Technique 6.29 How to Choose the Right Innovation Environmental Shift

The 3 most common areas targeted for innovation are business model, platform and customer experience.

i) business model (primary focus on degrading assets, capabilities around the value chain to serve customers better and make money)

Can readily alter where value is created and amplified, especially in the production, process and systems area

Most relevant to the innovation types of profit model, network, structure and process (see elsewhere in Knowledge Base)

An example is Zipcar which

"...created a networked fleet of cars and developed the new way customers pay for rides. The result: drivers pay by the hour for the car conveniently parked in nearby neighbourhoods..."

Larry Keeley et al, 2013

ii) platform (this focuses on reinventing, recombining or finding new connections, etc to create value for customers)

Most productive when helping customers to do challenging tasks and/or connect the previously disparate communities, capabilities, offerings, etc. The use of digital technology (like e-commerce solutions to social networks) is pivotal

Most relevant to the innovation types like process, product performance, product system and services (see elsewhere in Knowledge Base)

An example is Amazon which aimed to

"...build a strong e-commerce platform selling books to customers. It has since leveraged its own infrastructure, experience and data to drive wave after wave of innovation from its foundation - providing Web services or other enterprises to catalyse the book industry..."

Larry Keeley et al, 2013

iii) customer experience (this focuses on connecting, serving and engaging customers in distinct ways)

Aim to build enduring relationships with customers via their positive experiences with your staff and organisation

"...where becoming the easiest firm to work with ever can overcome competitive gaps in price or quality..."

Larry Keeley et al, 2013

Most relevant to the innovation types like channel, service, brand and customer engagement (see elsewhere in Knowledge Base)

An example is Starbucks

"...created a global franchise by taking the principles of European coffee shops and applying them at scale. The goal: to provide retail environments that give customers consistent service and products wherever they are in the world..."

Larry Keeley et al, 2013

NB Once customers experience superior service, it then becomes an expectation

Indications of a major shift - where indicators provide opportunities

Business model

i. External

- there are elements of the value chain that are significantly under- or over-priced

- there are there are groups of customers that cannot afford the current offerings

- there are limited variations in processes, organisational structures, supply chains, etc

- there is there little cooperation and collaboration between industry players

ii) Internal

- there are obvious ways to change the accepted profit model that will benefit customers and the business

- you can re-structure assets, processes, systems, etc that will change the fundamental economics of the market

- you can offer products and services that are reliable, flexible, guaranteed, better value for money than competitors.

Platform

i) External

- offerings, solutions, etc are not customer-friendly, eg hard to use

- a community or group with shared interests or needs but no central hub/forum to bring them together

- a need to simplify market capabilities or assets to suit a customer group

ii) Internal

- found ways to extend, diversify, or expand your current offerings or connect them in new, effective ways

- found ways to use your core competencies so that customers have better access

- found ways for better cooperation, collaboration, etc with different stakeholders

New customers' experience

External

- where there are regular complaints about dealings with the organisation

- where "depersonalising" etc of contact and dealings with customers is occurring

- use incentives to lock-in customers

Internal

- identify effective delivery of buying experience to customers ie more compelling, simple, or seamless than the current offerings

- identify ways to engage customers differently, like appealing to their values, sense of self and their connections with other customers and users

- already have success in delivering effective customer experiences in one market and feel it can be transplanted to another market

NB All the above indicators provide opportunities