Nick Skillicorn
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Nick Skillicorn

CEO & Founder, Innovation Coach at Improvides
Voted as the world's #7 Innovation blogger in 2014, I help individuals and companies build their creativity and innovation capabilities, so you can develop the next breakthrough idea which customers love.

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Nick Skillicorn
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tentypesofinnovation

You’ve got your successful product, and you’re about to release the new version to the world. Your team has been working all year to refine the design and adding new features that you hope will keep you ahead of the competition. You’re convinced that this updated version is superior to the last version in every conceivable way. What you don’t realise though is that the updated product would likely be more successful if you’d invested in innovation unrelated to the product itself.

Many people consider innovation to be primarily about the steady improvement of your current offering, especially in the face of competition from other vendors. Think of the arms race in most of the innovative industries you care about, and you’ll notice a continuing trend of companies introducing new features to their products to make them stand out from the crowd. In consumer electronics, this even leads to annual upgrade cycles aimed to make last year’s model obsolete, and fans eagerly awaiting news from tech conferences to see the debut of new features and top of the line technology.

A major problem with this system is that product and technology upgrades are also the easiest things for your competitors to copy. You might invest heavily in developing and testing a new technology, while other firms wait and see if it will catch the consumers’ imagination. If it’s successful, in most cases it’s much easier for the competitors to add it in their next product upgrade, eroding your advantage. I would argue that the last innovative feature to debut in an iPhone was the high-resolution retina display. Within a year, other competitors had copied or even surpassed its capability.

Another issue is that because of this, companies feel they need to keep adding new “innovative” features to their products, which ends up with features being added for the sake of it. Two of my least favorite examples which featured heavily in recent advertising campaigns:

  • Samsung Galaxy S4: can tell when your eyes are not looking at the screen to stop playing media. Critics noted it was interesting technology but saw little practical use for it.
  • Nissan Juke with Google Send-to-car: You can upload a map from your phone to your car’s SatNav, which was sold as the main highlight of the car. Is that really the primary purchasing decision when buying a car?

So what can companies do to reduce their reliance on product improvement innovation? The answer is to diversify the types of innovations they develop. Doblin, which is part of my previous consulting firm Deloitte, researched thousands of innovations coming from the most successful companies, and found that there are 10 distinct types of innovations:

  1. Profit Model: How you make money
  2. Network: How you connect with others to create value
  3. Structure: How to organise and align your talent and assets
  4. Process: How you use signature or superior methods to do your work
  5. Product Performance: How you develop distinguishing features and functionality
  6. Product System: How you create complementary products and services
  7. Service: How you support and amplify the value of your offerings
  8. Channel: How you deliver your offerings to customers and users
  9. Brand: How you represent your offerings and business
  10. Customer Experience: 
    How you foster compelling interactions

The vast majority of companies focus their innovation efforts primarily on Product Performance, and maybe one other type. However, those companies which actively search for ways to be innovative across multiple types are consistently more successful. This is shown by the graph below, illustrating the stock prices of companies over a 5 year period, based on how many types of innovation they exercised.

innovationstockprices

Companies which actively looked at multiple types of innovation, within their own portfolio of projects as well as what was happening in the industry, were much more likely to spot trends and find gaps in consumer satisfaction. This enabled them to focus their innovation resources on areas that would have the most impact.

Let us know in the comments of any struggles your teams have had with product innovation, or how focusing on other types of innovation has helped.

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