Most people misunderstand innovation. We often imagine innovation to be an iPhone-like moment – creating a breakthrough product for consumers. The reality is this is just one of four different types of innovation available to companies.
We can go well beyond products and services when thinking of areas ripe for innovation. The culture inside of a company can be a source of an unfair advantage. The stories we tell on the outside can transform customers into ambassadors. We can even enjoy significant growth from a standard product that employs a radical approach to pricing.
To help you discover innovation potential in your company, here are the four pillars of innovation.
1. People: Culture, Structure, Leadership
The All Blacks, the national Rugby team of New Zealand, are the highest performing sports team in history. Over the last three decades, they have continuously held a win rate over 85%, and they’ve won more World Cups than any other country. Their success comes down to one thing: culture.
The AllBlacks outperform the greatest NFL coach, Bill Belichick of the New England Patriots, who has achieved a whopping career win rate of 72% and holds five Superbowl victories.
We see companies with a focus on people winning big too. Zappos and Southwest airlines are competing in highly commoditised areas, yet their focus on people has helped them thrive.
If you want to unlock the potential of people in your organisation, you should start by aligning vision with the things you do every day. Two great tools for this are OKR’s (Objectives Key Results) and CFR’s (Conversation, Feedback and Recognition).
2. Product: Design Thinking
Airbnb, Apple and Dyson all create products that we love. The one practice they all have is a focus on design. However, it goes deeper than that. The products they produce are more than beautiful objects of desire. They are equally profitable and viable.
This balance means they can price the product for healthy profit margins and they have the means and resources to deliver at scale.
When you’re attempting the delicate balance of desirability, viability and profitability in your next product, remember you are in the playground of design thinking.
3. Profit: Business Model Innovation
We all know the famous “Razor Blade” business model. Sell the customer cheap razors today, and they buy blades tomorrow and forever more. Numerous business models change the way companies create value and get paid for it.
Google and Facebook have disrupted the world of advertising. Together, they accounted for 90% of last year’s growth in the online advertising industry.
However, it’s not only tech titans of today that are innovating with business models. Rolls Royce and Xerox changed very traditional industries by install new models of ‘pay per mile’ or ‘pay per copy’ respectively.
When you consider new business models, your go-to tool is the Business Model Canvas.
4. Promotion: Ubiquity and Storytelling
Nike running shows, Dove soap and Hershey’s chocolate are very different products. However, they hold one strong connection as brands. They are trusted more than any other brands on the planet, according to Ybrands.
These three brands dominate. They are everywhere: from Times Square, Facebook and the retail environment. Moreover, they tell stories that we love to share.
Nike had the world buzzing when it launched its 30-year anniversary campaign for Just Do It with controversial NFL start Colin Kaepernick. Online sales grew by 31% the weekend after the campaign began, according to Edison Trends.
There’s no need to get stuck when you’re trying to discover new areas of innovation. Just review the four P’s – People, Product, Profit and Promotion – and you’ll be sure to find opportunity everywhere.
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