The rate at which globalisation is constantly changing the external landscape has underlined the strategic importance within organisations to develop capabilities that ensure the continued process of seeking out all forms of innovation to keep the competitive advantage in the commercial marketplace because when innovation is created and implemented, marketplace needs are met and when met successfully, value is created.
Innovation falls into two types of collaborations, ‘formal’ and ‘informal’. Informal is the wider range of common participation in problem-solving and can be extended to a very wide audience, whilst it is argued that formal collaboration brings about a greater concentration in the transfer of knowledge and also results in greater leaps in solutions. Equally another characteristic of innovation looks at the incremental or radical rate of change needed. Incremental refers to the small steps needed to improve a product or service to remain competitive, whilst radical implies a more turnaround model where the product or service has to be significantly changed.
All sources of innovation are insightful and progressive in their nature and here we look at just a few of the different types that have a huge persuasion in organisations whilst equally having some of the biggest impacts on the world.
The importance of open innovation is widely accepted as being the main component to create business value. The popularity of open innovation has transpired due to the great importance that social, economic, and environmental factors have greatly contributed to a company’s objectives. A concept moving away from traditional thinking that once considered that innovation is an exclusively an internal process and work towards and acknowledging that ideas and creativity can equally come from outside the organisation and bring alternative fruitful thinking. Open innovation has had to engage in activities that include learning by interacting and learning from each other from both internal and external sources. An amazing example of open innovation is the company Openideo that has created an open innovation platform (similar to crowdfunding) that reaches out to global audiences, addressing innovation in global challenges for social good. A platform we can all contribute to encapsulates innovation in specific projects making a difference around the world, proving the point of diverse open collaboration working on innovating projects that make a positive impact.
Lead User Innovation
Considers the idea that it is often the user/s of innovative products and services that provide the greatest feedback for organisations to further research and develop until the final product or service is achieved. A concept coined in 1998, acknowledged that there will always be more users of innovation than there are testers and developers and therefore the most obvious place for feedback and innovation improvement will reside with the user. As an example of this, is to consider the development of a piece of ‘software’ or ‘equipment’ process that will really benefit from feedback from the actual users that have deep experience in older, previous models and really knows the ‘special element’ that would bring about a ‘light bulb’ moment and potentially revolutionise that particular industry………..
Now, this all sounds very simple, yes?
No – There is a flaw with this source of innovation because on one hand, manufacturers and organisations need to keep their innovations broadly available in the marketplace in order to remain viable, get thoroughly tested and to receive the greatest range of feedback, yet this subsequently means that they are unable to keep their innovations secretive to competition and with exposure to the world, ideas are likely to be stolen. When all organisations are focussed on gaining a competitive advantage, this mode of user feedback provides a challenging conundrum.
Understanding disruptive innovation is when there is an introduction into the marketplace of alternative new forms of products and services with slow incremental changes, challenge the incumbent’s expensive option. History suggests that disruptive innovation occurs in marketplaces that have been often ignored by the incumbent leaders.
As the disruptors gain a foothold in the market, by simplifying, generating affordable alternatives then marketing the incumbent’s target market, they can potentially result in the erosion of share price of the incumbent business as the new rivals proposition eventually reshapes the market. This can be witnessed in the airline industry as low-cost flights disrupted and shaped that industry, equally in the mobile phone industry that has seen aggressive-disruptive product innovation consistently challenge the status quo.
One of the cycles of product disruptive innovation, that demonstrates the process of elimination can be shown here in these three steps:
1. The era of ferment: When there is a flood of businesses ideas and entrepreneurial ventures into the marketplace, that results in a fermentation process of several prototypes with wide-ranging degrees in stages of development.
2. The shakeout: Is traction in the marketplace, as the most prominent designs emerge on top. The results in the ‘shakeout’ of designs witnesses a series of mergers and acquisitions to reduce the number in competitors whilst other designs phase out or step aside.
3. End of growth: As saturation eventually occurs in the marketplace, designs mature and become difficult to make incremental changes and growth become slow. This stage typically generates a fresh breed of entrepreneurial spirit that looks forward to the next generation of concepts with fresh and radical innovation.
And so the cycle continues to evolve and as a business, you have to weigh up if you are prepared to……disrupt or run the risk of being disrupted…………………..
Whilst most people think of innovation being focussed on products ie, mobile phones, computer software, hybrid cars, all that have immeasurably changed the way we operate our lives, innovation is not exclusive to products and is as important in the service sector. However, unlike products, services depend on customers engaging with and encountering differing levels of experience and as services are intangible, they, therefore, are more difficult to innovate than products, for example reading emails or listening to the radio, both supplied by service providers.
Alternatively, the concept of creating joint ventures between the local authorities and the private sector has been exposed by the UK government as a perfect example of service innovation as collaborative initiatives have allowed local authorities to raise additional revenue by being both housing developers as well as land vendors. Cormac in Cornwall is an example of this hybrid mix that witnesses service innovation initiatives between the local authority and their own private company.
The Bottom Line
Regardless of the range or level of service or product innovation provided a business, this out-looking approach creates value for the company. There is a strategic need for leaders of organisations to encourage and develop innovation in all forms. If you are struggling to see the way forward in development or need help identifying these opportunities, S.M.A.R.T Turnaround are leading experts in extracting value and aligning innovation with the long-term health of the organisation. To see how we can reshape your business with the latest innovative thinking by contacting us today!