It’s inevitable that every company must be out there battling for market share, but you don’t really want to be in a situation where the competition is so stiff that any potential upside is eroded away in the process – a scenario known as perfect competition in economics.
To avoid perfect competition, companies must strive to build an economic moat that gives them a sustainable competitive advantage over time. While these protective moats can arise from a number of different sources, in today’s information economy they most often arise from the power of innovation.
But where does innovation come from, and is there a universal framework that can be applied to help consistently make big breakthroughs?
The 10 Types of Innovation
After examining over 2,000 business innovations throughout history, a Deloitte owned company (Doblin) uncovered that most breakthroughs don’t necessarily stem from engineering inventions or rare discoveries.
Instead, they observed that innovations can be categorized within a range of 10 distinct dimensions—and anyone can use the resulting strategic framework to analyse the competition, to stress test for product weaknesses, or to find new opportunities for their products.
Here are the 10 types of innovation:
# Innovation Type Description
1. Profit Model How you make money
2. Network Connections with others to create value
3. Structure Alignment of your talent and assets
4. Process Superior methods for doing your work
5. Product Performance Distinguishing features and functionality
6. Product System Complementary products and services
7. Service Support and enhancements around your offering
8. Channel How your offerings are delivered
9. Brand Representation of your offerings and business
10. Customer Engagement Distinctive interactions you foster
Innovation Types #1-4: “Configuration”
According to Doblin, the first four types of innovation centre around the configuration of the company, and all the work that happens “behind the scenes”.
Although innovation types in this category are not directly customer-facing, they can still have an important impact on the customer experience. How your company and products are organized can have a crucial downstream effect, even enabling innovations in other categories.
Innovation Types #5-6: “Offering”
When most people think of innovation, it’s likely the offering category that comes to mind.
Making improvements to product performance is an obvious but difficult type of innovation, and unless it’s accompanied by a deeply ingrained company culture towards technical innovation, such advancements may only create a temporary advantage against the competition.
This is the part of the reason that Doblin recommends that companies focus on combining multiple areas of innovation together—it creates a much more stable economic moat.
Innovation Types #7-10: “Experience”
These types of innovation are the most customer-facing, but this also makes them the most subject to interpretation.
While other innovations tend to occur upstream, innovations in experience all get trialled in the hands of customers. For this reason, intense care is needed in rolling out these ideas.
Making Innovations Happen in Your Organization
How can organizations approach the 10 types of innovation from a more tactical perspective? Drilling down a level it is easy to produce a list of over 100 tactics that correspond with the aforementioned framework.
Infintec – an innovative approach to innovation
It is important that a company doesn’t unnecessarily limit its thinking when it comes to identifying ways in which to create a sustainable USP.
However, it is critical that it employs an effective process to identify which tactics to focus on – ones that are achievable and make a difference in their market.
To do that requires a full understanding of your market and your potential strengths, and the ability to objectively and quantifiably assess the relative impact of changes to aspects of your business.
This is where Infintec comes in – rapidly unravelling your business, identifying your opportunities and working with you to build a sustainable growth strategy.
We love thinking outside the box, without ever losing sight of reality – the art of the possible is what we are focussed on.
We cut through the passion to get to the proposition.