The following contains excerpts from the book Ten Types of Innovation (The Discipline of Building Breakthroughs) (Keely, Pikkel, Quinn, Walters).
At our music school in Odessa, Texas we believe that the essence of music is more than mere sound. It is relationships. The role of the subject of Leadership in relationships is paramount, and the role of Innovation in leadership is unquestioned.
This is a book compiled by the Doblin Group, which examined 2,000 different innovations through many well-known companies, such as Southwest Airlines, Toyota, Dyson, Corning, Microsoft, Oscar Meyer, Sysco, Nike, Amazon, Virgin, Intel, Apple, Starbucks, to name a few. In their analysis of ‘pattern recognition’, their research identified 10 different types of innovation which fall into 3 categories. The 3 categories are: 1) Configuration, 2) Offering, and 3) Experience.
The innovation types are as follows:
Configuration
- “Profit model” – This is your “business model” – how your firm earns revenue. Fresh profit modes break from industry standards on product offering, pricing and collection procedures. Next Restaurant, for example, sells tickets to customers who buy their meals before dining and pay less during non-rush periods. Next earn interest on their payments.
- “Network” – How can you collaborate with external partners to build value you could not achieve alone? In one undertaking, Natura, a Brazilian cosmetics firm, built an innovation network with 25 universities across the globe.
- “Structure” – Consider how your firm organizes its intangible assets, its capital as well as its people. Being able to recruit top performers consistently indicates that you have an innovative structure. Using structure to smooth its operations, Southwest Airlines flew only Boeing 737s to achieve standardized service, low cost and quick gate turnarounds.
- “Process” – Seek inventive methods, the opposite of “business as usual,” to handle you work. This type of innovation affects a firm’s “core process” or competencies. For example, Toyota’s innovative “lean” manufacturing system sought to make every step of production as efficient as possible.
One of the most important things we can offer students in our music school in Odessa, Texas is the understanding of the process it takes to gain mastery of themselves. We teach them to value incremental daily progress, which ultimately yields exponential results.
Offering
- “Product performance” – These special features and functions differentiate your goods or services. Companies with innovative product performance often lead their sectors, and superior products earn premium prices. For example, OXO’s sturdy Good Grips potato peeler sells for five times the cost of a standard peeler.
- “Product systems” – This is how you develop high-quality, complementary products and services based on “interoperability, modularity” and “integration.” Oscar Mayer, for instance, packages its “cracker, meats, cheeses and desserts” into “Lunchables” boxes, saving parents time by creating portable school lunches for their kids.
Experience
- “Service” – Customers appreciate firms that offer superior service. Zappos goes out of its way to satisfy customers, even to the point of securing competitive products to fill orders if its comparable shoes are out of stock.
At our music school in Odessa, Texas we strive to make each student feel valued, centering our attention upon their growth and development as our highest priority of service to them.
- “Channel” – This is how firms move their products or services to market. Innovative channels upend the normal methods. Amazon’s free Whispernet service for Kindle users, for example, lets them order and download e-books in less than a minute.
- “Brand” – Customers of firms with innovative brands see themselves as members of special communities. Trader Joe’s grocery stores offer special “destination private labels” – products their customer cannot buy elsewhere.
- “Customer engagement” – This is the special way companies connect with their customers. Apple, for example, introduces its most recent offerings at its World Wide Developers Conference. Developers feel like insiders when they get an early, good look at Apple’s newest products- and they provide valuable feedback.
Developing authentic relationships between students, teachers, and parents is one of the most rewarding aspects of what we do at our music school in Odessa, Texas. We value each person and the role they play in fostering a thriving community.
The authors issue the challenge that to bring out a new product is seldom enough innovation in a competitive environment. Instead, mixing and matching as many of the 10 types as possible gives an edge in the process of innovation. Run-of-mill innovators incorporate 1.8 innovation types, on average. Top innovators average 3.6 types. Firms that use five or more outperform the S&P 500.
For example, Google innovates in eight of the 10 types:
-In profit model, its inventive AdWords program lets users bid for ads.
-In structure, it offers employee incentives like free meals to attract top talent.
-In process, Google’s “PageRank” algorithm dramatically changed the search engine business.
-In product performance, it limits ads to 25 characters to simplify them for advertisers and consumers.
-In product systems, it enables third parties to make money from Google ads on their sites.
-In channel, it offers users “location-specific information.”
-In brand, it has a clean, highly identifiable homepage.
To innovate in your own company, ask questions like:
-“What is changing?”
-“Where are the gaps in the market?”
-“How can we challenge the status quo?”
-“How might we learn from others?”
-“Where are our gaps?”
At our music school in Odessa, Texas we stay current with trends, while at the same time use time-tested disciplines to form our students’ core-competencies that will serve them in whatever direction they choose to go.
To seek opportunities and see ‘blind-spots’:
- “Define your boundaries” – Decide which types of companies to analyze.
- “Be precise about what you mean by ‘innovation’ – Use the 10 types of innovation as a “diagnostic filter.”
- “Scan multiple sources” – Make your analysis as wide-ranging as you can.
- “Visualize and assess the results” – Look for ‘innovation investment’ clusters and ‘areas of omission’.
- “Identify key forces of change” – Seek out external factors that will influence your industry and customers.
- “Stand in the future” – Contrast the present against your ‘future innovation themes’.
As an illustration of company analysis, when Procter & Gamble decide to enter the diaper market in China in 2008, it found that babies fell asleep faster in Pampers and slept more soundly than babies in cloth diapers – that demonstrated its product performance innovation and set new criteria. Working with Beijing Children’s Hospital’s Sleep Research Center – network innovation – P&G amassed more research showing that disposable Pampers would improve the health of Chinese Babies. This research and marketing caused a Chinese “diaper revolution.”
Most innovation occurs in three areas: business model (assets, capabilities and value chain), platform (core capabilities), or customer experience.
-Zipcar built a fresh business model by letting customers reserve and drive cars for short time spans.
-Business model changes work well in asset-intensive industries, like automotive, tightly regulated industries like aerospace, and commodities and business-to-business enterprises.
-Platform innovations work well with tech firms. Amazon broadened its platform by selling its expertise on web infrastructure development to other firms.
-Better customer experiences work in any industry. Clients gained a new place to hang out when Starbucks standardized the European coffee shop model and scaled it up globally.
The authors categorize three different “levels of innovation ambition”:
- ‘Core innovation’ – you change the known by improving current offerings. This works well for established brands.
- ‘Adjacent innovation’ – you change the boundaries to transform your capabilities or develop new ones.
- ‘Transformational innovation’ – you “change the game.” Transformational innovations shake up everything, bringing dramatic change to the marketplace and to your firm’s growth and profits.
Ultimately, innovation requires, “creativity, discipline, pragmatism, ambition, analysis and synthesis.”
At our music school in Odessa, Texas our innovation is in combining several elements uncommon to most music training programs. 1) We encourage all three learning styles: Visual, Aural, and Kinesthetic; 2) We believe in past disciplines expressed through current cultural norms; 3) We merge Classical styles with Contemporary disciplines; 4) We encourage music reading skills along with improvisatory skills; 5) We merge individual discipline with ensemble playing towards developing community awareness.