The essence of innovation

Meaningless?

Innovation: the term has almost started to lose its meaning because over the last few years it has been used anywhere and everywhere, whether relevant or not. However, in its core, the concept has not lost its meaning – if anything, it has become increasingly important over the last decade.

Types of innovation

Creating new products is only one way to innovate, and probably not the most profitable one. Larry Keeley and colleagues discovered that all great innovations in history comprise some combination of ten basic types of innovation:

• Profit model – how you make money
• Network – how you connect with others to create value
• Structure – how you organize and align your talent and assets
• Process – How you use signature or superior methods to do your work
• Product performance – How you develop distinguishing features and functionality
• Product system – How you create complementary products and services
• Service – How you support and amplify the value of your offerings
• Channel – How you deliver your offerings to customers and users
• Brand – How you represent your offerings and business
• Customer engagement – How you foster compelling interactions

The Ten Types of Innovation model can be used in many ways: as a diagnostic tool to analyze your internal approach to innovation, to analyze your competitive environment, to reveal gaps and opportunities for doing something different, etc.

Anyone interested in the subject is advised to read Ten Types of Innovation , Keeley’s book about the model that has influenced thousands of professionals and businesses throughout the world since its introduction in 1998. 

Of course, a myriad of theories and models for innovation have been developed over the years, and as there is no proven recipe for success, any business leader should decide what type of approach works best for their specific situation.

Need for innovation strategy

The fact remains that most of today’s leaders are very much aware of the need for innovation to ensure the future of their business. However, actually building and maintaining the capacity to innovate remains challenging. According to Gary Pisano, Professor of Business Administration at Harvard Business School, the problem with innovation improvement efforts is rooted in the lack of an innovation strategy.

In a recent article in Harvard Business Review Pisano argues that without an innovation strategy, innovation can easily become an incoherent collection of best practices, rather than a coherent innovation system of interdependent processes and structures that dictates how the company searches for new problems and solutions, and incorporates them into their business concept.

Another problem Pisano addresses is that without a clear innovation strategy, different parts of an organization can easily wind up pursuing conflicting priorities – even if there is a clear business strategy.

So how do you build an effective innovation strategy? Pisano discerns four essential tasks:
1. By answering the question ‘How are we expecting innovation to create value for customers and for our company?’
2. By creating a high-level plan for allocating resources to the different kinds of innovation.

3. By managing trade-offs – only senior leaders can make the choices that are best for the whole company.

4. By recognizing that innovation strategies must evolve. It involves continuous experimentation, learning and adaptation.

Testing your own innovation

It remains an intriguing question: what separates successful innovators from the rest? Marc de Jong, Nathan Marston and Erik Roth, all principals at the McKinsey Global Institute, asked themselves the same question and embarked upon a multiyear study , in which they researched more than 2,500 executives in over 300 companies, in a broad set of industries and countries.

They found every company that is a high performer in product, process or business model innovation has a set of eight essential attributes (see model above). Looking at these eight essentials, and using them to test your own innovation strategy, will help you assess your own company to see whether you truly innovate.