Innovations are the drivers of a firm’s performance. We look at Doblin’s ten types of innovation to uncover different ways in which we can develop new ideas.
Contents
What is innovation?
There are different definitions of innovations. However, when we look at the commonalities of these definitions, we can come across a similar concept. Innovation is the application of an idea to find better ways of doing something. These ideas need to be novel and they also need to be useful to the consumers. Thirdly, we also need to have certain whether the new idea is economically feasible for the firm.
Peter Drucker said, “Innovation is the specific instrument of entrepreneurship…the act that endows resources with a new capacity to create wealth.” Therefore, we can say that innovations are toolkits used by entrepreneurs to generate wealth. However, it can also be extended to non-entrepreneurial ventures. Larger firms also need to innovate to stay relevant.
Different ways to innovate:
- Product
- Process
- Technology
- Method
- Service
The Doblin Group
The Doblin group has been working on the topic of innovation since 1981. Some of the key members of this team were Larry Keeley, Ryan Pikkel, Brain Quinn, and Helen Walters. The model they have developed captures most of the types of innovations into 10 different categories. At the core of their research was a simple philosophy. They wanted to find out ways to innovate more effectively. It can become even more challenging to innovate when you face uncertain and tough problems.
Innovation is the specific instrument of entrepreneurship…the act that endows resources with a new capacity to create wealth
Peter DRUCKER
We generally say that problem definition is the first step to new product development. However, it is easier said than done. We all know of the popular quote by Henry Ford. If he asked people that what did they want, they would have said that they wanted faster horses. In this kind of situation where the customers don’t really know what they want. How do we define the problems? The Doblin team also questioned some widely accepted beliefs. We assume that team activities like brainstorming can help us come up with innovative ideas. They cross-questioned this popular method. In fact, their book about the Doblin’s 10 types of innovation was a culmination of over three decades of work.
Doblin’s 10 types of innovation
Profit Model
Profit models are ways of converting consumer value into profit. Any new business model has a higher propensity to be profitable. However, over time, factors like competition, change in consumer preference and other factors can lead make the business model less attractive. In other words, the competitive advantage diminishes.
Innovation in the profit model creates a new way of delivering value to customers. For instance, in the 2000s Apple introduced the iTunes store. The market was ready to move beyond the physical format. The business model was to charge the customers per download. The royalty for each downloaded track was then shared between Apple and the music label. Similarly, in the wake of the streaming services, Apple introduced a monthly subscription plan for unlimited music playback. They now have more than 56 million paid subscribers. This resulted in a revenue of $12.5 billion in the last quarter of 2019.
Network
Networks are connections between individuals or organizations. Firms derived value from these networks through interconnections. Let us look at some of the advantages of these networks:
- Networks provide access to otherwise unavailable resources.
- They can also lead to resource sharing that can increase the economic efficiency.
- Networks also result in a sharing of knowledge between the parties.
- It can also reduce the risks for the members of the network.
Thereby network create opportunities to innovate.
Structure
Structures are the configuration of the building blocks of the organization. These building blocks are the organizational assets like the buildings, humans, as well as other machinery.
Some of the ways in which we can bring about innovation in structure are:
- Restructuring of the capital assets
- Modernization of the factories
- Upgradation of equipment
- Innovations in human resource management
- Research and development initiatives
Process
Processes are the ways of converting inputs into useful outputs. Organizational processes are always marred by inefficiencies. However, these inefficiencies can be reduced through innovation. Also, one of the ways of improving processes is through automation. Automated processes leverage AI and ML technologies to improve efficiency.
Common types of innovations within Process:
- Research and development
- Proprietary approaches to process improvement
- Continuous improvement or Kaizen.
Product Performance
Products are some of the most common forms of innovation. When we think about innovation the first thing that comes into mind is products. However, this kind of innovation is a hygiene factor for thriving organizations.
Innovative ways of improving product performance:
- Feature extension
- Removal of unnecessary features
- Introduction of new products
- Improving the performance of important features
- Ease of use
Product System
Creating a product system means that you are creating an ecosystem of allied products and services. Product system innovation is one of the lesser-used ones within Doblin’s 10 types of innovation. These kinds of innovation are also examples of innovation within the business model. Apple has been a pioneer in the innovation of the product system.
On one hand, these types of innovations help organizations in generating higher revenues. They also help in increasing loyalty from the customers. On the other hand product system innovation is also an advantageous situation for the customers as it provides higher satisfaction from the products.
Service
The last two decades have seen a megatrend in the services. Aided by digital transformation services have improved drastically. Most of these improvements have been brought about by innovation in the services.
Some common innovation in services:
- Reduction in the wait times for the services
- Improvement in service quality
- Enhanced customer support
- Finding customer pain points through customer journey mapping
Channel
Channels are the mediums of delivering value to the customer. For instance one of the biggest innovations in retail has been channel innovation. The e-commerce channels were developed in the early 2000s.
The channel innovations tried to provide new ways of delivering value to the customer. However, this does not mean that the old channels are redundant. New channels can be a medium for providing complementary or supplementary products.
Brand
The brand is essentially the story of your firm or your product. When a customer buys your product they essentially buy your story. The innovations in the brand are essentially finding new ways of creating a story.
Marketing campaigns can be run to create a certain persona for the brand However, when these campaigns are innovative in nature they have a higher impact.
Customer Engagement
Customers need not be at the receiving end of all the communications. They can instead be the source of communication. Also, one of the ways of increasing the word of mouth is to enhance customer engagement.
How to enhance customer engagement through improve customer service quality?
- Improve customer service quality
- Make the experience more fulfilling for the customer.
- Increase ownership in the product creation process
- Delight people through enhanced product usage