The 10 types of innovation

Many times we ask ourselves…. How many types of innovation are there? Since there are many people who have asked me that question, I would like to share a general mapping of the types of innovation that I share according to the book called "The Discipline of Building Breakthroughs" written by Jay Doblin who was a consultant on these issues many years ago.

In his book, Jay Doblin indicates that in order to write this book, he analyzed more than 2,000 companies for over 40 years, including IBM, Amazon, and Ford Model T, to determine innovative movement patterns within successful companies, but also how innovation fails. The first thing I noticed was that innovative efforts fail due to lack of discipline, not creativity. Innovation must be treated with the same rigor with which we treat, for example, neurosurgery. In the book, we find ways to fix the causes of innovation failures, how to find the right level of research for a topic, and how to reduce the risk of even the most complicated parts of innovation.

Those who are more frequent followers of what I have written may know the Oslo Manual, well ... This manual recognizes 4 types of innovation categories:

1. Organization
2. Process
3. Product
4. Marketing

Nevertheless; Jay Doblin in his book grouped the 10 types of innovation into three blocks or categories, as you can see in the following graphic:

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Setting

Everything that has to do with the structure of the organization. It is the internal part, which reflects innovation in processes, in organizational methods and in the business model.

Offer

This section includes innovations in traditional products. The opportunities of companies to offer different products or services in the market.

Experience

This last section includes a combination of product innovation and marketing. How can we differentiate ourselves in the experience we offer to our customers.

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Once the table is analyzed, we will explore the areas with potential for innovative ideas from these 3 categories below:

SETTING

The configuration is related to the profit model, the business structure and the process. This is considered the core of the business and the backend of the innovation process. This section lists four types of innovation.

1. Business model: The generation of profits

This is the way your company makes money, the central focus of your business model. A good example is Airbnb, which disrupted the hospitality sector by creating a platform that connects hosts with people seeking accommodation, offering unlimited options, for all budgets, worldwide. They earn a fee for each reservation even if they don't have any rooms.

The Dell company revolutionized the business model of the personal computer industry by collecting payment before the computer was assembled and ready for dispatch, generating a positive net flow of seven to eight days.

2. Network Development: About how the assets and competencies of others are combined to create value

This is perhaps one of the most fashionable types of innovation today

How can you innovate in the relationship with alliances and networks abroad, as it has a lot to do with applying an open innovation strategy.

Your company must make alliances with the industry, artists, influential people who can make your business stand out, people from whom you can learn, access its technology and resources. It is imperative to create collaborative networks and for example open innovation is an excellent example of creating productive networks. Companies adopt a startUp to use their cutting-edge ideas and technology to develop innovative products, test and launch better products faster.

A success story is Natura; a Brazilian cosmetics company that has 250 people in its R&D team. However, it is able to compete in the development of new products thanks to alliances with 25 Universities that generate 50% of its products in its open innovation system.

3. Organizational structure: On how the assets and talents of an organization are organized

Flat structures are increasingly sought, with less hierarchies and more collaborative work. Because in a world where robots come to replace repetitive work, the big difference will be in intangibles and in new models of organizational structures.

In this case, talent will be the big difference between some companies and others. And the important thing is not to attract it, but to retain it.

Buurtzorg is a Dutch company providing home health services that is managed through autonomous teams of nurses, which allowed to reduce its administration cost and use only 40% of the hours prescribed by doctors generating savings in services.

4. Process: On proprietary methods of how work is done

Process innovation involves creating methods that will set your business apart from the competition. From a Mckinsey study, he found that fast fashion companies like Inditex or H&M that have dramatically reduced production time, from sketch to final product, innovate in the fashion industry with the diversity and abundance of options offered. to the clients. Zara for example; offers 24 new clothing collections per year; H&M offers from 12 to 16 and updates them weekly.

IKEA is a Swedish company that optimized the way it manufactures and markets its products through a standardization of its modular units, the use of the same set of materials for assembling furniture, the same product catalog in all regions and a self-service system so that customers can collect their purchases.

OFFER

This category of innovation focuses on the offer of products and services.

5. Product performance: On distinctive attributes and functionalities

Optimizing processes has been perhaps one of the usual types of innovation of many companies. You always have to reduce costs, to maintain prices, given the price increases of raw materials. Maybe some tools sound like Lean Manufacturing or Six Sigma.

This type of innovation focuses on the characteristics of the product and the value offered to customers. Apple is a great example of innovation in terms of features, functionality and design. They charge a higher price, but the products and their universal design have had a loyal following since its launch.

Corning, the North American company that manufactures high-resistance materials and products, developed Corning Gorilla Glass, an ultra-resistant, thin, and scratch-free glass for a mobile application that was later applied to television screens, PCs and tablets in 33 different brands in more than a billion devices globally.

6. Product system: On the complementarity of products and services

It is the innovation par excellence, the most popular and the one that appears in the news. How can I offer something differential and fast to the market. The application of all disruptive technologies is the key lever to develop this type of product, always starting from the user's needs.

A powerful way to innovate is to create complementary systems around the main product offering to strengthen your market position and increase brand awareness. Nike expanded the product offering with applications and instruments that increase brand exposure. The Nike Connect app is a combination of innovative and trendy digital technology that connects fans with exclusive offers and events. It also helps NBA fans to access tickets, Apple music playlists of the athletes themselves, and offers fans a great way to access their games.

High speed studio photography, moment of the impact of a bullet on a classic electric bulb. Detail of glass explosion, blue and purple lighting. Concept of obsolete energy.

EXPERIENCE

How is the user experience innovated and how is a great customer / product interaction created?

7. Service: On how value is provided to customers around and beyond the offering

Starbucks is a company that offers a service experience that goes beyond coffee and that generates loyalty from customers who appreciate personalized attention and the feeling of being at home, creating a third social space, different from home and work.

Create an innovative experience for the client, first, by understanding the needs of the client (Wifi needs). Use this insight to make the overall interaction with your product or service rewarding.

Burberry has introduced a way to sell products directly from the online website, while the presentation of the new collection is airing. Customers can also customize the items and be the first to buy the latest products.

8. Channel: About how offers are delivered to customers and users

We live in an “omnichannel” world, in which all possible channels are integrated into one to offer a unique user experience.

M-pesa is a social enterprise in Kenya that allows clients to transfer money through their mobile phones, saving time and transaction costs. M-pesa currently has more than 30 million users in Kenya, Tanzania and Mozambique.

Using a subscription model, Sisley created a personalized beauty box of makeup, hair care and skin care products that is delivered directly to the client monthly.

9. Brand: How the offer of the company and the company itself is represented

Surely many brands come to mind where what you buy is not a product or service, but the relationship with the brand. From basic products like Coca-Cola (€ 0.6 / can) to a Ferrari.

It is important to emphasize that it is not only about innovating in external branding but also in what is called employer branding (making the company attractive to employees).

Your brand is one of your most valuable possessions. It is a set of values, beliefs, traits, characteristics. It is the way in which your product is perceived by people outside the company. Apple maintains a leadership position because it has a strong brand identity and clearly defined values ​​that people identify with.

The British company Virgin has extended its brand to products as diverse as telephone, airline and retail services. The "Intel inside" strategy was designed to protect micro-processor innovation in computers.

10. Engagement with the client

One of the most complex types of innovation to achieve is the emotional bond of the client with the company. Someone become a fan (or evangelist) and not only buy and buy your product, but also be able to sell it to other people.

I have personally lived this experience with 2 brands: with U2 and with Adidas. In both cases there has been a fit of my values ​​with theirs, in such a way that the price comes to the background in many cases. I enjoy any contact with the brand (social networks, stores, products).

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CONCLUSIONS

According to the promoters of the 10 types of innovation, the greatest returns on investment exist in the Business Configuration and Customer Experience categories, given that they are the least used by companies.

This article aims to highlight the areas in which your company can innovate and help you differentiate yourself from the competition.

The most successful cases of innovations are related to the configuration of platforms that allow to assemble at least 5 types of innovation that allow to facilitate a complex task for a growing and relevant group of clients. A clear example of this is the Amazon Prime initiative that combines innovations in business models, in the logistics chain, in the customer experience, in the packaging of various services, etc. All these innovations generate an advantage that is difficult to imitate by other companies that generate sustainable profit margins over time.

Are you going to look for ideas related to product or branding or the collaboration network?

One of the questions you must answer in your strategic innovation plan is what kind of innovation are you going to orient towards.

How could we develop new support services that reinforce our products?

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