So you’re innovative, Now what?

Over the weekend, between home projects, I started reading “The Corporate Startup”.  The one standout comment so far was the authors’ definition of Innovation: “The creation of new products and services that deliver value to customers, in a manner that is supported by a sustainable and profitable business model”.  This suggests several things to me:

First creativity is not necessarily innovation.  One can be creative but not necessarily creating value to a customer, e.g., Rube Goldberg

Second value is in the eye of the customer, so maybe a new and novel approach that doesn’t reduce cost or produce more effective results but provides a more entertaining or satisfying experience is of value. Pines & Gilmore highlighted this idea in their book in 1999.  Examples of experience multiplying value are demonstrated by such corporations as Apple with the IPhone, etc. Where style and experience are often the major differentiating factor IPhone verse Windows Phone.

In earlier research I came to the conclusion that value for customers is manifested in at least one of follow three categories:

  1. Efficiency, reducing costs or time
  2. Effectiveness, producing better results
  3. Experience, enhancing enjoyment or prestige.  Consider how Rolex, Apple, DeBeers, etc. positions themselves and products

Lastly a sustainable and profitable business model, is a fantasy.  A look at the Dow Jones 30 over the years indicates sustainability is ecosystem dependent.  As it changes a business needs to change its business model to remain profitable.  U.S. Steel and U.S. Leather Company are entities that are no longer included in the top 30, their offerings and business models no longer enable these firms to continue as before.

In some cases companies tried to be “creative”: six colors of pens.  But those efforts failed to reach a tipping point in the experience category, neither did these enhance the other two categories.  So the musing for today are your company’s efforts creative or innovative?

 

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About briankseitz
I live in PacNW in a small town and work for Microsoft as a Enterprise strategy and architecture SME. I enjoy solving big complex problems, cooking and eating, woodworking and reading. I typically read between 4-8 business and technology books a month.

5 Responses to So you’re innovative, Now what?

  1. Next step – come visit one of Capgemini’s Applied Innovation Exchanges or AIEs for short!

  2. Ted Mayeshiba says:

    Brian,

    Bravo. My definition of VALUE is getting the RIGHT product to the RIGHT place at the RIGHT time.

    1. You are absolutely correct that creativity in itself is NOT innovation. I love the Rube Goldberg example.
    2. Value, as defined in my comment, will cover your third point of sustainability. Your examples of companies that are no longer sustainable return to my point about the RIGHT product. Why wasn’t their product RIGHT? Does anyone still use steel? Sure. Not at the same cost point as the competition, but it’s still used. US Steel loses (now there are many arguments as to why, but the fact remains price point was the issue) Therefore, because of the price, we can say it’s not the RIGHT product. Does anyone use Leather? Not in the same way, but new methods and products have taken its place. Again, they are no longer providing the RIGHT product.

    An example of a company that has sustained is Ducommun. Founded in 1849 to provide tools for the miners of the California Gold Rush, they have sustained by redefining their core business of metal conversion to now be a secondary supplier of aerospace products. Still bending metal. Just for different purposes. Now into composites and products that have replaced (in use) the old steel that was hammered out. No longer picks and shovels. Now skins for wings and other structural components.

    Insisting on adherence to an obsolete business model ensures business failure.

    • briankseitz says:

      Product, Customer Value, and Business Model: like the Project Management Tirade are linked together, pulling one effects the others. A great product today is not necessarily great the next. You business model maybe great today, but two years later its obsolete. Thus sustainability is not permanent. As the ecosystem changes so do the things that make you competitive.

  3. davidwlocke says:

    Innovation is invention plus the business. Innovation happens everywhere in the innovation chain. But, today innovation is devoid of invention. When innovation is about the bending or breaking of a constraint, we get more than the continuous notions of better, faster, quicker. We get sustainability from the get go because we might win the near-monopoly market position. That isn’t where we most innovation begins today. Somehow the orthodox business is seen as innovative and that business model is applied without thought. We are not innovating all that much today. We are replicating. We are mistaking starting up another burger joint as innovation. Business models are not enough. Without invention, creativity abounds in you and your competitors netting out to zero in the long run.

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