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Don’t look in the rear view mirror – look forward with an innovation mindset

May 3, 2016

In a world where there’s an army of ‘Uber for X’ clones, startups working on high impact and daring ideas need to make their mark. Those ground-breaking companies with sweeping visions and big hairy audacious goals operate under the influence of outsize creative thinking, and employ audacious strategies.

With new startups popping up practically every day, it can be easy to miss the ones that are truly innovative. These young companies are going beyond the basics of selling a product and effecting real change in a variety of industries. The race for technology innovation is shaped by the ambition to achieve a first, a breakthrough, a game-changing advancement.

Entrepreneurs, driven by passion, open mindedness, curiosity and a looking-to-the-horizon approach are fired up by disruptive thinking, yielding bold ideas to make something happen, make their mark and leave a legacy.

For today’s startups, innovation is an imperative, developing a value proposition and business model to provide unique value to customers is the key, but choosing which innovative idea to pursue is often a moment of inspiration, serendipity or an exercise in guess work, One light-bulb moment like Archimedes had relaxing in a bath before discovering his famous principle is all it takes, but accidental innovation is common.

For example, Alexander Graham Bell was working on designing a hearing aid (all his family were deaf) when he accidentally invented the telephone, and Dmitri Mendeleev developed the Periodic Table of elements by playing around with packs of cards looking for number patterns? Both were accidents of discovery, but by being inquisitive and following their impulses, great results emerged from these two great pioneers.

Albert Hofmann, the Swiss chemist discovered LSD properties by unintentionally ingesting it at his lab, and Alexander Fleming and his discovery of penicillin where he accidentally left a petri dish of Staphylococcus bacteria open. Both took the opportunity to start from somewhere they didn’t expect to be, and just followed their instinct.

But from a startup perspective, there are four dimensions of innovation potential to guide decision-making: Does it solve a problem? Can it deliver more value to customers than existing products? Can it create new market space? Can it be the basis of a sustainable business model?

How do you answer these questions? Besides using Lean Startup principles for developing hypotheses, testing and an MPV for customer development and validated learning, I’ve also applied the Doblin innovation practices, a methodology, which guides you through ten types of innovation thinking and practices to validate your thinking.

The Doblin Ten Types of Innovation emerged from research into more than 2,000 successful innovations and identified the ten meaningful moves typically made and thus provides insight into diagnosing sources and patterns of innovation.

The Doblin research shows that effective innovators take a balanced approach, splitting their investments 70/20/10 between incremental, adjacent and transformational innovations, ensures a focus on playing both the long and the short game. The Ten Types of Innovation framework helps identify and accelerate the most promising ideas, kill those with little potential, and effectively improve the overall return on innovation investment.

Here are Doblin’s ten types of innovation. Which can you identify as offering potential opportunities for your own startup?

1. Innovation in the Profit Model: How you make money Innovative profit models find a fresh way to convert an offering into cash, and reflect an understanding of what customers value and where new revenue or pricing opportunities might lie. Innovative profit models often challenge an industry’s established assumptions about what to offer, what to charge or how to collect revenues. In most sectors the dominant profit model is tired, old and often goes unquestioned. Apple’s Apps Store is a great example of profit model innovation.

2. Innovation in Networks: How you connect with others to create value in the connected economy. Collaborative networking enables startups to leverage other companies’ brands, processes, technologies, offerings and channels through strategic partnering. This network innovation means firms can capitalise on their own strengths and share risk, while harnessing the capabilities and assets of others, develop new offers and ventures. CISCO’s strategy and customer offering is based around the ROI of collaborative networks http://www.cisco.com/en/US/netsol/ns1007/index.html

3. Innovation in Structure: How you organise and align your talent and assets Structure innovations are focused on organising all of the startups assets in unique ways that create value. Looking across traditional organisation boundaries, such innovations help attract and develop talent by creating productive working environments or fostering a level of performance that competitors can’t match. For example, leverage and unify your technology, design and marketing teams to ensure product development is driven by customer insight and intelligence.

4. Innovation in Process: How you use processes to do your work differently Process innovations involve the activities and operations that produce an startup’s core offerings. This requires a fresh think around ‘business as usual’ that enables the company to provide a different customer engagement and cost model. Process innovations often form the core competency of an enterprise, are sustainable and become the ‘special sauce’ that competitors simply can’t replicate. Amazon.com shows the power of process innovation.

5. Innovation in Product Performance: How you develop distinguishing features and functionality Product Performance innovations address the value proposition – the features, benefits, impact, experience and evidence of a startup’s offering. This type of innovation involves both entirely new products and updates to existing products that add substantial customer value. Too often, we mistake product performance for the sum of innovation, when, as Doblin highlights, there are other sources.

It’s often the core of the competitive arena, but it devolves into an expensive arms race and mad dash to parity from competing firms in the market. The mobile phone market is an example of this. Product performance innovation that delivers long-term sustainable competitive advantage are the exception rather than the rule – the Dyson being a great example of this, be it their ‘Hot & Cool’, or their new hair dryer. http://www.youtube.com/user/dysonteam

6. Innovation in Product System: How you create complementary products and services Product system innovations are rooted in how individual products and services connect or bundle together to create a scalable system. This is fostered through interoperability, modularity and integration to create valuable connections. Product System innovations help you build ecosystems that captivate and delight customers by providing bundled value – and make it personal. Check out Mint.com as a example https://www.mint.com/

7. Innovation in Service: How you support and amplify the value of your offerings Service innovations ensure and enhance the utility, performance and value of an offering. They make a product easier to use and highlight features and functionality customers might otherwise overlook. They also fix problems and smooth rough patches in the customer journey and bad customer experience in the current product. Done well, they elevate products into compelling experiences that customers come back for again and again. Uber is a great example of this https://www.youtube.com/user/UberWorldwide

8. Innovation in Channel: How you deliver your offerings to customers and users Channel innovations encompass all the ways you connect with your customers and users. While e-commerce has emerged as a dominant force, traditional channels such as physical stores are still important in creating immersive experiences.

Skilled innovators find multiple, complementary ways to bring their products and services to customers. Their goal is to ensure that users can buy what they want, when and how they want it, with minimal friction and maximum delight. Apple’s Genius Bar is a great complimentary Channel Innovation http://www.apple.com/uk/retail/geniusbar/

9. Innovation in Brand: How you represent your offerings and business Brand innovations help to ensure that customers and users recognise, remember and prefer your offerings to those of competitors or substitutes. Great ones distil a brand promise that attracts buyers and conveys a distinct identity, the result of carefully crafted strategies that are implemented across many touchpoints between your company and your customers, including digital communications, advertising, service interactions and employee conduct. For me, although never personally remotely interested in motorbikes, Harley Davidson defines brand innovation http://www.harley-davidson.com

10. Innovation in Customer Engagement: How you foster compelling interactions Customer Engagement innovations are all about understanding the deep-seated aspirations of customers and using those insights to develop meaningful connections between them and your company. Great Customer Engagement innovations provide opportunities to foster customer loyalty and help people find ways to make parts of their lives more memorable. Airbnb executes this brilliantly https://www.airbnb.co.uk/

The Ten Types of Innovation research provides a thoughtful and structured framework for startups to build breakthroughs built around ten distinct types of innovation into your business model that need to be orchestrated.

However, you also need the mindset, determination and curiosity of an entrepreneur. When we all think alike, nobody is thinking. Capital isn’t so important in business, neither is experience, you can get both these things, what is important is new ideas.

You need to see what everybody has seen and think what nobody has thought, and don’t live your life in the rear view mirror – it tells you where you’ve been, not where you can go looking forward.

Soon, software will know how you feel, and will use that data to sell you things. The gig economy will go global, but it’s not Uber-take-all. AI will achieve something like common sense, and it will be open source too. But that future won’t build itself. Actual people (at least for now) have to make these things happen, and the Doblin framework is useful to guide your thinking.

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