5 Innovation Models Your Organization Can Start Using Today

by Sat Duggal

Custom Marketing Framework

Last week we discussed seven key principles for successful innovation. If you recall, the seventh principle was “use a combination of innovation models.”

Well, today we’re going to dive into five innovation models that are all practical and proven ways to successfully and profitably innovate in multiple industries and circumstances. As noted in the previous post, rather than focusing on just on model and struggling to accomplish all innovation in that way, the most successful companies approach innovation with a combination of these models.

Model #1: Product-based innovation model.

This model is best suited for a situation where change needs to take place within the current market space and the current business model.

Generally, this model involves the existing product line or brand receiving improvements in functionality and/or inclusion of updated and improved technology. Other aspects of the product features that can be explored for innovation are customization, simplification, safety, reliability, durability, usability, styling, and greater environmental sensitivity.

In all these cases, even relatively small changes can make a big difference in differentiating a product, proving superiority over competition, and gaining market share.

The main things to be concerned with when using this model is making unnecessary changes without considering the customer’s wants and needs or creating unexpected problems through hasty “improvement” of a product that is already satisfactory for the majority of consumers. Another concern too is “feature bloat,” the excess addition or expansion of features that really add no additional benefit. (i.e. how many blades do they really need to fit into one safety razor? 6? 10? 13?)

Model #2: Experience-based innovation model.

As opposed to changing the product itself, this innovation model focuses on improving the customer experience with an eye toward increasing the value of the total product/service combination being offered.

To make this model work, the customer experience needs to be improved by making it easier, more convenient, or less of a hassle to purchase and benefit from the product. The experience should become faster, more flexible or customized, or in some other way more unique and enriched.

To accomplish this effectively, the current customer experience must be fully understood as it truly is – not just as the company expects or believes it to be. This likely extends beyond the touchpoints your company has direct control over so it will require in-depth research. Then, focus must be placed on those “moments of truth” when the consumer makes either positive or negative decisions based on their experience. This model should focus first on filling any recognized gaps, then on improving the overall experience across the board.

Model #3: New applications innovation model.

As opposed to actually changing the product itself, or specifically the customer experience, the third innovation model involves placing the product into an entirely new context that opens up a new profit center, exposes a new potential market segment, or even represents a foray into an entirely new industry.

An example to help explain the use of this model could be a chemical manufacturer that develops a new kind of plastic and is able to identify numerous uses for it in various unrelated industries and consumer applications. With each new application, the chemical manufacturer pursues dramatic innovation without really changing the underlying technology of the product.

To be effective, these new applications should provide the company with functional leverage, input advantage, cost advantage, or form factor advantage over competition already established in that field. Ideally, before making an entrance into a new field the company should be able to identify a “sweet spot” where the customer’s unmet needs, competitive gaps, and technological advantage intersect.

Model #4: Services and solutions attributes innovation model.

Unlike the previous three models, Model #4 assumes that the company wishes to make the leap into an adjacent market space and/or use an adjacent business model to accomplish its successful innovation. There is a higher level of risk involved in this kind of innovation, but there’s also a greater potential reward.

This model relies primarily on expanding the value of the services offered to augment a product that may be viewed as a commodity, or that at the very least is faced with strong “me too” pressure from the competition.

By innovating in regards to product-based services, transactional services, assembled solutions, and even solutions-as-a-service, a company can dramatically improve the perceived and actual financial value of their offerings without needing to change the product itself at all.

To do this successfully, the company must ensure competency in service capabilities and delivery, they must be able to deliver people-based advantages that decision makers can readily identify, and they must create mechanisms that will allow them to cross organizational boundaries and overcome the inertia caused by “the way we’ve always done it.”

Model #5: Business model innovation.

The final innovation model inherently involves the greatest amount of risk. However, as expected, it also holds the greatest possible rewards because it can essentially recreate an organization from the ground up if done properly.

This model of innovation involves adopting a brand new business model within a completely new market space. Imagine General Motors building OnStar. Obviously, the greatest risk is that a company simply will not possess the level of expertise, experience, resources, or strategic capability to successfully reorganize itself to succeed in a brand new business universe. However, many companies have done so and have done amazing things as a result.

A few words serve as the ultimate examples: Apple and Google.

The company needs to be dedicated to and invested in the long-term. They’ll need to focus on building critical mass and account for what is likely to be an extensive amount of customer challenges as they seek to gain market share and revenue.

Google, being a classic example of this innovation model, has ventured into numerous enterprises with a desire to innovate and disrupt everywhere they go. Their experimentation is funded by an extremely lucrative base business model involving advertising fees related to their search engine (which enjoys over 80% of the search marketplace). Their innovations have led to triumphant successes (such as the rise of the Android mobile device operating system and complementary app store) as well as tremendous failures (like Google Buzz, a social networking mistake, and Google Glass, a consumer product that was apparently far cooler than it was practical).

If you’d like to know how your own company can take advantage of one or more of these innovation models, we’d love to discuss that with you. Contact us today and we’ll set up an opportunity to talk.

Contact Us Today

Keywords: Custom Marketing Framework