Innovation types

1. Lecture 3. innovation types

LECTURE 3. INNOVATION
TYPES
Innovation management

2. Lecture content

Innovation types:
Depending
on change type. - 4 types
Depending on application area - 10 types
(TEN TYPES OF INNOVATION - THE BUILDING BLOCKS OF BREAKTHROUGHS)

3. 4 types innovation

Your business can take a number of different
approaches to innovation. Usually, this will depend
on how much time and money you have available
and what your business strategy is. These
approaches can be part of a continuous cycle or
employed on a more ad-hoc basis, depending on
your needs.

4. 4 innovation types

5. 4 types innovation – Breakthrough

Breakthrough or radical
innovation
creating a completely new
process or product in response
to a market need or
opportunity
DIFFICULT TO BE CREATED. WHY?
Lack of resources
Lack of laser-like focus
Lack of a detailed understanding of the end user
Lack of required technical competencies

6. 4 types innovation – Breakthrough

Charge premium
Deliver high quality
Example – AMAZON
vs APPLE

7. 4 types innovation – Sustaining

Sustaining
Sustaining ideas have to do with
improving the current product by
developing generations 2, 3, 4, 5
and so on until the product reaches
the end of it’s life cycle.
Typically,
Feature fixes/additions
Cost reductions
Product line expansions (proliferation)

8. 4 types innovation – New market

New market
applying a current
product in a new way and
sometimes even for a
different segment of
customers.
The classic example often cited is Arm and Hammer
baking soda.
A leavening agent for dough when baking breads?
OR a deodorizer? OR a multi-purpose product?

9. 4 types innovation – New market

Cost or benefit
leadership?
Baking soda – benefit
Deodorizer - cost
Adjacent spaces – what industries or uses would you consider as
adjacent?
Other jobs to be done - other jobs does your product do? Could
those be marketed for other customers?
Customer usage studies – for some products, customers may already
be using your product in new and different ways that you haven’t
considered yet.

10. 4 types innovation – Disruptive

the Harvard Business School
professor Clayton
Christensen
https://hbr.org/2015/12/w
hat-is-disruptive-innovation
Look for competitors that have overserved.
Focus on one job to be done rather than several.
Focus on making the solution the very best.
Remove as much cost as possible to make the end price
affordable for most users.
Observe the industry trends regarding vertical integration. –
DELL – example

11. Use combination!

12. Basic vs Systematic

Often when people
think of innovation,
they mention product
innovation
There are actually 10
types of innovation.
The more types you
implement, the more
successful innovation is
likely to be

13. 10 types of innovation

14. Configuration: Profit model

The way in which you make money
For example, how Netflix turned the video rental
industry on its head by implementing a subscription
model

15. Configuration: Network

Connections with others to create value
For example, how Target works with renowned
external designers to differentiate itself
http://www.thebudgetfashionista.c
om/archive/target-designercollaborations/

16. Configuration: Structure

Alignment of your talent and assets
For example, how Whole Foods has built a robust
feedback system for internal teams

17. Configuration: Process

Signature or superior methods for doing your work
For example, how Zara’s “fast fashion“ strategy
moves its clothing from sketch to shelf in record time

18. Offering: Product performance

Distinguishing features and functionality
For example, how OXO Good Grips cost a premium
but its “universal design” has a loyal following

19. Offering: Product system

Complementary products and services
For example, how Nike+ parlayed shoes, sensors,
apps and devices into a sport lifestyle suite

20. Experience: Service

Support and enhancements that surround your offerings
For example, how “Deliver WOW through service” is Zappos’ #1 internal core value
Due to an internal error, one of their sites, 6pm.com, accidentally marked down
nearly all of its stock to $49.95 for six hours. Items that should have sold for almost
$2000 were sold at over 97% off! This mistake cost the company an estimated
$1.6 in revenue.
So what did Zappos do? Nothing. CEO Tony Hsieh described it as a learning
experience and decided to honor all sales made during the time period. Although
this was an expensive decision, it generated a lot of positive buzz and goodwill in
Zappos customers.

21. Experience: Brand

Representation of your offerings and business
For example, how Virgin extends its brand into sectors
ranging from soft drinks to space travel

22. Experience: Channel

How your offerings are delivered to customers and
users
For example, how Nespresso locks
in customers with its useful members only club

23. Experience: Customer engagement

Distinctive interactions you foster
For example, how Wii’s experience draws more from
the interactions in the room than on-screen

24. Suggestions to read

http://www.theinnovativemanager.com/the-four-types-of-innovation-and-thestrategic-choices-each-one-represents/
the Harvard Business School - Clayton Christensen https://hbr.org/2015/12/what-is-disruptive-innovation
//www.thestreet.com/story/13223113/1/netflix-beats-google-when-it-comes-tobusiness-models.html
http://www.cass.city.ac.uk/__data/assets/pdf_file/0017/220517/Netflix.pdf
http://www.forbes.com/sites/walterloeb/2015/03/30/zara-leads-in-fastfashion/#6101a68361d7
http://www.inboundmarketingagents.com/inbound-marketing-agentsblog/bid/361859/Zappos-WOW-Philosophy-Tips-for-Fostering-Customer-Delight
http://universaldesign.ie/What-is-Universal-Design/Case-studies-and-examples/3case-studies-on-UD/#oxo
http://smartdesignworldwide.com/work/oxo-good-grips/

25. Workshop 4

1.
2.
Describe the structural, cultural and human
resources variables that are necessary for
innovation.
Provide your own examples – companies
that changed some variables and present
them.

26. Workshop 5

2 or 3 teams - when
every team will
present new functions
for a paperclip.
How can you use it in a
different way?

27. For the next week

Your group will present one of the
innovation types. Choose
whatever you want. Then the other
group will judge your
presentation.

28.

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Lecture 5
Lecture 7
Lecture 8-9
Lecture 10
Pixar Case study
Virgin Case study