation.
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