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I was recently asked for advice by a friend regarding buying a DSLR camera. He was getting a wonderful offer. He always wanted to take photographs like the pros with big lenses. After going through the needs, we concluded that despite the DSLR being a fantastic offer, it made little sense to buy. A great product at bargain pricing, but completely irrelevant to the customer needs.
The digital camera industry is going through such a transformation phase. We have manufacturers producing great cameras that people were screaming for half a decade ago. Image quality and pixels counts that were part of a photographer’s dreams have become reality. And at prices that are lower than what used to be possible. Yet demand is down and the industry future is looking bleak.
Every offering (and the industry as a whole) goes through 4 stages genesis, custom-built, product, commoditization and eventual decline.
As an organization, you have a choice to be the victim or change this cycle. You could be the one to make sure you have products that continue to remain relevant for customers. And when you don’t know the answer, innovation is usually the solution.
First, some myths about innovation, that need to be busted
1. Reducing the price will not make your product relevant, it will surely make you bankrupt
2. Innovation doesn’t mean a fancy new thing, an invention. Business innovation is about new value, not new things
3. Innovation is not expensive, NOT innovating is. Your business may not survive without innovation
4. Innovation isn’t a result of a creative spark, an “aha” moment or the result of a genius mind. It’s the result of systematic process and strategy.
Nagji & Tuff in 2012 came up with a variation of Ansoff Matrix called the innovation ambition matrix. They theorized that there exist 3 levels of innovation ambition
1. Core innovation – How can we innovate my existing offering to create new value?
2. Transformational innovation – How can we develop breakthroughs and create new value for markets, that doesn’t exist today?
3. Adjacent innovation – How can we straddle the two – create disruptive concepts and technologies that leverage the core?
An ideal strategy would be for an organization to be working on all three levels of ambition. This article is about how we do this. There are systematic approaches possible for all three levels of innovation ambition.
How to deliver Core and Adjacent innovations
Delivering core and adjacent innovations involves going beyond product innovation, doing it continuously and with rigour. Trott and later Keely et al have shown that innovations can be multiple types, that can be bucketed into 3 broad categories
1. Configuration Innovation – the way we organize the business model, networks & alliances, the core processes and the structure
2. Offering Innovation – the way we innovate the product performance, the product system or the services
3. Customer Experience innovation – the way we innovate the delivery channels, brand experience or the customer engagement
We find that the most powerful way and easiest way is to systematically explore the different ways we can use technology and customer insights to create new value on each of these elements. We have discovered that by seeking solutions for unique “How Can We” questions, it is possible to come up with solutions that result in core and adjacent innovations. The book 10 Types of innovation by DU Press is a veritable gold mine of examples.
It’s possible with the sprint approach to deliver individual innovation projects using this approach in a short period.
How to initiate and deliver transformational innovation?
Delivering transformational innovation is a challenge of initiating and subsequently, executing. Getting an organization to move out of its current focus and focus on the future is not the easiest of things. Several uncertainty and questions that need to be answered for this to happen, exist.
· Do we have a burning platform or the necessity to start a transformational exercise?
· What is the future that we are working towards?
· What are the key elements that will drive us?
· What resources do we need?
· What competencies do we require?
· How do we execute this?
The list is long. Transformational innovation requires strategy and process to deliver.
We believe that for transformational innovation to happen, the organization should start with the vision of the future and how to get there. This requires a series of steps
Step One: Identify possible issues linked to the driving force or forces that impact the present and future.
Step Two: Specify a time frame―for instance, three years from now.
Step Three: Define two or three extreme potential outcomes within the time frame.
Step Four: Finish by working backwards to understand possible plots or evolvements that can signal that the scenario is about to happen.
Step Five: Analyze what recommendations the scenario would mean
Scenario planning allows you to build the narrative essential for the transformation journey and provides you with the answers to the WHY question. Once the why is answered, of course, it becomes easier to mobilize resources and enrol people to the cause. However, having an innovation management system becomes important.
This requires the organization to make sure the following
· There is a governance structure in place
· Innovation competencies and capabilities are developed
· Innovation process and toolkit exists
In short, innovation is the answer to the question how do you ensure your organization continues to stay relevant today and in the future.
Hope this is thought-provoking. Do reach out to me if you would like to discuss further on the topic.
Krishnan Naganathan
Krishnan is a leading innovation consultant and focuses on helping people and organizations innovate and build capabilities for innovation. He brings over 25 years of experience in the industry and consulting. You can reach him by phone / WhatsApp: +919791033967 or email: krishnan@thinkhorizonconsulting.com
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