Like many of the buzzwords that float around the startup landscape, innovation is a perfectly aspirational, yet infuriatingly abstract term. It sounds like something every company should be striving for, yet what exactly that means for you and your business remains elusive.
– Is your product innovative enough? –
– Do you have innovators in your team? –
– Are you working in an innovative industry? –
The more you use the word, the less meaning it seems to have.
The exact definition of innovation however, especially within a business context, is fairly concise, though broad in its applications. Innovation is simply the introduction of something new, and in business, is usually associated with a positive outcome.
However, it remains up to you to define what a positive outcome is for your business.
Here’s some of the different types of innovation in business, and some great real-world examples.
The most straight-forward type of innovation perhaps is product innovation - that is, the introduction of a new product, or a new product feature, to market.
Technological advancement plays a critical role in product innovation as more advanced features and products become available at a lower cost of scale. The Amazon Kindle is a great example of product innovation, as it brought a new level of convenience to book readers around the globe.
Markets can be resistant to change, and in some cases customers reject innovative solutions outright. The DVORAK keyboard was a classic example of a product that all the hallmarks of a game-changing design innovation, only to completely fail to capture the imagination of its market. It turns out that nobody wanted to re-learn how to type.
With product innovation, always take a solutions-orientated approach to new ideas, and never forget that it's your market that decides whether a product is truly innovative or simply a novelty.
Even when the user-end product outcome remains the same, businesses can still gain massive market advantages through business model innovation. Netflix is an example of a company that had massive success delivering a traditional product in an innovative way.
Back in 1997, video rentals were usually offered by brick-and-mortar businesses on a pay-per-rent basis, with large fees for late video returns. Using its flagship subscription model, Netflix delivered flat-fee, unlimited movie rentals with no late charges or shipping costs.
The high business value of this retainer subscription model, coupled with the lower overheads of a delivery business, gave Netflix a significant financial edge in the market at a time when video rentals were waning. By 2015, Blockbuster - Netflix' largest competitor - had downsized from 9,000 stores to 11, and Netflix had eaten up the other 98.8% of their market share.
Even though the end product here remained the same, Netflix used business-model innovation to undercut their competitors and provide a better service at a cheaper cost.
In the startup space, where agility and speed to market are potent success factors, process innovation can give new businesses an edge over competitors. Everything you do in your business is a process (whether you've observed it or not!), and these processes can be modelled and innovated upon to optimize for speed, potency or cost efficiency. Moreover, powerful process innovation can set the tone for new ways of thinking, and have knock-on effects in other areas of your business.
A great example of process innovation is Walt Disney's approach to story brainstorming. Disney recognized that good story ideas didn't appear out of nowhere, and that there was a process for creative imagining and validation that could be mapped, reproduced, and scaled. By breaking down the process into distinct stages, then assigning a unique environment to each stage, Disney built a process that could reliably churn out strong story ideas time after time. The result was a catalogue of classic family movies with their popularity extending over half a century.
In the example above, an innovative approach to process allowed for more creative ideas, which resulted in a more engaging end product.
Innovation in business is an extremely broad subject, but these three models are a great place to start. If product innovation isn't an option for your business, try thinking about how you can invent new working processes that will give you an edge on the competition.
If you have any question, just drop us a line here.