Innovation kaleidoscope: The 4 primary colors of innovation

Many people think that innovation is a single thing – and it’s centered on the product or service – but I believe innovation can come in at least four areas and is driven at the organizational level, not just the product or service level.

In the graph, I have outlined four areas of innovation that create and drive Customer value:

1. Technology Innovation
2. Revenue Innovation
3. Channel [or sales] Innovation
4. Delivery Innovation

But before we start talking about innovation, let’s quickly look at Customer Value so let's keep it simple with the following definition...
Innovation driven Customer Value is anything that improves the product or service for the customer while creating an overall lower price.
I can already hear some of you "But what if I make the product better and it's costs more?" -- that may be the case, the innovation may make something "better" and raise the price - but price is relative to the improvement or innovation - and is completely relative to the "perceived" value by the customer [adding anti-lock breaks to a car may increase the price, but it should also increase the perceived value of the vehicle even more].

So, with that in mind, let's look the four areas...

Technology Innovation
Technology Innovation is usually what we think about when the term "Innovation" is used. It is the aforementioned anti-lock brakes [that are now standard and no longer considered innovative]; it Windows 7 or Snow Leopard operating system; it is the reusable space craft [also called the space shuttle]. Technology Innovation is that leap forward, the move from one place to another, that makes our lives more interesting.

Every company and organization can utilize technology to innovate their products and services - even things as boring as water facets can be enhanced with technology - new metals, new filters, new colors, new shapes, etc. So anytime you see either a brand new product or a "new and improved" label - it usually has to do with Technology Innovation.

Revenue Innovation
Most people don't think "how you get paid" is very innovative, but ideas such as Credit, Lay-away, try-before-you-buy, are all innovative ways to get more revenue. How about Google - they have an innovative way to fund their company - it's through advertising - they provide most of their services free and all a user has to do is allow advertising to be "presented" to them while do their own thing. Or how about Open Source software - in many cases, it's free, but the companies such as Red Hat and SugarCRM give away their products but charge for support and training. In the very early days of outsourcing, EDS shifted the revenue away from "time sharing" of a large mainframe to "paying per transaction" complete [sounds a little like cloud computing doesn't it - of course it's not, because cloud is new concept created by Amazon!!].

Channel Innovation
How you sell is always changing - some companies innovate by moving everything to "self service" allowing the customer to support themselves [and many people do a better and quicker job of it] while others may move to a very "high touch" or personal experience. How you sell and how you support your customers becomes an integral part of who you are as an organization - and in many cases becomes synonymous with your "brand". But remember - nothing is written in stone and being innovative with your products and services can breath new life into them.

Delivery Innovation
Within the context of services, how you deliver can determine "who" you deliver to. In fact, companies have sprung up around this area alone - FedEx being the most popular, but there are others. But logistics and delivery is only one aspect of delivery innovation. Think about all the applications on the iPhone that did not exist two years ago. Many banks deliver your account balance and other services to you where ever you are in the world - that's delivery innovation. How about Enterprise Rent-a-Car "They'll pick you up" - that's both a promise and delivery innovation.

So what does all this mean - that Innovation does not have to be wiz-bang stuff. Innovation can be doing some small things differently. Or it can be about who you are in the world. Innovations are happening around us all the time - stop and starting looking for both the small and big things - and you'll notice that many companies are listening to you and making changes for the better.


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