Your perfect Ten: 10 types of innovation explained

The oil and gas industry is pivoting. Where other industries have been forging ahead, the oil and gas sector has been lagging behind through outdated technology and methodologies. But there’s a pressure on them to perform better. A global push for a reduced environmental impact coupled with the rise of new technologies is causing a shift in the industry.

In fact, Deloitte takes it a step further by explaining that the reason for the success being seen in the sector today is purely down to a willingness to solve complex challenges.

But as with any organisation who has made a change – if they want to stay ahead of the game, they need to keep reinventing themselves.

But what does it mean to be a true innovation in this market? According to a Deloitte Oil & Gas Conference held in Rotterdam, “Truly successful innovators manage innovation as a portfolio of ambitions and resource their efforts accordingly. They know where to play, how to win, where to invest and where to expect returns. They go beyond product innovation and discern ten types of innovation. Also, they treat innovation as a discipline, so for instance they create a smart metric system and valuation methodology that reflects the ambition.”

 

Similar to this blog post that our sister company published a little while back, innovation doesn’t always mean coming up with the latest cool product or gadget – but quite often starts by thinking about something in a different way, or doing something in a way that makes it easier to get done or improve productivity. And Deloitte agrees. In fact, they say this: “When discussing innovation, we tend to think about product innovation only, whereas we should consider a much more diverse set of innovation types, consisting of profit model, network, structure, process, product performance, product system, service, channel, brand, and customer engagement“.

Deloitte has created a great detailed guide to each of these. Here are our summaries of these 10.

 

Profit Model Innovation

How you make money

What Deloitte say: “Innovative profit models find a fresh way to convert a firm’s offerings and other sources of value into cash. Great ones reflect a deep understanding of what customers and users actually cherish and where new revenue or pricing opportunities might lie. Innovative profit models often challenge an industry’s tired old assumptions about what to offer, what to charge, or how to collect revenues. This is a big part of their power: in most industries the dominant profit model often goes unquestioned for decades.”

Also referred to as Business Model innovation, changes in customer behaviour, globalisation and technological innovations are currently creating a “window of opportunity” for new business models to emerge and whether it’s a trend towards subscription models, or whether we move from the own it to lease it for life model, new ways of making money are springing up all around us. Probably the most famous example of a innovation in profit model, was Roll’s Royce’s decision to move towards a “power-by-the-hour” model. The new business model does not sell engines, but thrust hours to the airlines: The airlines pay only for the operating hours of the engines and are no longer obliged to buy the turbine engines.

 

Network Innovation

How you connect with others to create value

What Deloitte says: “In today’s hyper-connected world, no company can or should do everything alone. Network innovations provide a way for firms to take advantage of other companies’ processes, technologies, offerings, channels, and brands—pretty much any and every component of a business. These innovations mean a firm can capitalise on its own strengths while harnessing the capabilities and assets of others. Network innovations also help executives to share risk in developing new offers and ventures. These collaborations can be brief or enduring, and they can be formed between close allies or even staunch competitors.”

Whether it’s Microsoft researching a solution to tedious mobile device charging protocols, called AutoCharge that charges devices automatically using light beams, or whether it’s the development of MAMMOET, a European Commission-sponsored project, which aims to enable much more efficient mobile data transfers, network innovation enables us to communicate better and be even better connected to the world around us.

 

Structure Innovation

How you organise and align your talent and assets

What Deloitte says: “Structure innovations are focused on organising company assets—hard, human, or intangible—in unique ways that create value. They can include everything from superior talent management systems to ingenious configurations of heavy capital equipment. An enterprise’s fixed costs and corporate functions can also be improved through Structure innovations, including departments such as Human Resources, R&D, and IT. Ideally, such innovations also help attract talent to the organisation by creating supremely productive working environments or fostering a level of performance that competitors can’t match.”

In this era where organisations are up against the biggest skills gap of all time – finding, and retaining, the best skill is paramount – whether that be through physical employment, or a more networked infrastructure that lends itself to collaborative working, being accessible and having systems that support that will stand your organisation in good stead to have the right talent, as and when you need it.

 

Process Innovation

How you use signature or superior methods to do your work

What Deloitte says: “Process innovations involve the activities and operations that produce an enterprise’s primary offerings. Innovating here requires a dramatic change from “business as usual” that enables the company to use unique capabilities, function efficiently, adapt quickly, and build market–leading margins. Process innovations often form the core competency of an enterprise, and may include patented or proprietary approaches that yield advantage for years or even decades. Ideally, they are the “special sauce” you use that competitors simply can’t replicate.”

And this is what we love. Getting stuck into the very core that runs our daily business. And, surprisingly, businesses still get this wrong. Organisations wonder why their teams are inefficient, why their revenue-streams appear to be drying up – and simply because of operational process that is out of balance.  Hidden revenue opportunities lurk where exhaustive process hinders – and looking at freshening up the way you do things, paying close attention to the expectations of your customers, should be your first step towards getting your operational business in order.

 

Product Performance Innovation

How you develop distinguishing features and functionality

What Deloitte says: “Product Performance innovations address the value, features, and quality of a company’s offering. This type of innovation involves both entirely new products as well as updates and line extensions that add substantial value. Too often, people mistake Product Performance for the sum of innovation. It’s certainly important, but it’s always worth remembering that it is only one of the Ten Types of Innovation, and it’s often the easiest for competitors to copy. Think about any product or feature war you’ve witnessed—whether torque and toughness in trucks, toothbrushes that are easier to hold and use, even with baby strollers. Too quickly, it all devolves into an expensive mad dash to parity. Product Performance innovations that deliver long-term competitive advantage are the exception rather than the rule.”

A great example of this type of innovation at its peak is when Toyota decided to invest a substantial amount into the development of the Toyota Prius. Remember, back in the day, when a hybrid driving option was cutting edge stuff? Well, first commercialised by Toyota, the Prius was leading of it’s kind. Toyota had enough of a product performance advantage, and perhaps more importantly, committed to the Prius’ success, that the Prius model continues to account for about half of all hybrids sold in the US, with Toyota owning nearly 64% of the US hybrid market. Yep. That was innovation.

 

Product System Innovation

How you create complementary products and services

What Deloitte says, “Product System innovations are rooted in how individual products and services connect or bundle together to create a robust and scalable system. This is fostered through interoperability, modularity, integration, and other ways of creating valuable connections between otherwise distinct and disparate offerings. Product System innovations help you build ecosystems that captivate and delight customers and defend against competitors.”

The concept of IFTTT: Better known as “if this, then that” system language. When the IFTTT concept was created, it revolutionised how we do things. It has, and still does, given us control over the essential parts of our day-to-day lives. These “if this, then that” statements are called “recipes,” as they allow you to combine different devices, trigger and action ingredients, at will. For example, if the temperature in my house drops to below 5 degrees, turn my heating on, and switch the lights on through my connected HIVE system.

 

Service Innovation

How you support and amplify the value of your offerings

What Deloitte says, “Service innovations ensure and enhance the utility, performance, and apparent value of an offering. They make a product easier to try, use, and enjoy; they reveal features and functionality customers might otherwise overlook; and they fix problems and smooth rough patches in the customer journey. Done well, they elevate even bland and average products into compelling experiences that customers come back for again and again.”

This type of innovation is completely customer-centric and changes the way your customer does. Whether their buying habits change, or their demand does, adapting to new buying behaviour means your business changes and keeps in pace with their requirements. We only need to mention the way Apple and Netflix has changed the way we listen to music, or watch movies.

 

Channel Innovation

How you deliver your offerings to customers and users

What Deloitte says: “Channel innovations encompass all the ways that you connect your company’s offerings with your customers and users. While e-commerce has emerged as a dominant force in recent years, traditional channels such as physical stores are still important — particularly when it comes to creating immersive experiences. Skilled innovators in this type often find multiple but 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 cost and maximum delight.”

Back in the day, when the birth of the automobile happened – it completely changed the channel of supply and demand – the notion of “delivery” became one synonymous with efficiency and luxury. And still that continues today – with the evolution of delivery now spreading to as far as emergency supplies being delivered by drone.

 

Brand Innovation

How you represent your offerings and business

What Deloitte says: “Brand innovations help to ensure that customers and users recognise, remember, and prefer your offerings to those of competitors or substitutes. Great ones distill a “promise” that attracts buyers and conveys a distinct identity. They are typically the result of carefully crafted strategies that are implemented across many touch-points between your company and your customers, including communications, advertising, service interactions, channel environments, and employee and business partner conduct. Brand innovations can transform commodities into prized products, and confer meaning, intent, and value to your offerings and your enterprise.”

Customers have moved beyond buying products. They buy meaning. They buy reputation. They buy access. Brands no longer simply represent a product – they have become the product. Case in point: Dyson. Apple. Amazon.

 

Customer Engagement Innovation

How you foster compelling interactions

What Deloitte says: “Customer Engagement innovations are all about understanding the deep-seated aspirations of customers and users, and using those insights to develop meaningful connections between them and your company. Great Customer Engagement innovations provide broad avenues for exploration, and help people find ways to make parts of their lives more memorable, fulfilling, delightful — even magical.”

Estée Lauder were onto something with the development of their Consumer Engagement Centre of Excellence in 2016, which centralised consumer learning and insight. They knew that by centralising consumer learning, coupled with data collection such as social listening and focus groups, the team would be able to gather insights into a diverse range of consumers and use the learnings to drive innovation across the company. And they’re still doing it today – and they continue to revolutionise their industry.


If you’re ready to delve into a new way of doing things, and need help getting there, we’d love to talk to you.


 

2018-11-20T16:38:27+00:00November 20th, 2018|News, SME Growth|Comments Off on Your perfect Ten: 10 types of innovation explained