9 Innovation Concepts & Methodologies to Embrace, Consider or Rethink
For decades, the key challenges on innovation management in large companies have evolved around four elements; strategy, structure/approach, culture and people. This has been a constant, but the innovation concepts and methodologies keep changing and they continue to impact how we deal with the key challenges.
Here I give you my views on the concepts that I think corporate innovation teams need to embrace or consider (they are fairly new) and those that you need to rethink (they have been around for a while and some adjustments are needed).
COMPANIES SHOULD EMBRACE…
Business model innovation:
According to Wikipedia, business model innovation refers to the creation, or reinvention, of a business itself. Whereas innovation is more typically seen in the form of a new product or service offering, a business model innovation results in an entirely different type of company that competes not only on the value proposition of its offerings, but aligns its profit formula, resources and processes to enhance that value proposition, capture new market segments and alienate competitors.
The focus on business model innovation really took off with a book by Alex Osterwalder and Yves Pigneur. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers is an easy to approach guide that explains the most common business model patterns and inspires you on how you can apply them in your innovation process.
I often say that companies need to have a more holistic approach to innovation that goes beyond products and technologies. Well, that is what business model innovation is all about.
The new corporate garage:
Big companies will become more competitive than ever and in this HBR blog post, Scott Anthony, states that three trends are behind this shift:
“Three trends are behind this shift. First, the increasing ease and decreasing cost of innovation mean that start-ups now face the same short-term pressures that have constrained innovation at large companies; as soon as a young company gets a whiff of success, it has to race against dozens of copycats. Second, large companies, taking a page from start-up strategy, are embracing open innovation and less hierarchical management and are integrating entrepreneurial behaviors with their existing capabilities. And third, although innovation has historically been product- and service-oriented, it increasingly involves creating business models that tap big companies’ unique strengths.”
Scott Anthony is one of the leading innovation minds and I think he is spot on with this. Big companies are about to kick small company butt when it comes to innovation.
Many people ask what open innovation is. I suggest that you view open innovation as a philosophy or a mindset that you should embrace within your organization. In a more practical definition, open innovation is about bridging internal and external resources and act on those opportunities. The value proposition (better innovation to market faster) this gives companies that get it right is simply too good to miss out on.
I also like this quote from Henry Chesbrough; “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology”
Open innovation is often viewed as an umbrella term that also includes crowdsourcing, user-driven innovation and co-creation. In order to avoid too much confusion on semantics, I suggest that we focus on what really matters here; bring external resources into your innovation process.
COMPANIES SHOULD CONSIDER…
The lean startup methodology:
Eric Ries, the key thought leader on the lean startup methodology, states that this is a movement that is transforming how new products are built and launched. His initial focus was start-ups, but he is definitely right in also pursuing this for big companies.
Some of the key ideas behind the methodology are: fail fast – fail cheap, “Can we build a sustainable business around this set of products and services?” and develop a minimum viable product to begin the process of learning as quickly as possible.
Social media for innovation efforts:
Yes, this is one of my favorite personal topics, but it is also something that is picking up interest among clients, in blogs/media and at conferences. The intersection of social media tools and (open) innovation is still at the very early stages, but it will become increasingly important as open innovation takes hold. One reason is that the future winners of innovation know how to make communities (virtual and physical) work and a social media will be a key driver for this.
You can read more on this in my latest book: Social Media for Corporate Innovators and Entrepreneurs: Add Power to Your Innovation Efforts
Reverse innovation is an interesting concept / book that helps us understand what it means to develop in emerging markets first, instead of scaling down rich world products, to unlock a world of business opportunity.
Vijay Govindarajan and Chris Trimble based their concept on these three key elements:
1. You must innovate, not simply export, if you want to capture the mammoth growth opportunities in the developing world.
2. The stakes in emerging economies are global, not local. Passing up an opportunity in the developing world today may invite formidable new competition in your home markets tomorrow.
3. Legacy multinationals must rethink their dominant organizational logic if they are to win in an era of reverse innovation.
COMPANIES SHOULD RETHINK…
Clayton Christensen was one of the first innovation thought leaders that really came across to a bigger business audience. His ideas and concepts on disruptive innovation are still relevant. However, I wonder how the increasingly speed of change and globalization impact this. Is it getting easier to pursue radical or disruptive innovation? I don’t think so, but on the other hand I think it has become more difficult to defend an existing business against disruptive innovation.
I think this is an interesting paradox that goes back to the ideas of the new garage by Scott Anthony and I continue to ask myself this question: What if big companies could become better at disrupting themselves?
Crossing the chasm:
This is a classic by Geoffrey Moore. He does a very good job of describing the five main segments of the technology adoption lifecycle of: innovators, early adopters, early majority, late majority and laggards.
I still think these ideas are valid, but again, how is the speed of change and the higher focus on business model and open innovation movement impacting this?
Blue ocean strategy:
Hmm, what happened to the idea of creating blue oceans of opportunities where you do not have any competitors? The idea sounds intriguing, but I wonder why I never meet any companies that actually used – and succeeded – with this methodology. Their community is still active so maybe I just miss out on some good stuff here.
There are of course many other concepts, methodologies and approaches for driving innovation in big companies, but I had to make some choices. Let me know what you think of this and please feel free to argue why others should be on this list.
image credit: hand pushing image from bigstock
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Stefan Lindegaard is an author, speaker and strategic advisor who focus on the topics of open innovation, social media and intrapreneurship.
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I would like to add three of my methodologies into the mix for conversation:
1. Value Innovation Methodology
— Value Creation + Value Access + Value Translation
2. Eight I’s of Infinite Innovation
3. Nine Roles of Innovation
— Exciting news on the Nine Innovation Roles coming here on Monday
Always happy to hear people’s thoughts on any or all of the three.
All the best,
Some great references to innovation principles here. A couple of comments:
It’s true that it’s getting harder for existing businesses to defend disruption. That’s the point of Clayton Christensen’s theory; that market leaders in existing industries will find it hard to defend disruption as their resources, values and processes will hinder any strategy to address disruption. He believes the only way to succeed is for incumbents to create independent businesses with separate management, resources, processes and ideally (although not necessarily) other investors.
Regarding Blue Ocean Strategy: it is most certainly time for a follow up book from the professors with updated case studies. To enlighten you, some companies using BOS methodology include: Nintendo, Samsung, AirAsia, Tata Motors, China Mobile, Casella Wines, Starwood Hotels.. to name just a few. There are also many others who wish not to be mentioned.
Thanks again for a great article.