What is Your Innovation Mix?
Understanding the three horizons of innovation and choosing the best mix for you can help you achieve your goals and drive strategic conversations further. These are not mutually exclusive; organizations often start with one and shift between the different types of innovation as they build their expertise.
INCREMENTAL INNOVATION:
Small Changes Have Dramatic Impact
EMBED INNOVATION AROUND YOUR CUSTOMERS:
A Sustainable Innovation Approach
RADICAL INNOVATION:
Open New Industries Or Disrupt Those Existing
Incremental innovation refers to some of the most common innovation types that companies undertake today and can be summed up as offering ‘the same thing, only better’. Existing technologies and processes are used within existing markets, but one or more aspects of the system are changed in a small way. Small, incremental changes, often focused on day-to-day operations, can have a dramatic impact on the profitability of an organization.
This is a good place to start and organizations favor this method as it’s often affordable and less risky than radical innovation. This might involve adding new features to an existing product, service, or process, or even removing them.
Waitrose, a leading retailer with a diverse mix of staff in 350+ locations, leverages its collaborative hub, Partner Ideas, to connect its 60,000-strong workforce. Here, partners (employees) can share, rate, and discuss ideas continuously, and management can prioritize which of them to implement.
By transforming the formatting and management of till receipts, Waitrose saved £168K annually through one recommended change.
Waitrose has seen a total saving of £3.5 million through the implementation of in-house ideas – resulting in an ROI of 1500%.
Read more here
Sustainable innovation focuses on identifying and solving customer problems with creative solutions. It should answer the question, "how can we do things differently for our customers?" This requires more engagement from your business and can have a broader impact. Speed to market is key, as the needs and wants of customers evolve, organizations must match that speed if they want to be competitive. It also focuses on new ways to deliver a product or new markets to penetrate whilst putting the customer at the heart of the innovation program.
British multinational insurance company, Aviva, was experiencing the challenge of keeping up with customer evolution and expectations, maintaining a competitive edge within the market, and engaging employees.
Its Customer Cup - a global innovation competition program aimed at improving the customer experience – was designed to engage its diverse global workforce and identify ways to build customer loyalty and develop an industry-leading customer experience.
One of the tournament’s winning ideas addressed the delivery speed of replacement items, leading to six new partnerships with businesses including Amazon and Apple.
Radical innovations don’t merely introduce new products, they open new industries or make existing ones unrecognizable.
The projects are usually risky, and complex, requiring significant investment and resource commitment, meaning few organizations pursue radical innovation regularly.
It creates new business models and changes the way customers engage with the market.
While the other two types of innovation can be relatively fast-paced, radical innovation often relies on timing, internal capability, emerging technology, and technical skills.
When we think of radical innovators, we usually think of new players who nowadays are encouraged by crowdfunding platforms to pursue their innovations.
Coca-Cola and Google are both well-known for applying the 70/20/10 rule to their innovation programs:
70% of the time is focused on the core business (incremental innovation)
20% of the time is focused on adjacent projects (sustainable innovation)
10% is focused on the new and unknown (radical innovation)
70% incremental innovation
20% sustainable innovation
10% radical innovation