8 Ways to Structure Innovation

I’ve seen businesses opened because the owner saw a new business open down the street and thought it was a good idea to copy it. There’s a flaw in that thinking for many reasons other than differentiation. Just because the business is a success for one person doesn’t mean it will translate well into a success for you.

The companies that are making a difference, that are creating buzz, and yes, a lot of money are innovative by design, nature and operation. There are many variations on a theme in the area of innovation and they range from internal and external to continuous and radical.

If you take your business idea and put it to the test, is it life changing, bold, and sustainable or the same old idea packaged a slightly different way?

Companies also follow three categories of innovation; core, adjacent and transformational. Core innovations are clearly related to the company’s product or service and how innovation can be created using incremental change. Adjacent innovation leverages something that a company does well into a new market. Procter and Gamble did this when they introduced the ‘Swiffer’ thereby creating new customers. Transformational innovations are the big game changers and usually the most creative. Starbucks changed the way we drink coffee and iTunes the way we listen and purchase music.

Innovation will always trump the easy way of setting up a business model to follow. Here are a few of the most common ways to innovate based on those three categories.

• Disruptive – my favorite and to me the most exciting. I like to write about disruptive innovative technologies and although the word seems to be the new buzzword it is a serious way to describe many innovations. Disruptive innovation displaces an existing technology or process to create a new market and value network. Consider how Uber changed the taxi industry and Airbnb changed accommodation and you can see how a business will get traction if the founder looks for revolutionary technology or processes in order to secure a new market.
• Architectural or component – you can change the look of a product or just change a component of the product to make it innovative. Classic examples of changing the product versus the components are the analog to digital wristwatch and the mouse to a wireless one. One of the unexpected benefits of NASA’s search for seat safety lead to the creation of those comfy beds and pillows made of ‘memory foam.’
• Incremental – this innovation technique is the most common and makes the most sense. Every business that develops a product or offers a service is refining them constantly because a better product makes customers want to buy the latest and the greatest. A continuous change keeps some companies ahead of the competition and brings the standards of the industry higher with each refinement. Consider how iPhone 10 years ago launched the first smartphone. At the time I thought my flip phone was the ultimate communications device.

  The bottom line with incremental innovation is that changes in design, function or adding new feature will create a better, faster and cheaper product.

• Radical – this innovation can be interchangeable to the disruptive model but has distinctions. Radical innovation changes both the components and how the components interact and puts them together in a new way to create a unique solution while disruptive is a different way of looking at the problem. Anyone remember Blockbuster Video? Netflix really changed that landscape putting Blockbuster out of business.

  Like most innovations there are hybrids. Amazon was a radical way to sell to the masses but you could say they disrupted the in-person shopping model and continue to do so in many sectors.

• Breakthrough – every once in a while we hear the word ‘unicorn’ referred to a new tech company. It refers to a company that is so innovative and new that it revolutionizes how business is done in that sector yet with little history or sales is evaluated at $1bn. Inventions like the transistor changed industries overnight. Breakthrough companies and the high evaluations that go with them are driving productivity through technology. In the 1400’s the printing press changed the way we communicate forever.
• Sustainability – The Harvard Business Review wrote that sustainability is driving innovation although most companies think that by going ‘green’ or sustainable they will lose competitiveness and risk incurring higher costs. I see companies developing sustainable strategies because customers demand change in the way business is done as a cultural shift.
• Experiential – Innovation equals advantage in today’s competitive marketplace, but can prove challenging in practice. In the absence of pure innovation a company can create a culture of innovation in the processes and tools that are required to make innovation simple, attainable, and effective.

  By changing the values and culture from within the company differentiation can propel an average company past the competitive milieu.

• Untapped Markets – everyone wants to be that company that finds an untapped market. Remember the ‘pet rock’ phenomena? Usually it’s restructuring industry markets but sometimes ideas come right out of left field. Assure tapped into a new vertical for the health industry. They monitor the integrity of surgical procedures that involve the nervous system, directly, indirectly or inherently places neural structures at risk. Zipcar tapped into the millennial market that shunned traditional rent-a-cars that has spawned many competitors.

There is another aspect of architectural that is innovative. If you can look at an existing business model for a product and see how those processes can relate directly to your product adapt it to your business. No one wants to reinvent the wheel.

While governments drag business kicking and screaming to be sustainable, many are finding opportunity there. Complying with government regulations early, rather than fighting, makes the innovators ‘first-movers’ and are not only looked upon more favorably by consumers but develop products that place them ahead of the competition. Air pollution regulations caused automobile manufactures to improve car engines and climate change has pushed them the last step to electric vehicles. In fact, innovator Volvo announced that by 2019, they would not be selling solely gasoline-powered automobiles.

Innovation powers technology and business and is the creative process that allows founders to find success. Hybrids and other ways exist to provide innovation to the savvy entrepreneur. Change what, or how, you are doing things and get to work on developing that unicorn.