Technique 6.31 Three Ways of Engaging with Innovation Tactics

Introduction

Initially you need to check

- what innovation shift are you pursuing?

The answer will help you understand which tactic to focus on and their sequence. For example, if pursuing the sharing customer experience- driven innovation, focus on first, such as new ways of engaging customers, your brands, channels and services experiences.

- what is your initiative's ambition level, ie do you want to change the known, the boundaries for the entire game?

Your ambition level will determine how many tactics you should consider using. For example, if you're aiming for transformational innovation, you will need at least 5 distinct tactics integrated with care.

Three ways

i) Anchor & Extend

Select an 'innovation anchor' as a basis to build a concept or business.

"...this should lie at the core of the value you deliver to customers and how you beat competitors..."

Larry Keeley et al, 2013

Then consider other types of tactics required to make your concept work

ii) Add and Substitute

Define the tactics you are using in your current concept or business. Then look for adding or substituting or replacing other tactics that could improve your operating economics or your customer satisfaction.

iii) Array at Random

Select 3 to 6 tactics randomly and use them to look at new ways of doing business.

NB Use the innovation tactics described in the 10 types of innovation (see elsewhere in the KB); under one type of innovation, ie 'profit model', the tactics to select from:

- premium prices (price at a higher margin than competitors, usually for a superior product, offering, experience, service or brand)

- subscriptions (great predictable cash flows by charging customers upfront, one time or recurring fee, to have access to the product or service over time)

- auction (allow a market and its users to set the price of services)

- cost leadership (keep variable costs low and sell high volumes at low price)

- forced scarcity (limit the supply of offerings available, by quantity, timeframe or access, to drive up demand and/or prices

- membership (charge at time-based payments to allow access to locations, offerings, or services that non-members don't have)

- micro-transactions (sell many items very cheaply to drive impulse purchases)

- scale transactions (maximise margins by pursuing high-volume, large-scale transactions when unit costs are relatively fixed)

- switchboard (connect multiple sellers with multiple buyers; the more buyers and sellers joining increases the value of switchboard)

- ad-supported (provide content or service for free to one party while selling listeners, viewers, or eyeballs to another party)

- bundled prices (sell in a single transaction two or more items rather than sell them individually)

- disaggregated pricing (allow customers to buy exactly, and only, what they want)

- financing (capture revenue not from the direct sale but from structured payment plans and after-sale interest)

- flexible pricing (vary prices for a product or service based on demand)

- float (receive payment prior to building the offering; earn interest on their money prior to delivering the goods and/or services)

- freemium (basic services are free while charging a premium for advanced or special features)

- installed base (offer a core product for a slim margin, even a loss, to drive demand and loyalty; then realise profit on sale of additional products and services)

- licensing (grant permission to a group or individual to use your offering in a defined way for a specific payment)

- metered use (allow customers to pay only what they use)

- risk sharing (waive standard fees or costs if certain metrics are not achieved and receive significant gains when they are achieved)

- user-defined (invite customers to set prices they wish to pay), etc

Some examples in the below table around 3 types of innovation, ie business model-driven, platform-driven & customer-experience driven:

Innovation Type With Tactics Description of Activity Tactic at Work
1. BUSINESS MODEL-DRIVEN    
1.1 open invitation encourage other people to work with you, whether individual experts or strangers - open innovation

- crowd sourcing

- competency centre

1.2 collaborative consumption leverage connectivity to traditional forms of ownership and change the way customers relate to your goods and services - metered use or switchboard

- process automation

- safety of user communities

- support systems

- values alignment

1.3 free-based

 

 

Give away basic offerings free to attract many users and then have other additional, profitable offerings - freemium

- engaging functionality

- micro-transactions

- membership

- ad-support

- switchboard

1.4 radical optimisation

 

 

move beyond standard operational efficiencies to make it painful for other firms to compete with you - IT integration

- process automation

- process standardisation

- guarantee

1.5 predictive business

 

 

mine data to model behaviours & breakdowns, allowing you to make promises, predict outcomes and drive efficiencies for customers - risk sharing

- metered use

- predictive analytics

- product bundling

- guarantee

2. PLATFORM-DRIVEN    
2.1 franchise

 

 

develop signature offerings and experiences that you and others use to develop ecosystems of extension - superior product

- complements

- brand extension

2.2 exchange

 

 

established hubs of activity

 

 

- switchboard

- user generated

- user communities

- support systems

2.3 collaborative creation

 

 

connect communities with campuses and toolkits that encourage them to create offerings for you

 

 

- crowd sourcing

- process automation

- user communities

- support systems

- value alignment

- status and recognition

3.4 competency-driven platform

 

 

open up key assets and capabilities and let others use them to power their own businesses

 

 

- complementary partnering

- intellectual property

- superior products

- diversification

3.5 experienced ecosystem

 

 

build a seamless system of products, services and extensions that interoperate and connect in consistently elegant & beguiling ways

 

 

- licensing

- alliances

- strategic design

- performance simplification

- product/service platforms

- go direct

4. CUSTOMER EXPERIENCE-DRIVEN    
4.1 status-based

 

 

use subtle or explicit cues to your customers - creating elite groups that engage rapidly with your products and services

 

 

- loyalty programs

- personalisation

- status and recognition

4.2 immersion

 

 

create environments that captivate and mesmerise customers, fostering new levels of engagement and commitment

 

 

- strategic design

- flagship store

- experience enabling

4.3 connected community

 

 

leverage the power of social ties to deepen experiences and encourage consumers to share common interests, activities and the offerings that support them

 

 

- focus

- user communities

- support systems

- value alignment

- community and belonging

4.4 values-based

 

 

make your products stand for something and foster a movement - focusing on a particular constituency, cause or reason for existing

 

 

- focus

- transparency

- values aligned

- whimsy & personality

4.5 simplification

 

 

radically ease the complicated or arcane for customers; allow them access to things they simply couldn't have done before

 

 

- ease-of-use

- engaging functionality

- experience simplification

- whimsy & personality

(source: Larry Keeley et al, 2013)

 

 

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