Most technology firms, for example, focus on product R&D; in the chemical, oil and gas industries, the emphasis is on process innovations, while consumer goods manufacturers look to branding and distribution.
With industry benchmarking commonplace, this innovation along the same lines can lead to erosion of competitive advantage.
Business innovation should be much broader in scope, about creating value (rather than things) and more systemic; it also contrasts with simple technological innovation that doesn't necessarily translate into customer value.
Twelve dimensions of businesses are highlighted as possible avenues for innovation:
Offerings (the development of new products and services valued by customers); Platform (using common components or building blocks to create derivative offerings); Solutions (the creation of integrated and customised offerings that solve end-to-end customer problems);
Customers (discover new customer segments or uncover unmet customer needs); Customer Experience (rethink the interface between the organisation and its customers); Value Capture (redefine how the company gets paid or create innovative revenue streams);
Processes (redesign processes for greater efficiency or effectiveness); Organisation (change the structure, function or activity scope of the business, including the redefining of staff roles, responsibilities and incentives); Supply Chain (streamline the flow of information, change structure or enhance collaboration);
Presence (create new distribution channels or use existing points of presence in creative ways); Networking (enhancements to the way a company connects with its customers to increase the value of its offerings); and Brand (extend the brand in creative ways).
Companies should also get greater value by thinking of these different areas for potential innovations as intertwined. However, the research also suggests that successful innovation strategies tend to focus on a few high-impact dimensions, rather than attempting a scattergun approach.
Importantly too, identifying and pursuing neglected innovation dimensions can change the basis of competition and create a distinct advantage that competitors can't make up overnight.
The 12 different ways for companies to innovate
Mohanbir Sawhney, Robert C Wolcott and Inigo Arroniz
MIT Sloan Management Review, spring 2006, Vol 47 No 3
Review by Steve Lodge.