The ten types of innovation
I recently got my hands on the book "Ten Types of Innovation" by Larry Keeley, Ryan Pikkel, Brian Quinn and Helen Walters. I had made this great find thanks to a blog post by Julie Delisle on the beeye site. The ten types of innovation were developed by the firm Doblin in 1998 and show that companies that integrate several types of innovation will develop an offer that is much harder to copy and will be able to generate a greater return. In this article, I will present the three categories of innovations as well as the ten types discussed in the book.
The platform's ten types of innovation are grouped into three categories. Innovations in a "more left" category are internal, opaque, and out of sight of consumers (or customers) while those in a "more right" category are visible and obvious from the outside. Thus, those on the left are behind the scenes while those on the right are on the stage.
The "configuration" category
The types of innovation that make up the configuration category focus on the workings of the company and its business system. It is in this category that we find innovations of the business model, network, structure and process type. These are all internal innovations and therefore not very visible externally.
The business model
Business model innovation boils down to asking the question "how do you make money? ». The most innovative business models are those that have a deep understanding of what customers and users value most and know how to find new revenue and pricing opportunities. These are the ones that challenge the industry's conventional business models, which are rarely questioned.
The Gillette Company, with its razor and blade strategy, is a perfect example of business model innovation. The concept is to sell the base at a low cost and obtain a recurring income from the disposable portion. This model has been picked up by printer manufacturers, among others.
To innovate at the level of your network, you can ask yourself the question "how do you connect with others to create value? ». Companies can take advantage of the hyper-connected world we now live in and there is no reason to go it alone. The network enables them to take advantage of other companies' processes, technologies, offerings, channels and brands. The idea is to capitalize on its strengths and use external resources to cover the rest. Network innovations allow executives to share risk when developing new offerings or investments. These collaborations can be short term or lead to long term partnerships.
An example of innovation at this level would be TARGET (ignoring their dismal failure in Canada) with its network of suppliers and collaborators.
How do you align your talents and assets? This is the question to ask in order to innovate in the structure of a company. These innovations focus on organizing the company's assets (human, material or intangible) in a unique way in order to create value. This can be done through the acquisition of great talent or a sophisticated management system. Having a highly motivating work environment can make a company stand out from the competition. These are often referred to as "lean" start-ups or simplified IT infrastructure and are structural innovations.
Southwest Airlines is an example of structural innovation with the simplification of its fleet through the single use of the Boeing 737 (this was true until the purchase of AirTran in 2011). This strategic choice has reduced maintenance costs and has resulted in lower pricing compared to the competition. This model was taken over by Westjet in Canada, which used the 737 exclusively, until recently with WestJet Encore.
Continuous improvement is often talked about in a company and it is, in a way, the spirit behind the question "how to use superior methods to carry out your activities? ». Process innovations involve all the activities and operations necessary to produce the company's core offering. This type of innovation is like the company's secret sauce. In software development, we use continuous integration, which is one of several ways to innovate in processes. Agile development methodologies are also innovations specific to IT companies.
An excellent example for this type of innovation is, without a doubt, Toyota, which has revolutionized the industry by eliminating waste and continuously improving its processes. There is, by the way, an excellent book on this subject that I invite you to consult: "The Toyota Way" by Jeffrey Liker.
The "offer" category
In the offer category, you will find the performance and system types. These innovations are centered on one or more products or services specific to the company. This category is at the center of the innovation spectrum.
If you want to innovate on the overall performance of your offer, you need to think about how to implement distinctive features and functionality. This is a well-known way to stand out from the competition. If you want to innovate on performance, you have to work on the quality, the added value and the functionalities of the offer and do better than the others. This can be done through simplification, sustainability, reduction of the ecological footprint or even customization of a product or service.
I think it's obvious that Apple can be identified as an example of innovation in the performance of their products. They stand out from their competitors by the quality, design and simplicity of their offer.
System-type innovation consists of establishing a synergy between the products or services offered. This raises the question of how to create complementary products and services. We can stand out from the competition when our offer forms a whole by its components and when there are relationships between them. Grouping several products together and successfully integrating them can be very advantageous.
Take for example Microsoft with its Office suite, which is unquestionably a successful integration of various products. This strong synergy ensures that users buy the complete suite rather than individual products. Microsoft Office is a must-have and Microsoft is comfortably ahead of the competition thanks to this innovation.
The "experience" category
The last category is that of experience, and these types of innovation are visible outside the company. The innovations that make up this category are services, channels, brand and engagement.
And then, how to support and enhance the value of your offer? Service innovations are changing the usefulness, performance and apparent value of the offer. This type of innovation makes the product easier to use, to try, and above all to appreciate. One way to do this is to draw consumers' attention to features that can solve their everyday problems. When done well, this kind of innovation can even go as far as transforming a product that is basically bland and tasteless into an irresistible experience that will help business recurrence. There are many ways to do this, including product improvement, a maintenance plan, customer support, documentation and education.
The example used in the book is that of Zappos which had set a new standard for customer support. The representatives of this company are empowered to do everything in their power to provide a great experience. This includes sending flowers to customers and even spending hours on the phone with them to help them find the right product for their needs. In the event that Zappos is out of stock, they will even go so far as to order it from a competitor to ensure that the product is delivered on time. Amazon purchased Zappos in 2009 for $1.1 billion.
Channel innovation looks at how to deliver your offering to your customers and users. It includes all the ways you connect your company's offering with consumers and users. Despite the recent strong emergence of e-commerce, more traditional channels (e.g. stores) are still important today. This is especially true when you want to create an immersive experience. Channel innovators are finding many original and complementary ways to bring their products and services to consumers.
A very good example of channel innovation is Nespresso. This company has ensured that consumers get their very popular capsules through a variety of channels including their 270 retailers and coffee shops. They also operate kiosks in their partner Macy's and Bloomingdale stores and the famous Nespresso Club as an online solution.
To innovate at the brand level, you have to ask yourself how to represent your offer and your company. Innovations at this level will ensure that consumers and users will recognize, remember and prefer your offer over those of your competitors. They are typically well-thought-out strategies that are implemented across multiple touch points between your company and your customers, including communications, advertising, interactions, channels, employees and partners. Innovation at the brand level can transform a convenience into a product worthy of the highest desires. There's nothing better than being proud to put your company logo on a high quality, premium product!
Virgin is a good example of a company that has put a lot of effort and innovation into their brand in order to establish an undeniable reputation. Since its very beginning in 1970 with the sale of music albums by mail through Virgin Atlantic Airways, Virgin Active and Virgin Mobile, this company, which has now become a global investment group, has become a reference in terms of brand management and innovation.
And finally, how do you encourage consumer engagement? This type of innovation puts forward a deep understanding of the ingrained aspirations of consumers and users. By using this knowledge, it is possible to develop strong connections between your customers and your company. Nowadays, we see this kind of innovation particularly in social media. Companies are increasingly moving away from mass distribution channels to direct interactions in a more organic, authentic and mutual way. When consumers openly discuss how your product has changed and integrated their lives, it is safe to say that there has been an innovation at the engagement level.
A prime example of innovation in engagement is undoubtedly Blizzard Entertainment's massively multiplayer online game World of Warcraft (WoW). This game is immersive and encourages collaboration between players by creating virtual groups with a common goal: destroying the enemy. There are more than 11 million subscribers worldwide. It's quite an accomplishment in terms of commitment!
We've seen the three innovation groups and the ten types of innovation in the book Ten Types of Innovation, which I invite you to read if you haven't already. We have also highlighted an example of innovation for each of these types. Will you be able to have your company innovate under one or more of these types?