I’ve defined innovation as:
Innovation is repeatable, scalable creativity through people and process.
I’ve also talked about the 4 different types of innovation:
- Process Innovation
- Product/Service Innovation
- Customer Experience Innovation
- Business Model Innovation
Let’s talk about why all 4 types of innovation are important and why you need to have a portfolio approach to innovation instead of focusing on any single level of innovation.
Process innovation are critical to the survival of the organization that has already discovered the formula for sustainability, ie business model. For scale and growth, process innovation is the name of the game. Companies that fail to innovate simply go out of business, because they’re inefficient, they have low margins, and they’re unproductive. Without being lean, you’re essentially steering a leaky boat. It’s critical that every organization, assuming that you have a business model to execute, is passionate about process innovation.
Product/Service innovation is exciting for your customers. They’re depending on your product and service and they’re eager to see the next version of the product you have to offer. Developing new versions of your product/service is critical to stay competitive and to capture the imagination of your customers. Companies who fail to iterate and improve their product will soon lose the trust and loyalty of their best customers. Again, it’s paramount that you’re organization has the capacity to continually work and improve your core value proposition.
Customer Experience Innovation
This is your opportunity to shine and truly differentiate yourself with the crowd. Customer Experience is where you can delight your customers. You have the chance to pleasantly surprise your customers. And believe me, the bar is low. You have infinite ways to connect with your customers and to build a tribe that are eager to follow you because you’ve designed an amazing experience for your customers. Obviously, companies that do not focus on their customer’s experience are going to be left behind. Customers expect more than a functional piece of widget/equipment. They’re looking for a organization that can elevate the expectations and standards.
Business Model Innovation
Business Model Innovations is the hardest to pursue, because of the innovator’s dilemma. Without an innovation culture and the space/resources/people to pursue business model innovations, it’s nearly impossible to achieve business model innovation within an already existing organization. With people’s place already full, how do you get your team to pursue new innovations and opportunities?
Regardless of how difficult it is to achieve, business model innovation is required for organizations to survive the rapidly changing world and the competition for the attention of your customers/consitutents. Without business model innovation, you’re at the mercy of the future being defined for you verses you being the one defining the future for everyone else. Business Model innovation is crucial for your organization to reinvent itself and to remain relevant for the long-term.
A Porfolio of Innovation
It’s so easy to focus on a single level of innovation. When you have Apative challenges looming over your head and there’s a constant anxiety regarding the uncertainty of the future and the changing world around us, it’s easy to focus on adaptive challenges. However, this is ignore the 80/20 principle and is akin to throwing the baby out with the bath water.
What’s required is a portfolio of innovation where innovation is happening at all levels from process/incremental innovation all the way to business model innovation. We need to maintain our existing customers/products/services 80% of our time but also make room for 20% of our time to be dedicated to future-facing, R&D activity so that we can continue to reinvent ourselves in the ever changing post-modern world.
Successful organizations are hyper-efficient and focused in their ongoing product development and current customer base. However, they invest a significant portion of their resource in search for the new business model and new world that they need to live in.