Types of Innovation Model
Today we begin a new series of posts on tools and frameworks, in which we will be analysing and describing the models we use in our innovation and branding advisory. The first of our tools and frameworks is the Types of Innovation Model, which helps gathering an open and comprehensive mindsets about the form of innovations within the industry. It also helps identifying the best practices while providing an overview of where most of the competitors are innovating and what is the competitive landscape and battleground.
As an input, starting from a specific industry, we need to identify the players, and what kind of innovations they have been launching. The output is an understanding of how those innovations are playing a role within the industry and what strategic opportunities might be as well as which are the crowded spaces.
Types of Innovation: building the framework
- The Types of Innovation framework is basically a survey. It starts from looking at top players: what they are doing, what kind of products and services they are offering, and whether they are innovating on a business model point of view or launching new futures or services for the products. It collects this information granularly and then summarises, it so that we can generate an industry-wide view. It is not a competitive benchmark and it is not a mere best practice back-engineering. The steps involved in developing the frameworks are the following:First we need to identify the industry, very specifically, by identifying the top players we want to look at. Of course, we want to look at the very big players – if any – driving the volume of the industry. But we also want to look at other players: the more disruptive ones – the ones who are creating buzz if not yet volumes, and are delivering on a promise of growth. For each of those players, we need to identify which innovation they are launching, and we need to cluster these innovations by grouping theme into either one of four segments.
- Finance, which includes business model innovation or networking/ distribution
- Process, which is really about solutions, either enabling a new process, e.g., digitalisation, web based solutions, new channels, or if they are optimising the core process of the company by offering cost savings, time improvement, efficiencies, operation averages, etc.
- Offering, which is more on the marketing and commercial side. This cluster includes three parts. One, is the product performance. Two, is the product system. And three is the service. Product performance is not only about how well a product performs, but also how comprehensive the portfolio is, in terms of delivering benefits. The product system deals with multi-category products – think about healthcare and laundry – where there are multiple products, which are used throughout a process to deliver benefits. The last element refers to servitization, including pre-during-post purchase services.
- Delivery, which takes into account the pure channel side, the pure brand side, and the customer experience. We’re looking here for innovation in terms of channel: from business to business to business to business to consumers to direct to consumers. We’re looking for innovations in terms of customer experience or brand driven For example, licensing beyond traditional innovation – which is very common in the luxury goods sector. This is so your brand gets associated beyond the traditional scope of your industry.
- Once the clusters are identified, we can now move on to make a visual diagram. This is usually done as a bar chart, where we have the clusters on the horizontal axis and the frequency on the vertical axis. The frequency ranges from zero to very high levels. Here, we summarise all the specific clusters and we convert them into a chart in order to understand which side of the high frequency versus the low frequency, etc.
The final step in the Types of Innovation model is really to generate insights and understand opportunities. For example, there might be cases in which the offering is leading innovation in a given industry. This basically means that we are stuck in warfare of features – we are in the Gillette world where we are adding more and more and more blades to our shaving experience. Or it might be that few things are happening in terms of delivering, or only on process, whether it is enabling process or core process. We see for example, when, with enhanced level of digitalisation, there is a peak in channels but there is also a peak in more digital enabling. This allows the backhand of the industry to develop further. This is why this is important: it is giving a comprehensive 360-degree helicopter view of the industry. Rather than a personal, subjective angle of what’s happening, it gives us a more honest answer on what is really driving innovation in an industry.