In a world of relentless competition and technology advancements, the only constant a business can be assured of is change itself. The playing field we once enjoyed competing successfully on, eventually gets crowded, stops growing and margins decline.
Life would be great for us (but not necessarily our customers), if competitors didn’t exist. Those pesky competitors have studied our playbooks and have become good at executing the very plays that once made us unique and special in the eyes and hearts of our customers.
And you probably too, have studied the competitor’s playbook. And now find yourselves competing on specmanship, incremental improvements and lower prices, hoping to withstand the onslaught from your competitors by running faster and offering cheaper prices. And countering their moves, every step of the way.
As a result we end up launching “me-too” products that customers can’t differentiate from one another. Customers know they can get the same “me-too” product form our competitors. And customers are more than willing to watch us compete with each other for their business on price and specmanship. It’s a race to the bottom. The definition of a “red-ocean.”
Something needs to change. Innovate or Die
Innovation is a strategic play a company can make to deliver peer-beating results over the long-haul. To innovate, we need to look beyond the current solution and imagine novel new ways to help customers achieve better outcomes in getting important jobs done.
But what does it mean to innovate?
If you google “innovate” you find this definition: to “make changes in something established, especially by introducing new methods, ideas, or products.” That captures some of the essence of innovating, but new isn’t necessarily better.
Perhaps Silverstein, Samuel, and DeCarlo definition is better: “The act of generating more value for the customers and the business by fulfilling an [important] job to be done better than anyone else.”
Creating value for the customer is key from a business perspective. If a prospect doesn’t value what we create, we have by definition, created waste. As good as that definition is though, it potentially limits the options available to innovate across the three innovation types where value can be discover and create value.
Figure 1: Innovation Portfolio Options
Figure 1 is a portfolio matrix that shows the “Types of Innovation” (Products & Services, Processes & Methods, and Business Model) in the columns and “Degrees of Innovation” (Incremental, Substantial, and Breakthroughs) in the rows. The graph also makes a distinction between innovating over “core growth” (i.e. your existing business), and “new growth” opportunities.
What the matrix tells us is that innovation can and should happen across your existing business (the core business), new growth opportunities (new products and markets – see figure 2), the innovation types, and the innovation degrees.
Approaching the innovation game from this perspective, we have a matrix of 18 potential innovation options where we can create value and growth. From this perspective, I believe Global Innovation Management Institute’s (GIMI) has a simpler and better definition of innovation:
“Business innovation is the creation and capture of new value in new ways”
Figure 2: Jobs & Executor Opportunity Matrix
How you define innovation in your company determines the options you can explore in creating new value across the core business and future new business. Though the product & service dimensions are extremely important, they only represent one dimension where customer value can be created.
The next obvious question is “What do we mean by Value”
No matter how good a potential invention appears on paper, if it doesn’t fundamentally address a specific outcome or overcome a specific constraint a customer is trying to accomplish by getting an important job done, then chances are the product concept will fail in the market. It simply fails to address a problem worth solving, thus no customer value is created.
In my new book “The Innovator’s Playbook: Discovering and Transforming Great Ideas Into Breakthrough New Products,” I provide an innovation framework based on “jobs-to-be-done” innovation theory pioneered by Clayton Christensen.
The framework shows you how to streamline your new product process and focus your development resources on the important jobs where the customer’s needs and expectations are not being met. Solving these important jobs better than anyone else, creates value for the customer and a winning product strategy for you.
I will explore and apply the jobs-to-be-done innovation theory to discover and validate value in upcoming articles. In the meantime don’t limit yourself to thinking that new value creation is limited to product & service dimension. While important, it’s not the only game in town when it comes to creating and capturing new value.
Play to win by knowing what your options are!