Wednesday, April 12, 2006

3 types of innovation in your business

I was speaking with a customer in a firm which has helped us develop some of our software applications and methodologies. He's trying to figure out how to solve various problems in his organization that require "innovation" at some level. However, his approach was fairly interesting and one I thought could create some thinking.

His supposition was that there are three types of challenges or problems that require "innovation". They are:

1. A simple problem on the manufacturing floor that should be solved by a small team brainstorming and arriving at three or four viable solutions within 1 hour.
2. A larger problem, challenge or opportunity that is an extension of a product or a move of an existing product into a new market. This innovation happens over a longer period of time, is managed asynchronously and requires a larger number of people.
3. Truly big and disruptive innovation - a completely new product or service that significantly changes the market. This innovation requires a number of people, but does not have a defined time span, since it could happen very quickly or take quite a long period of time.

His is a different way of thinking about incremental and disruptive innovation, but he's pointed out that the magnitude of the problem, the number of people it takes to solve the problem, the scope of the problem or challenge and the nature of the problem or challenge dictate different approaches.

In the first instance, it is usually better to have "experts" all in one place at the same time, rapidly generating ideas and coming to consensus quickly. In this instance what's needed to improve innovation is teamwork, training on brainstorming techniques and a white board. Generally speaking you don't need a significant amount of outside involvement, and people with experience can add substantial value.

In the second instance, a team is much more likely to be made of up diverse individuals, since representation from many different functional groups is required. The timespan is usually longer, since incremental innovation takes what is known and moves into an unknown, along either a technology or market axis. I suspect that incremental innovation is probably the most difficult and problematic of the three types, since there is often a lot invested in the original product or service or market. What's required for success is a process and software applications to help a larger number of people collaborate and work asynchronously, and record their observations and decisions, and a culture willing to allow people to innovate.

In the third instance, truly disruptive innovation will probably require people from inside and outside your organization with little regard to the corporate crown jewels or structure. In fact very disruptive innovation probably needs to disregard what the firm thinks is important today, as it seeks to change a market the firm currently lives in, or create a market that no firm operates in. Given this supposition there are two possibilities: no sacred cows since it's a completely new space, or a huge sacred cow since we are probably cannabalizing our own products. What's required in this instance for success is a collaborative environment somewhat untethered to the existing corporate architecture that allows for exploring ideas and opportunities that many people might find dangerous, and a corporation willing to risk a lot with new products or services to dominate a market.

As firms interested in innovation, we should sponsor each type of innovation, and recognize the challenges inherent in each approach. What's consistent is the requirement that the firm, through its culture, support the teams and give them the necessary tools and processes. Each one of these approaches requires dramatically different team members, tools, processes and timelines, yet each approach is equally important.
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posted by Jeffrey Phillips at 1:19 PM


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