getabstract book summary, "Ten Types of Innovation"

The Discipline of Building Breakthroughs

Larry Keeley, Helen Walters, Ryan Pikkel and Brian Quinn

John Wiley & Sons, Inc. © 2013

Take-Aways

Leadership & Management

Strategy

Sales & Marketing

Finance

Human Resources

IT, Production & Logistics

Career & Self-Development

Small Business

Economics & Politics

Industries

Global Business

Concepts & Trends

• Most companies don’t handle innovation well and most innovation projects fail.

• Innovation involves 10 different “innovation types” in three categories: “assets, platforms

and experiences.”

• The 10 types are: business or “platform model, network, structure, process, product

performance, product system, service, channel, brand” and “customer engagement.”

• To innovate, combine as many types as possible – utilize at least five.

• To use them well, understand all 10 types; go beyond product change since rivals can

copy it; know what your customers want; and change in meaningful ways.

• Innovate as broadly as you can while carefully managing every detail.

• Innovation requires thorough planning and an “industry innovation analysis,” covering

your innovation projects, your rivals’ innovations and innovation in other industries.

• Assemble your “innovation tactics” to build a tailored “innovation playbook.”

• Choose your level of “innovation ambition”: changing the known “core,” expanding your

“adjacent” boundaries or being “transformative.”

• Innovate with a pirate’s mentality: Be bold, sabotage existing rules and make your own.

Relevance

What You Will Learn

In this summary, you will learn:r1) What innovation is and what it demands, 2) What the

10 innovation types are, 3) What an “industry innovation analysis” requires, and 4) How

to identify and deploy “innovation tactics.”

Recommendation

Many companies use ineffective, silly techniques to innovate, including brainstorming

sessions featuring NERF balls and “fun foods” to make the session enjoyable and

productive. But brainstorming does not work, no matter how many balls you throw

at it. Larry Keeley, Ryan Pikkel, Brian Quinn and Helen Walters – all of Doblin, the

innovation consultancy – detail what does spark innovation. Their book explains 10 kinds

of innovation in detail. They suggest tactics and methods for analysis and planning, and

they explain how to foster productive, tailored creativity. getAbstract praises this book’s

informative design, data-block layout and lively graphics as well as the authors’ welldeveloped,

and even innovative, ideas.

Summary

Innovate or Die

Innovation is “the creation of a viable new offering.” Most organizations don’t know

how to innovate, so most innovation projects fail. To learn how to develop organizational

innovation, the Doblin consultancy examined 2,000 different innovations through the

lenses of “pattern recognition” and other analytical techniques. This research identified

10 types of innovation.

The “10 Innovation Types”

Bring about meaningful innovation involves combining at least five of the 10 different

types of innovation, which fall into three categories: “configuration” (items one to four

on the following list), “offering” (five and six) and “experience” (seven to ten). The 10

types of innovation are:

1. “Profit model” – This is your “business model” – how your firm earns revenue.

Fresh profit models break from industry standards on product offerings, 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 earns

interest on their payments.

2. “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.

3. “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 costs and quick

gate turnarounds.

4. “Process” – Seek inventive methods, the opposite of “business as usual,” to handle

your 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.

5. “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.

6. “Product system” – This is how you develop high-quality, complementary products

and services based on “interoperability, modularity” and “integration.” Oscar Mayer,

for instance, packages its “crackers, meats, cheeses and desserts” into “Lunchables”

boxes, saving parents time by creating portable school lunches for their kids.

7. “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.

8. “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.

9. “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.

10. “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.

The More Innovation Types, the Better

Bringing out a new product is seldom enough innovation in a competitive environment.

Your rivals can reverse-engineer products and services to issue knockoffs quickly. Instead,

“mix and match” as many of the 10 types as possible to create a new innovation. To make

the best use of the 10 types, follow these application tips:

1. “Understand all 10 types” – Study each type’s “value and subtleties.”

2. “De-emphasize...products and technology” – Rivals can copy these easily.

3. “Think about categories as well as types” – Rethink how you “configure assets,

build platforms and foster fresh experiences.”

4. “Use the types that matter most” – Analyze carefully; search out neglected avenues.

5. “Understand what your users...want” – Utilize research to fulfill client wishes.

6. “Use enough of the types to make a splash” – Blend five or more types to “reinvent

a category.”

Run-of-the-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 service, it provides “integrated ad services”;

in channel, it offers users “location-specific information”; and in brand, it has a clean,

highly identifiable homepage.

Analyze, Then Act

As you innovate, manage the details. Merely “doing something” within the 10 types is not

innovation. To decide what steps to take, start with an “industry innovation analysis” that

positions you to spot new creative opportunities. Ask: “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?” Use pattern recognition to “see how industries and

markets shift.” Make your analytical results visual. Seek “opportunities and blind spots”

with this six-step analysis:

1. “Define your boundaries” – Decide which types of companies to analyze.

2. “Be precise about what you mean by ‘innovation’” – Use the 10 types of innovation

as a “diagnostic filter.”

3. “Scan multiple sources” – Make your analysis as wide-ranging as you can.

4. “Visualize and assess the results” – Look for “innovation investment” clusters and

“areas of omission.”

5. “Identify key forces of change” – Seek out external factors that will influence your

industry and customers.

6. “Stand in the future” – Contrast the present against your “future innovation themes.”

Quality Research

Top-notch research is essential to any analysis. When Procter & Gamble decided 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.”

Run your analysis from three vantage points. First, “look within” to see how your firm

traditionally innovates. How can you change tired or stale activities? Second, “look

around you” to assess your competition. What can you do that is different? Third, “look

into the distance” to see what innovations firms outside your industry are introducing.

Determine how noncompetitive companies in other industries deal with challenges similar

to yours. Learn everything you can from these multiple focal points.

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. Amazon

broadened its platform by selling its expertise on web infrastructure development to other

firms. Platform innovations work well with tech firms, and 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.

“Innovation-Ambition”

Pursue three different “levels of innovation ambition.” With “core innovation,” you

“change the known” by improving current offerings. This works well for established

brands. With “adjacent innovation,” you “change the boundaries” to transform your

capabilities or develop new ones. With “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.

“Innovation Tactics”

Choose among 100 innovation tactics in order to amass your innovation building blocks.

Specific innovation tactics match selected innovation types. Some of the tactics are

venerable, but you can combine them in new ways – called “innovation plays” – to achieve

significant breakthroughs.

For your profit model, tactics include “auctions, bundled pricing, forced scarcity and

licensing.” For networking, use “consolidation, franchising or alliances.” To innovate

in structure, try a “corporate university, knowledge management or outsourcing.” For

process innovation, look to crowdsourcing, “lean production or flexible manufacturing.”

Product performance tactics include “added functionality, customization and feature

aggregation.” For changing a product system, evaluate “product bundling or modular

systems.” Service innovation tactics can extend to “loyalty programs, guarantees,

personalized service, self-service or try-before-you-buy” programs.

For changing your channels, look at going “direct,” setting up a “flagship store, multilevel

marketing or cross-selling.” For branding, consider “certification,” “private label”

or “co-branding.” Customer engagement can extend to offering “status and recognition,”

“autonomy and authority.”

Three methods offer a choice of ways to implement these ideas. First, you can “anchor

and extend” innovation by selecting a single “innovation anchor,” like a core value. This

is a focal point for developing your innovation type or tactic. The second approach is to

“add and substitute” by trying a tactic you’ve never used before. The third method, “array

at random,” calls for arbitrarily selecting and trying “three to six” new tactics.

The innovation types and tactics you assemble make up your “innovation playbook.”

Decide how ambitious to be and how you will “pursue innovation differently.” Use your

business model, platform or customer experience as the hub of your innovation activities.

However you organize your strategy, don’t bog down. Innovation requires “creativity,

discipline, pragmatism, ambition...analysis and synthesis.” Don’t let company culture

obstruct you. Deploy the right innovation tactics and your corporate culture will adjust.

Real innovation requires the right “approach” in how you define your project components;

the appropriate “organization” in how you set up your business units and teams to succeed;

the best “resources and competencies”; and the correct “metrics and incentives” to spur

and measure performance. Test your innovations before you introduce them.

Be bold. Adopt a pirate’s state of mind. Begin by ignoring all of the rules. Sabotage them

instead and substitute your own rules. Once you are ready to introduce your innovation,

strike quickly. Plan to knock your rivals out of the box and bury them. That is how you

change the game, and that’s the purpose of innovation.

About the Authors

Larry Keeley is president and co-founder of Doblin, the innovation practice of Monitor

Group. Ryan Pikkel, design strategist, Brian Quinn, innovation program professional,

and Helen Walters, writer, editor and researcher, work at Doblin.