Recognising innovation as a systematic business process is far more important than just creating “an innovation”. If a company is to be a market leader, it must set the “pace of innovation”. To become a serial innovator, a company will need to view innovation as an ongoing business process that spans all the dimensions of the business innovation.
Most companies equate innovation with the development of new products. But creating new products is only one of ten types of innovation, and on its own, it provides the least return.
Doblin, the renowned design firm started by Jay Doblin of Chicago’s IIT Institute of Design, works with clients using a framework of Ten Types of Innovation, which can help to identify new opportunities in finance, process, offering and delivery. Companies that are able to simultaneously innovate across multiple innovation types will develop offerings that are more difficult to copy and that generate higher returns.
There are two types of innovation that can present new opportunities in finance, business model and network and alliance innovation. Business model innovation is about how businesses make money. For example, Dell revolutionised the personal computer business model by collecting money before the consumer's PC was even assembled and shipped, resulting in net positive working capital of seven to eight days. Networks and alliance innovation is where businesses can join forces with other companies for mutual benefits. By outsourcing operations that are not part of a business’s core competencies, organisations can spend more time on the things that matter.
New opportunities in process can be identified through enabling process and core process innovation. Enabling process innovation is how businesses support the company’s core processes and workers. For example, Starbucks can deliver its profitable store/coffee experience to customers because it offers better-than market compensation and employment benefits to its store workers-- usually part time, educated, professional, and responsive people. Core process innovations help to create and add value to your offerings. In the retail sector, real-time inventory management systems, aggressive volume/ pricing/delivery contracts with merchandise providers, and systems that give store managers the ability to identify changing buyer behaviours and respond quickly with new pricing and merchandising configurations, are all core process innovations that can all help to create and add value.
There are three types of innovation which can help identify new opportunities in offerings, product performance innovation, product system innovation and service innovation. Product performance innovation aids businesses in designing their core offerings.
The VW Beetle (in its original and its newest form) took the market by storm, as it combined multiple dimensions of product performance. Product system innovation is how businesses link and/or provide a platform for multiple products. This can be achieved by bundling a variety of specific products into a package that benefits the customer. Service innovation helps businesses provide value to customers and consumers beyond and around their products. This is going above and beyond for the customer providing them with the best services possible throughout the product lifecycle.
New opportunities in delivery can be obtained through channel, brand and customer experience innovation. Channel innovation is how businesses get their offerings to market. Businesses must ensure that they pick the right routes to market by understanding their customer’s needs and where they purchase products. Brand innovation is how businesses communicate their offerings. Absolut conquered the vodka category on the strength of a "theme and variations" advertising concept, strong bottle and packaging design, and a whiff of Nordic authenticity.
How your customers feel when they interact with your company and its offerings is called customer experience innovation. Harley Davidson has created a worldwide community of millions of customers, many of whom would describe "being a Harley Davidson owner" as a part of how they fundamentally see, think, and feel about themselves.
As we can see, innovation can take many forms and by using this framework, businesses will be able to identify new opportunities in finance, process, offerings, and delivery. However businesses should not focus on one area or type of innovation but should ensure that this entire framework is woven into the fabric of the organisation to achieve the best results and biggest return.
