Innovation is an essential component to the success of organizations. It can take many forms and have different ambitions. Innovation can be a formidable competitive weapon or be easily copied. To use innovation as a growth engine, we need, however, to clarify what an innovation is and what its characteristics are.
The author of the theory of disruptive innovation, Clayton Christensen (Seeing What’s Next, 2004), mentions that innovation can be focused on creating or improving the resources, processes or value offered by a business. He notes that the most common innovations are focused on products, services, and processes, while more sophisticated innovations can also affect customer service strategies and business models.
Larry Keely (10 Types of Innovation, 2013) presents innovation as the creation of a new viable offer. Innovation is not an invention, it is not just a novelty, and it can go beyond the product to maximize its impact.
It is even possible to go further by considering the point of view of Tim Brown from IDEO (Change by Design, 2009). For him, it is necessary to approach innovation according to three essential factors. An innovation must be desirable, feasible and viable. An innovation creates value for customers, is technically feasible and economically viable. Focusing only on one of these factors is extremely risky.
Simple vs. Complex
An innovation can also be simple or complex whether it focuses on a single element (product, service, process, technology) or incorporates different elements of the business model or value chain.
The more the innovation is concentrated on a limited number of elements, the more it runs the risk of being quickly copied. That is why it is recommended to go further and include the business model in the reflection of innovation. By broadening the scope of the innovation, it improves its’ robustness, and it makes the offer unique and more attractive to the customer.
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The ambition of innovation – The axes
Innovation can also be incremental, adjacent or radical depending on the degree of unknown factors and the degree of exploration involved.
Incremental Innovation – A
It is possible to improve the performance of existing offers in already known markets. This type of innovation is incremental and is essential. The company’s performance today depends on its ability to improve its offering, constantly better satisfy its customers and respond to attacks from competitors.
Evolution innovation (product or market) – B
Innovation goes further here. The evolution is done through the adaptation of the offer or the market. By considering the exploration of new markets for which it is possible to adapt current offers, or by exploring new offers in known markets, the innovation is evolutionary. It requires the exploration of new avenues.
Radical innovation – C
It is also possible to see, although more rarely, radical innovations. These focus on the creation of a new offer and a new market to respond to a new problem.
More and more it is possible to observe that companies working and exploring the different axes are more successful in managing an innovation portfolio. It is then possible to work on both the present and the future of the company. Many of them are developing strategic agility, which is a key competency.
These types of innovation are different from disruptive innovations that are focused on existing markets or offerings. Disruptive innovations enable companies to offer a more economical or user-friendly alternative to customer needs that are poorly addressed or abandoned by market players.
It should be noted that the competitive response from the companies targeted by the new players will dictate the success or failure of new entrants.
Read more: Clayton Christensen – Key concepts
Strategic impact and culture
Innovation supports the company’s strategy and can develop a competitive advantage. That is why it is so important to manage the approach, the process, and be proactive in the innovation efforts. To grow, develop the business and to protect it from new entrants.
It is important to create a favorable context for innovation and to make it a priority. It is about developing the learning capacity of the organization, enabling experimentation, allocating the necessary resources and managing multidisciplinary teams through programs under the responsibility of a member of the senior management.
By developing a culture of innovation, the search for efficiency in day-to-day operations can be in balance with the search for future growth engines.
Read more: How’s your strategy? 5 key questions
Innovation plays a key role in the success of organizations. Those who develop, articulate their practices, and focus on different areas of innovation seem to develop a clear advantage.
We recently surveyed leaders of Canadian companies to learn about their innovation practices and the impacts on the success of their business. The results are available here.