Types of Innovation

Last week our article focused on the four types of innovation: standard, specialized, extraordinary and breakthrough innovation. This week we are going to examine some of the areas in which we can apply innovation.

 Tired of reading already? Click here- LISTEN TO THIS ARTICLE. Process Innovation
Innovation isn’t always about changing the product or service itself. Innovation can and should occur in several different areas of business development. We can create innovation in processes as well as in product design. In fact today, this is softer but a far more powerful way to innovate. 

Internal Innovation
Many organizations have gained market advantage by innovating internal variables such as their production process, delivery, technical support or customer service elements. Look at how retailers like Home Depot, Wal-Mart, Ikea and Amazon have innovated the shopping process. All the very latest and coolest stuff, major brands priced with razor thin margins, all in one place and you can have it in seconds. 

External Innovation
External innovation includes building improvement into the selling process, the branding strategy or the marketing approach. In order to create a world class product, service or company we must build innovation into many areas of our business, that is the internal elements as well as the external ones. Because of the competitive nature of nearly every product or service category today, innovation is often a very effective force when applied to the areas of marketing and branding. Think of how Harley Davidson has innovated the image of a “biker.” Now bikers wearing denim and leather are more likely to be Federal Circuit Court Judges and brain surgeons than the wild hoodlums of just a decade ago.

Innovation Defined
Please don’t confuse innovation with invention. They sound similar but they are very different forces. It is a term of economics rather than technology. Webster’s defines innovation as, “a new device or process created by study and experimentation.” It’s interesting that the word “experimentation” appears in the definition. Sometimes we need to experiment in order to discover the correct innovation. Peter Drucker, in his book, The Essential Drucker, says, “The most productive innovation is a different product or service creating the new potential of satisfaction, rather than an improvement.” He goes on to conclude, “In the organization of the business enterprise, innovation can no more be considered a separate function from marketing. It is not confined to engineering or research but extends across all parts of the business, all functions, all activities. Innovation is ultimately the task of endowing human and material resources with new and greater wealth.” Drucker obviously understood the concept of heart share back in 2001 when his book was published.

The Transformation of the Lowly Paper Clip
You may be saying, “Hey wait!  I’m in a price sensitive, commodity oriented industry. That kind of innovation won’t work for me.” Believe me I’ve heard that before – only about 1,000 times. While there may be very few commodity oriented businesses where innovation is impossible or unnecessary, every business can innovate to some degree. Think of the lowly paperclip. How innovative can you get with paper clips? That being said, even paper clip manufacturers are innovating these days. I have seen some pretty creative paper clips lately. I’ve seen colored paper clips, stripped paper clips, day-glow paper clips, uniquely shaped paper clips, magnetic paper clips and so on. Therefore I believe innovation applies to all industries and business categories. We should always be looking for ways to innovate. 

Innovative Bureaucrats
But what about monopolies? Who needs innovation when you own the entire market? You might not expect innovation from government agencies like the IRS or the post office. But have you called the IRS lately? They actually answer the phone and are knowledgeable, courteous and rather helpful. I found out the reason for this is the massive innovation program they are in the midst of. How about the postal service? I encourage you to visit their web site? You will be shocked at the level of attention that has gone into branding, communication and customer automation. Folks like Fedex and UPS have forced them to innovate for the sake of survival and now they are pushing the envelope and again becoming market leaders. If Bureaucrats can innovate so must you and I.

In what areas of your business are you creating innovation? What can you do to expand this effort? If you are achieving internal innovation, what can you do to apply innovation to the external functions? Creating innovation is no longer a luxury, it is a pre-requisite to continued existence in today’s lighting fast economy.

Posted in Growth Strategies, Uncategorized.

Leave a Reply

Your email address will not be published. Required fields are marked *