Innovation is often considered in quite one dimensional ways, and yet it is of-course a multi-dimensional thing. In their book 'Ten Types of Innovation: The Discipline of Building Breakthroughs', the authors Larry Keeley, Ryan Pikkel, Brian Quinn, and Helen Walters identified ten distinct types of innovation. It's one of the best representations I've come across of just how multifaceted it is. They make the point that whilst many executives have traditionally associated innovation with the creation of new products, in isolation this will often bring the lowest return on investment and least competitive advantage. Integrating multiple types of innovation enable organisations to develop offerings that are more highly differentiated, less easy to copy, and that generate higher returns.
The ten kinds of innovation (and I'm paraphrasing here) are:
- Profit Model: How you make money. Innovative profit models will often challenge an industry’s conventions on offering, pricing or revenue generation and they have significant potential since in manu industries the dominant profit model might go unquestioned for decades
- Network: How you connect with others to create value. Network innovations enable companies to capitalise on their own strengths whilst harnessing the advantage that might be derived from the capabilities and assets of others. This might include sharing the risk associated with the development of new capability.
- Structure: The organisation and alignment of talent, resource and assets. Structure innovations can create unique value or efficiencies. They can improve productivity and collaboration, help attract talent to the company, and drive performance
- Process: Developing and implementing unique or superior methods. Process innovations involve a significant level of change from ‘business as usual’ that can drive greater capability, adaptability or efficiency. The development of unique processes can prove difficult for competitors to access and can yield advantage for extended periods of time
- Product Performance: the development of distinguishing features and functionality. This might speak to completely new products, or significantly improved features, qualities to existing ones. This is arguably the most visible and easiest form of innovation for competitors to copy, and so is harder to derive longer-term competitive advantage
- Product System: the creation of complementary products and services. This is concerned with how separate products or services might be brought together to create new capability or improved scalability. So things like integration, modularity, interoperability are what matter. The development of ecosystems that take value from one place and use it to enhance experience at another is one example (sound familiar?)
- Service: supporting and amplifying the value of your offerings. Enhancing performance, utility and loyalty through improved design or service provision, fixing customer pain points and helping to ensure seamless customer journeys. This can elevate the average into the exceptional, and create a compelling experience.
- Channel: The way in which your offerings is brought to customers. Channel innovations are focused on finding new or multiple ways to bring products and services to users, creating an extraordinary experience with minimal friction
- Brand: The representation of your offerings and business. Innovations in the way that consumers might recognise, recall or associate your brand, the distinct identity and ‘promise’ of your offering. Often incorporating multiple customer touchpoints, these can confer value, meaning and intent to the offering.
- Customer Engagement: Fostering compelling interactions. The development of more meaningful customer connections derived from deep understanding of customer aspirations, needs and desires. Helping people to “find ways to make parts of their lives more memorable, fulfilling, delightful — even magical”