[Book Review] Ten Types of Innovation: The Discipline of Building Breakthroughs
This is a ‘must-read’ book for startups, innovators, business leaders and tech/biz schools, providing a comprehensive overview of cross-industry innovation trends and practices. The wealth of case studies in the book is based on over three decades of research, across 2,000 examples.
Author Larry Keeley is a world renowned innovation consultant, speaker and co-founder of Doblin, the innovation practice of Monitor Deloitte; the other co-authors are his colleagues. They have also created a superb online companion for the book, with lots of useful content and resources.
“Storytelling is in a new golden age,” the authors begin, as the pace of innovation picks up around the world and a range of experts, practitioners and narrators describes methods and impacts of innovation.
Innovation depends as much on creativity as discipline, and aspiring innovators can learn a lot from industry patterns of innovation so as to build their own success formulas. Invention is about ideas as well as execution, and even companies with the right insights have failed to act on them decisively, as the case of Kodak and digital photography illustrates. Innovation is a team sport, and the need of the hour is rigorous, flexible and reliable innovation. I have summarised some of the principles in Table 1, but each chapter provides a wealth of insights and examples in greater detail.
Table 1: Innovation Types and Tactics
|Product||Corning (tough thin glass), Intuit (tax software)||New functionality, ease of use, customisation, performance, safety, style, environmental sensitivity|
|Product system||Microsoft (Office), Mozilla (Firefox)||Complements, extensions, plug-ins, modular system, bundling, platforms|
|Service||7-Eleven (Japan: bill payment), Zappos (customer-centric culture)||Loyalty programs, self-service, concierge, experience management, try before you buy, guarantees|
|Channel||M-Pesa (mobile payment), Amazon (Kindle), Nike (stores), Nespresso (stores, clubs)||Go-direct, cross-selling, diversification, flagship stores, multi-level marketing, non-traditional channels|
|Brand||Virgin (‘fun’ companies), Intel (Inside), Trader Joe’s (destination labels)||Brand extension/leverage, co-branding, certification, private label, transparency, values alignment|
|Customer engagement||Apple (annual conference), FourSquare (‘mayorships’), Blizzard (World of WarCraft)||Community, personalisation, status, experience simplification, curation, autonomy|
|Process||Zara (apparel design), Hindustan Lever (sachets), Zipcar (rentals), Toyota (Lean), Ikea (flat-packs)||Crowdsourcing, lean production, IP, localisation, on-demand production, predictive analytics, process automation, standardisation, user involvement|
|Structure||FabIndia (local community ownership), Southwest Airlines (only one type of aircraft)||Competency centre, corporate university, decentralised management, incentives, IT integration, knowledge management, outsourcing, organisational design|
|Profit model||Gillette (stick + blades), Hilti (power tools on loan), Schibsted Media (freemium classifieds)||Ad-supported, auction, bundling, low cost, financing, freemium, licensing, membership, microbilling, forced scarcity, risk-sharing, switchboard|
|Network||GlaxoSmithKline (co-innovation), Natura (research network with universities)||Alliances, coopetition, M&A, open innovation, supply chain integration, franchising|
The authors urge companies to go beyond product innovation to address elements of ecosystem, brand, service and process. For example, Google has combined almost all types of innovation in its range of offerings; even McDonald’s has taken steps like creating a corporate university and branching out into McCafes.
Ginger Hotels in India has a skeletal staff and outsourced most of its services (network and structure innovation). Dell pioneered the Internet as a sales channel in the computer industry (channel innovation). Lego has a range of interlinked products and even theme parks for customer engagement.
In the section on Innovation Landscapes, the authors use these ten types of innovation to provide insights into decades of innovation shifts in the consumer IT industry (eg. less ecosystem engagement in the 1990s) and pharmaceuticals (eg. the rise of generic drugs).
Understanding these broad tends helps companies identify gaps and opportunities, eg. Proctor & Gamble using crowdsourced photos of babies in China to come up with new angles of pitching diapers to parents; Nike moving on from the ‘Just do it’ slogan to ‘retail as theatre’ (new stores) and Nike+ (partnership with Apple to blend running with music).
Typical innovation strategies for companies revolve around business model shift (eg. pay for performance), platform shift (eg. new product capability systems), and customer experience shift (eg. new branding). Depending on the scale of shift in next innovation, there are three kinds of ‘innovation ambition’ – core innovation, adjacent innovation (reframing), and transformational innovation (changing the whole game).
The different types of innovation tactics in the playbook summarised in Table 1 can also be combined to create a range of gameplans: collaborative consumption (Zipcar), radical optimisation (Cemex), predictive business (GE Aviation), franchise (Harry Potter), exchange marketplace (Kickstarter), competency platform (Amazon Web Services), experience ecosystem (Apple iTunes), connected community (Harley Davidson), simplification (Wii), and freemium + switchboard (LinkedIn).
The latter part of the book is about how organisations should internalise this kind of market analysis and execution. This calls for a balance of creativity + discipline, pragmatism + ambition, top-down + bottom-up initiative, and analysis + synthesis. Leadership drive is needed to set the vision, define the innovation approach, create organisational support and incentives, and devise appropriate metrics for internal and external assessment.
In addition to useful and compelling content, the book is superbly designed and easy to read, and makes for a good skim as well as deep dive into the material. This book definitely belongs in your bookshelf if innovation is your organisation’s priority.
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